1. Introduction
2. Funding Instruments
3. Public Funding
4. Support from Banks
5. Private Equity Investment
6. Venture Capital
2
1. Introduction
3
Challenges in Successful Technology Commercialisation
• Legal Frameworks as Obstacles
• Missing Awareness and Sensitiveness (Entrepreneurship Education for
Scientists)
• Missing Integrated Concepts
• Missing
Integration
of
Engineering
Competence
with
Business
Competence (Teamrekruiting)
• Missing Sales Forces
• R&D Results aren‘t Products
• High Risks in Early Stages (Gap of (Pre)-Seed Investment)
4
From Technology…
OnlineTicketTechnology
Encryption of information by algorithms
in a 2D-Barcode
Ticket ID
Key ID
Product
82349294
F5CC06F1
… to Product
Product
OnlineTicket
Technology
+
Ticketshop
+
Online payment
+
Online assistance
+
Statistics
+
Cash desk
+
Control center
+
User Manual
+
Helpdesk
Benut zhandbuch
OnlineT ick et
Version 2.0
Funding Requirements for Product Development
information and communication technologies
Partner
Customer
Sales and licensing of technology
Universities /
patent
commercialisation
agencies
public
research
facilities
medium-sized
enterprises
evaluation /
Screening/ choice
purchase
productdesign
marketing
sales
product
development
aftersalesservice
captive product
development
departments /
supplier
marketing and sales of technological products
software developer
public research facilities
7
?
f ( x) 
1
2
 exp(ix)dx
??
Dilemma of Early
Stage Financing
?
Inventor
??
?
Investor
8
2. Funding Instruments
9
Instruments for Financing
External Financing
Equity
Equity Financing
• Private Equity
• Venture Capital
• IPO
Internal Financing
Loans
MezzanineFinancing
Loan
Financing
• Loan
• Warranties
• Corporate Bonds
• Leasing
• Factoring
• Asset Backed
Securities
10
Phases of Financing
Stock Market
Equity Gap
Business Angels
Sales
Risk
Venture Capital
Family,
Fools, and Friends
Loan Financing
Company‘s Expansion
11
Angel Investor´s Motivation
Germany
Financial Motivation (IRR; Profits)
Expansion of Companies's Network
Support of young Entrepreneurs
Gaining Expertise in different Fields
Access to New Technologies
Support from Families and Friends
Other Targets
47%
17%
15%
7%
7%
6%
1%
100%
Austria
36%
15%
21%
12%
8%
3%
5%
100%
Switzerland Gesamt
41%
17%
17%
12%
7%
5%
1%
100%
44%
17%
16%
10%
7%
5%
1%
100%
12
The Hockey Stick Effect
Profits
Break Even
Losses
Early Stage Phase
Seed
Phase
Entrepreneur
Grants
Private Pers.
Business
Angels
Incubators
Later Stage
Phase
Expansion
Phase
Start-up
Phase
Business
Angels
Incubators
Strategic
Investors
VC/CVC
VC/CVC
Private Equity
Loans
Grants
Private Equity
Investment
Bank
3. Public Funding
14
Sources of Public Funding
 Free Consulting (Consulting Agencies)
 Supplemental Funding
 Equity/Shares
 Warranties
 Loans
15
Example: High Tech Start-up Funds
HighTech Start-up Funds
of KfW
Start-up
Coach
Coaching Contract
Shareholder‘s Agreement
Managementsupport
Risk Capital
16
Sources of Funding in Relation to Business Risk
High
Banks and venture
capital firms
Venture capital firms
Capital
required
Banks
Financing gap which may be
filled by the incubator
Low
Low
High
Business Risk
17
4. Support from Banks
18
The Role of the Banks
Market
Research
Institutes
Universities
R&D Institutes
Associations
Networks
Industry
Information
Capital
Market
Bank
Investors
Capital
Companies
19
Potential Support offered by Banks
•
Management Support and Consulting
•
Information flow to Assess HighTech Start-up
•
Local, Regional Networks
•
Co-operation within an Innovation Team
•
Organisation of and Participation in Fairs
•
Loans
But:
• Rating Requirements
20
5. Private Equity Investments
21
Private Equity
Equity
Private Equity
Eq. Mezzanine
Loan
Mezzanine
„Source of Equity Financing or
similar Instruments without
financing through the stock
market“
Loans
22
Private Equity
Institutional Investors
(Banks, Insurance Companies, Private Investors etc.)
Investment
Return
Private Equity-Company/ Funds
Investment +
Return +
Management Consulting
Fee
Portfolio Company
23
Private Equity
•
Private Equity Investors are Co-Owners of the Company: They share
Risks and Profits
•
They target Investments in Companies that are not listet in Stock
Markets
•
Private
Equity
Investments
Majority or Minority Participation
•
Participation may be active or in-active as well
target
generally
for
both:
24
Private Equity
•
Private Equity Investor targets a Return of 20% to 25%
•
Normally they do not look for Desinvestments
•
They use to take Management Responsability
•
They target an Exit after 4 – 7 Years
25
How Investors Think
Months
0
6
12
24
 Negotiation
First Meeting
IPR Situation
Team Recruiting
Basic Business Plan
Milestones
Financial Planning
Draft Contratcs
LOI and Assessment
Term Sheet
18
 Creation




Development
Progress in BP
Staffing
Enhancement of
Management
 Proof of Concept
 Exec Summary
 Business Plan
 Presentationen
 Iterationen
 Syndification
 LOI and Valuation
 Investment
 Regulations
26
Go for the Goal!
f ( x) 
1
2
 exp(ix)dx
!
Inventor
?
Investor
?
Thank
you
October 2011