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TOOL KIT TO SUPPORT AN AWARENESS ACTION
PLAN CONCERNING BA BAN ACTIVITIES AT REGIONAL
LEVEL
October 2001(Rev 5) M. Reino C. Saublens
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Introduction
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WHY DO EUROPE NEED A BUSINESS ANGEL CULTURE

• EQUITY GAP
• BANK RISK ADVERS
• ENTREPRENEURIAL SKILL TRANSFER. Most start-up
  entreprises don t survive more than 5 years.
• SME s BIRTHRATE

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EQUITY GAP

• Banks look for collateral (intangible assets are
  not security)
• Formal Venture Capital investing in higher and
  higher amounts
• Gap in the start-up and seed phase
• Need for Business Angel financing

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BASIC FACTS

• It is difficult for new companies to raise funds
  because they dont have the necessary guarantees
• Business Angels and venture capital organisations
  have difficulties in finding good business plans
• Need for Business Angel Networks

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SME SUCCESS DEPENDS UPON

• Business Plan
• Amount of equity and appropriate finance
  available
• Skills of the entrepreneur
• Guidance available

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BA FINANCING
GROWTH
CAPITAL NEEDS
IPO
HIGH RISK
Formal Venture Capital
Business Angels
LOW RISK
Friends, Family, Fools
TIME
SEED
START-UP
EARLY GROWTH
SUSTAINED GROWTH
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FROM IDEA TO ENTERPRISE
Start-up
1. Growth
Pre-IPO
2. Growth
Market leader
10 000
Creation of enter-prise
Going public
VC financing
Busi-ness idea
1 000
2
100
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SourceMcKinsey, New Venture
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ABOUT BUSINESS ANGELS
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BUSINESS ANGEL

• Informal private investor with smart money
  (financeexpertise)
• Investment 25 000 - 250 000 euro
• Willing to share their managerial skills,
  specialist knowledge and networks
• Often prefer to invest in their region of
  residence
• Seeking profit, but also fun

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ANGEL SYNDICATES

• Informal one-off syndicates for individual
  deals
• Permanent syndicates with their own identity and
  operating procedures
• Leed Angels and outer group of passive Angels
• Larger than average size of investments
• Some affiliated to a BAN (Linc Scotland)

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BUSINESS ANGEL TYPES(Source LINC Scotland)

• PATRON ANGELS/ARCHANGELS
• Over 50 000
• Serial investor
• Net worth 1M
• Limited hands-on management
• Invest in wide range of companies, including
  start-ups
• Often pull syndicates together

• INCOME SEEKING/ OCCUPATIONAL ANGELS
• Less wealthy
• less able to withstand loss, risk averse
• Invest 25K-50K
• Seeking full-time or part-time employment and
  regular income
• Like syndicates
• Invest close to home in known sectors

• ENTREPRENEURIAL / WEALTH MAXIMISING ANGELS
• Invest 25K-100 000 or more
• Significant hands-on management role
• Net worth up to 500 000
• Invest in known sectors / areas of expertise

• VIRGIN / FIRST TIME ANGELS
• Represent significant total investment potential
• Difficulties in finding opportunities
• Prefer co-investors
• Need professional support
• Prefer investments close to home

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BUSINESS ANGEL NETWORKS

• Private or semi-public bodies whose aim is to
  match entrepreneurs looking for equity with
  Business Angels

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GAP WITH USA

• Operating in Europe 125 000
• Potential 1 000 000

• Operating in USA 3 Million
• Likely to double within next decade
• 30-40 times more companies get BA than VC money.
• (van Osnabrugge)

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ABOUT BUSINESS ANGELS NETWORKS
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A BAN IS A MARKET PLACE WHICH ALLOWS ENTREPRENEURS
TO MEET WITH BUSINESS ANGELS

• Ban can operate localy, regionaly,
• or at national level. They need a critical
• mass in terms of good project and angels

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SERVICES PROVIDED BY BANS

• Creating awareness of the Business Angel concept
• Identification of BAs
• Assistance to entrepreneurs and BAs
• Matching BAs and entrepreneurs

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MATCHING BY BAN
ENTREPRENEUR
BUSINESS ANGEL
Contact to BAN
Identification
Confronting offer and demand
Business plan evaluation and validation
Identification of nvestment priorities
Drafting of business plan summary
Circulation of business plan
BA added to database
Preparation of presentation
MATCHING
Participation in investment forum/club
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TOOLS OF BANS

• Organisation of investment clubs, forums
• Information bulletins, magazines, newsletters,
  circulation of business plans
• Internet, databases
• Personal introductions

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Matching is only the visible part of BAN
activities lots of the time is devoted to make
the entrepreneur  INVESTMENT READY 
N.b. up to 120 h by NeBib (NL)
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The Secrets of a Deal

