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Integrated Innovation Support Programme

Integrated Innovation Support Programme. Venture Capital – Challenges & Support Barriers and Solutions Robert Sheffrin IISP Finance Expert & SPEA Board Member 30th September 2013. “What is the problem”?. Many good SMEs in Serbia …So why can’t most access funding?

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Integrated Innovation Support Programme

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  1. Integrated Innovation Support Programme Venture Capital – Challenges & Support Barriers and Solutions Robert Sheffrin IISP Finance Expert & SPEA Board Member 30th September 2013

  2. “What is the problem”? • Many good SMEs in Serbia …So why can’t most access funding? • Bank funding not available to all • Bank funding not suitable for all • Funding gap • Most don’t know how to access funding Integrated Innovation Support Programme (IISP)

  3. Integrated Innovation Support Programme EU Project: • Development of innovation support services • Development of new financial instruments (venture capital) • supply of venture capital • demand for venture capital

  4. Private Equity & Venture Capital • Private Equity is the provision of long term, equity (share) capitalto privatecompanies with high growth potential • Venture Capitalis a type of Private Equity focussed on start-up, early stage companies and emerging growth companies Integrated Innovation Support Programme (IISP)

  5. Companies that have received VC funding

  6. Example – Biotech start-up • Activity – crop nutrition & protection products • 2003 – start up funding. Owner + business angel • 2004 - £50k seedcorn finance (venture capital fund) • 2005 – 6 patents – intellectual property rights • 2005/06 - £1m. VC funds & business angels • 2006 - £3.85m AIM (London junior stock market) www.plantimpact.com Integrated Innovation Support Programme (IISP)

  7. Bank vs Venture Capital Venture Capital • Risk funding (equity capital) • Return only on success • Committed • Partner relationship - support • GROWTH – no repayment until sufficient profit and value Bank Debt • Collateral • Capital & interest repayments • Risk of withdrawal • Monitoring relationship • REPAYMENT – regardless of profitability Integrated Innovation Support Programme (IISP)

  8. Serbia - Issues/Problems • International - perception not good • Demand for investment – underdeveloped entrepreneurial culture • Supply of investment – limited access to finance / underdeveloped capital markets / limited intellectual property protection

  9. Solutions – stimulating growth Supply • Legislation for venture capital funds • Encourage investment by Serbian institutions into venture capital funds • Improve capital markets – facilitate exits from investments • Tax regime – incentivise entrepreneurs & investors • Fiscal consolidation & further reform of para-fiscal charges Demand • Ease barriers to technology transfer • Make SMEs investment ready - entrepreneurial education & much more!

  10. What an investor looks for • High growthpotential • An ambitious management team that can achieve the growth • Product / service that has a good market and the ability to reach that market • Competitive edge / unique selling point • Willingness to share ownership • Exit route Integrated Innovation Support Programme (IISP)

  11. 20 things investors like to see • Ability to Compete • A clear strategic plan • Market size (local and international) • Competitors and differentiation • Barriers to entry • Future products /services potential • Relevant technology • How you beat competing technology • Intellectual property you own • Return on Investment • Realistic funding requirements • Assumptions used • Financial plans • How you are currently financed • An investable business model • A match between the investors’ skills and the business opportunity Ability to Implement • Management and visionary leadership • An impressive management team and board • Credible professional advisors • Teamwork across the company • History of the business to date • Compatibility – can you work with them? Integrated Innovation Support Programme (IISP)

  12. Key dimensions of investment readiness for Serbian SMEs • Equity aversion – why SMEs are reluctant to work with investors • Investability – what investors see as good business models • Presentational failings – how SMEs can improve their ‘pitching’ and presentations of their investment opportunities Integrated Innovation Support Programme (IISP)

  13. Investment Readiness Training for Serbian SMEs: • Raise awareness of investment opportunities • Develop understanding of needs of potential investors • Make SMEs attractive to investors • Formulate business investment propositions • Present SME ‘pitches’ to win the investment • Prepare for successful negotiations • Materials developed - training in progress • E-learning platform by December 2013 Integrated Innovation Support Programme (IISP)

  14. Thank you for listening…. Robert Sheffrin Tel: + 381 (0)11 362 0923 Email: robert.sheffrin@iisp.rs Web: www.iisp.rs Integrated Innovation Support Programme (IISP)

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