Self evaluation of Entrepreneurs essential preparation before elevator pitch

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1
“ISTANBUL FORUM”
Early Stage Funding in the EU, Lessons to Turkey
Session 2
“Self-evaluation of Entrepreneurs: essential
preparation before elevator pitch”
Paolo ANSELMO
2
IBAN: the network
Business Angels,
Venture Capital,
and Banks
National and local
Stakeholders
IBAN
Universities,
Research
Centres
Thank
you
and technology
Companies
for
Professional
Intermediaries
listening!
, Business Support
Organizations
3
The players: 3 national networks – 11 local groups
BAN Brescia
BAN Club Milano Centro
IBAN
for the whole Italian territory
BAN Friuli V.G.
BAN Liguria
BAN Bologna
BAN Toscana Sud
BAN Puglia
BAN Umbria
BAN Lazio
BAN Sardegna
Life Science BAN
for the whole Italian territory
BAN Campania
ICT BAN
for the whole Italian territory
4
IBAN – overview of 2006 results





Angels investor involved: 300
Business applications evaluated: 569
Successful deals: 70
Average amount invested: 167.500 Euro
Total invested amount: 11,6 M Euro
5
Foreword
• It’s difficult for start-ups to access finance
• All money is not the same
• There is an asymmetry of information between
entrepreneurs and investors
• The equity gap require an investment readiness
methodology
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Entrepreneurs & investors: the equity gap
The entrepreneur
A great IDEA ?
The investor
A business PROJECT!!
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The equity gap

Entrepreneurs are generally faced with several types of
issues when trying to raise equity:
a) cultural reluctance when it comes to opening their companies to
b)
c)
d)
e)
outsiders (shareholders and managers)
difficulties in presenting themselves or their business plan
project investment readiness: certain credit and venture capital
tools are not adapted to the needs of all businesses at all stages of
their development
difficulties in identifying the administrative & governance
requirements of venture capital and credit providers
+ formal venture capital investing in higher and higher amounts,
not enough equity is dedicated to seed or early stage
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Is the company ready?
Business angel financing is one of the solution to close the gap
Business plan?
Stage of development of the company
Type of investment?
Valuation?
Management team ready ?
Has the management team enough time and energy to raise funds
Is the team shaped to talk to the most appropriate investors?
Does the company know where to go? And which method of financing is
the right choice?
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IBAN – the investment readiness methodology
• Behaviours rules concerning informal investments (EBAN tool kit, informal
investment guide, awareness folder)
• Business Plan Guide in cooperation with PriceWaterhouseCooper
• “Light up your idea” 2001 & 2002 SMAU ICT International Exhibition
EASY www.earlystageinvestors.org
• Early Stage Investors Actions for Growth of Innovating
Businesses
Ready for Equity www.eban.org/ready_for_equity.php
• Development and testing of training curriculums
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The EASY best practice
The Work Package 2 aims at developing a transnational operational model
supporting improved investment awareness and investment readiness among early
stage KBBs.
On the basis of the best practices collected, IBAN and Meta Group have developed
a toolkit to support the investment readiness process.
It revolves around two main aspects:
the investment readiness self-evaluation tool
A tool (software) has been developed to assess potential weaknesses of KBBs’
business plans.
the Investment readiness workshop
The workshop is intended to prepare KBBs in effectively presenting their business
idea to investors during the international investment meetings, improving both
their presentation skills and the presentation contents.
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The I²RSAT tool
The I²RSAT Software includes both quantitative and qualitative information.
I²RSAT is divided into four sections (company evaluation process, financial
matters, management team and market research), with 58 questions covering key
aspects of an international business activity and related to the information
requirements of investors:
Section I: Company evaluation: This section investigates and measures the company’s
understanding of effects related to any “informal investment” into the company. It also explores key
areas of interest to investors such as business plan, net worth and company valuation, investor exit
plan and returns;
Section II: Financial Matters: This section evaluates the level of understanding and preparation for
investment including: previous financing, dilution, use of funds, investor protection;
Section III: Management Team: This section measures the skills and experience of the management
team including: previous entrepreneurial experience, financial commitment of the management,
existing management/employee share or equity ownership;
Section IV: Market research: This section measures the company’s attitude to investigate the market
and to monitor competitors;
Summary Section This section summarises both the score achieved in each section and the total
score. This is the starting point of the scoring, weighting and reporting system implemented according
to the stage of development of the business and the company’s financial needs (euros Required).
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The One Day Workshop
The second step of the investment readiness methodology consists
of a one day training. It is a workshop for entrepreneurs or would be
entrepreneurs with the aim of tailoring their presentation to
investors requirements, improving the efficacy of the international
communications aspects.
Workshop has the objective of enhancing the entrepreneurs’
presentation capabilities.
The format involve both companies both angels.
The main issue of the workshop include:
A pitch presentation session. The visiting SMEs made a ten-minute presentation
presenting their business idea to investors
A brainstorming activities with the investors focused on:
• How to Ensure that Your Business Plan Will Attract International Investments
• Valuation of the Business
• Structuring the Investment Deal: Legal Considerations for Early Stage SMEs
• Term Sheets and Due Diligence - Protecting your IP
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What an elevator pitch need to be successful?
•
an executive summary
 the idea (activities and outputs), the size, the investment required, the location
•
a knowledge market with focused targets
 where we are - where we want to stand in 3 years
•
a product or a service description
•
the people back-round
•
the required finance package
•
the assets needed
•
the company strategy: how will you make money
BUT
A good elevator pitch don’t necessarily guarantee an investment!
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“Thank You for listening”
Paolo ANSELMO
e-mail: [email protected]
www.iban.it
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