• ANGEL s 5 C
• Cooperation will he become a real member of the
  management team
• Commitment can the team do what s in the
  Business Plan
• Competence of the management team
• Charisma will the BA be able to transfer his
  know how and not to impose it
• Chemistry Do BA believes he will cooperate with
  the entrepreneur

• ENTREPRENEURS 4 C
• Chemistry
• Competence
• Conditions participations, responsabilities,
  modalities, objectives)
• Contacts

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HOW ARE BAN CLIENTS ACQUIRED

• Word to mouth
• Information events, seminars
• Own newsletters
• Articles in press
• Established co-operation with banks, financial
  institutions, accountants
• Direct mailings
• Visits to enterprises

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INVESTMENT FORUM

• Generally organised in the late afternoon to
  allow a small number of businessmen (4 to 6) to
  show their project to a number of Business Angels
  (max 20)
• Business Angels often receive a short description
  of requests for investment along with their
  invitation
• There can be a fee to take part in such a forum
  i.e. NEBIB charges /- 110 EURO both to the
  entrepreneurs and to informal investors

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INVESTMENT FORUM

• Entrepreneurs taking part in the forum are
  briefed beforehand on how to introduce themselves
  and their project appropriately. Following a
  formal presentation of the projects,
  entrepreneurs and Business Angels have time to
  meet and initiate contacts.
• The BAN follows-up the event with an analysis of
  the contacts initiated during the forum
• Depending on the BAN, investment forums are held
  every 2 months

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INVESTMENT FORUM PREPARATION

• T0 Forum date
• T3 Training for entrepreneur - rehearsal of
  talk at investment forum
• T6 Invitations are sent to BAs, along with a
  summary of draft requests for funding
• T9 Identification of projects to be presented
  at investment forum

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BULLETINS MAGAZINES

• NEBIB (NL) publication of a monthly magazine on
  company profiles, various analyses and
  information on venture capital. Free service.
  Sent to 400 potential informal investors.
• LINK (UK) publication of a monthly magazine
  featuring entrepreneur profiles which are
  published six times - once extensively (200 word
  max) and five times as a two-line summary.
  Subscriptions (190 EURO). Sent to 12.000
  interested people.
• Neither NEBIB nor Linc charge a fee to include a
  profile in their magazine.

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BUSINESS ANGEL NETWORKS IN EUROPE
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AMOUNT OF BANS
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BANS BY COUNTRY
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DEALS REGISTERED BY BANS
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DIFFERENT BANS

• Non-profit organisations or public initiatives,
  free standing or integrated in the economic
  development actions
• Private sector initiatives, public limited
  liability companies

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NATIONAL BAN ASSOCIATIONS

• BANA (UK), BEBAN (B)
• Trade representative bodies overseeing the
  development of best practice
• Lobbying

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NATIONAL BANS

• NBAN (UK), LINC Scotland, BAND (D), IBAN (I)
• National networks of regional BANs
• Nationwide circulation of investment
  opportunities
• Magazines and bulletins
• Web sites
• Promotion of the BAN concept
• Often sponsored by major banks and professional
  firms, backed by Government

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BANS OPERATING NATIONALLY

• NEBIB (NL)
• Private initiative
• Regional seminars (De 7e Hemel)
• Working in co-operation with RoBAN
• SITRA MATCHING SERVICE (FI)
• Operated by national public fund
• Regional offices

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REGIONAL BANS

• BE Vlerick BAN, BAMS, Bizzbees, WaBAN, Business
  Angels Connect
• FR Federation Club B2A, Pro-Back
• DE BAAR, NBA
• IT Lombardia 1, Centro Adriatico, UBAN, Venise
• CH BOAS, Club Valaisan
• UK West Midlands, Equitylink, Xenos

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INTERNET BANS

• Professional Networks (FR)
• http//www.businessangels.com, BusinessAngels
• On-line secure matching information system for
  entrepreneurs and investors
• Funding requests are posted on the site after
  selection by Professional Networks or one of its
  partners (RDAs, CCIs, technological parks,
  specialised organisations, etc.)
• Investor wanting to get in touch with an
  entrepreneur clicks on a dedicated icon, this
  transmits his profile to the corresponding
  entrepreneur. Entrepreneur decides whether or not
  to follow up on the contact.

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SECTORAL BANS

• Talisman Ventures Ltd (UK) Manufacturing
• Biotechnologies, Internet, multimedia,
  engineering, etc.

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LOCAL BANS

• Clubb essor 77 (FR), Vlerick (B), Devon
  Cornwall (UK), B.A.R. (D)
• Often smaller amounts
• Sometimes linked to solidarity funds (FR)
• Generalised

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TRANSREGIONAL INVESTMENTS

• Some BANs started to operate transregionally
• Some ad hoc linking between BANs in different
  countries
• Offering of investment opportunities often
  hindered by own regulations and fear of foreign
  legislation and rules
• Experienced BAs already work transnationally - no
  need for BANs

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FUNDING OF BANS SOURCES
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FUNDING OF BANS DIFFERENT TYPES
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FUNDING OF BANS SPONSORS

• Banco Ambrosiano - Grupo Intesa (IBAN)
• Deutsche Bank, German Venture Capital Association
  (BAV)
• All major UK high street banks (NBAN)
• SchmidtBank and Rödl Partner (NBA)
• Düsseldorf Stock Exchange (WIN NWR)
• Deutsche Börse, KfW, Investitionsbank Berlin,
  Deutsche Ausgleichsbank (BAND)

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FUNDING OF BANSFEES CHARGED

• Some take no fees from BAs or entrepreneurs
• Fees charged vary according to a BAN, from 50
  euro to gt500 euro
• Fees can be charged upon registration,
  subscription to bulletins, a membership fee for
  one year (BA), a success fee after a deal
  (2.5-5)
• Some BANs started taking an equity share in
  companies

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EUROPEAN BUSINESS ANGEL NETWORK

• Non-profit organisation
• Exchange of experience and promoting good
  practice
• Concept of BANs and Business Angels
• participate in the initiation and implementation
  of local, regional, national and European
  programmes assisting the creation and development
  of a favourable environment to BAs

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About best practices in Europe
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• United Kingdom Fiscal environment
• Belgium and United Kingdom capital gains
  taxation
• France plan dépargne en action and Société de
  Capital Risque
• Belgium United Kingdom public support to BAN
• Germany awareness campaign via BAND
• Belgium code of conduct to be member of BeBAN
• UK NBAN and Colin Mason analyses of the UK
  Business Angels industry
• UK ERDF money to support BAN activities
• Italy, Germany and Luxembourg business plan
  competitions linked with local BAN
• networks and other financial institutions.
• Belgium, United Kingdom and Germany BAN are
  private regional initiatives who
• gain in some circumstances public support.
• Belgium BeBAN awareness seminar with all other
  enterprises financing key players
• United Kingdom Integrated finance panel for
  entrepreneurs
• United Kingdom LINC Scotland training for
  bankers, advisers, accountants concerning
• Business Angels activities
• Italy partnership between IBAN and Banca Intesa
  in order to establish a perfect triangle
• BA Entrepreneur Banks (capital debt)
• Italy Iban web site to make BA recruitment
  easier and propose business ideas.

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ABOUT EU SUPPORTS
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EUROPEAN SUPPORT

• Structural Funds
• Financial Engineering action line in each
  national SF programme
• Multiannual programme for Entrepreneurship and
  Enterprise

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EUROPEAN SUPPORTOJ C 263 of August 20th 1998
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FEASIBILITY STUDIES

• Creating an Italian Business Angel Network
• Service delivered through regional and local
  networks
• Setting-up a virtual community in IT
• Establishment of the Flemish Business Angel
  Network
• Expansion to the country
• Design of the most appropriated type of network

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PILOT SCEMES

• Establishment of regional networks
• Lisburn enterprise organisation ltd
• Instituut professor vlerick voor management
• Utveckling norrköping ab
• Gepafin spa
• Professional networks
• Instituto aragones de formento

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EBAN AWARENESS CREATION SEMINARS

• Project with DG Enterprise
• Co-funding (25) for organisation of regional
  seminars
• Awareness creation on informal venture capital
• studying the feasibility of setting up a BAN
• Pool of experts
• 1999 41 seminars in 12 countries

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About EBAN, the European Association of Business
Angel Network
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EBAN MISSION

• Facilitate that all potential European Business
  Angels are aware of the concept, want to become
  Business Angels and have the help of Business
  Angel Network to find suitable enterprises to
  invest in.

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EBAN ACTIVITIES

• Awareness creation
• Conferences
• Workshops
• Publications
• Gathering information on BAs and BANs
• Promoting a favourable environment for Bas and
  BANs

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MEMBERS
Bizzbees
SITRA
Banow
Flanders BAN
DBAN
NBA
NEBIB
BAND
LINC Scotland
BAAR
NBAN
Vlerick BAN
BANA
BBL Banque
BusinessAngels.com
innovationsagentur
Club B2A
BOAS
Pastor Centre
Club valaisan
IBAN
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Thank you for your attention

• EUROPEAN BUSINESS ANGEL NETWORK, c/o EURADA
• Avenue des Arts 12, bte 7
• B- 1210 Brussels
• T. 32 (0)2 218 43 13
• F. 32 (0)2 218 45 83
• info_at_eban.org
• www.eban.org