finance for innovative smes

This project is funded by

the European Union

Integrated Innovation Support Programme

Finance for Innovative SMEs

Robert Sheffrin – Finance Expert IISP

2nd November 2012


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“When the wind blows, some people build walls; others build windmills”

Chinese proverb

Integrated Innovation Support Programme (IISP)


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Topics

• Venture capital - introduction• Sources of funding for innovative SMEs• Examples of venture capital and angel backed

companies• Investment readiness



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Private Equity & Venture Capital

• Private Equity is the provision of long term, equity (share) capital to non-quoted companies with high growth potential

• Private Equity is for PRIVATE companies

• Venture Capital is a type of Private Equity focussed on start-up, early stage companies and emerging growth companies



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Business Angel


“ ..an individual, acting alone or in a formal or informal syndicate, who invests their own money directly in an unquoted business where there is no family connection.”

Professors C Mason & J Harrison


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Bank vs Venture Capital


Bank Debt• Secured (collateral)

• Capital & interest repayments

• Risk of withdrawal

• Monitoring relationship

• REPAYMENT – regardless of profitability

Venture Capital

• Risk funding (equity capital)

• Return only on success

• Committed

• Partner relationship - support

• GROWTH – no repayment until sufficient profit and value


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What are the funding options for innovative SMEs?

Stage of development: Seed? Start-up? Early growth? Sustained growth?



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Risk Finance Ladder



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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 2005/06 - £1m. 3 VC funds & 6 business angels 2006 - £3.85m AIM (London junior stock market)

www.plantimpact.com

http://www.plantimpact.com/


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Example – Service Sector start-up


Activity – dental recruitment Former dental nurse Rejected by banks & local Micro-Finance Fund Received £35k investment from one angel Failed Learned from failure - started again New angel investor


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What an investor looks for


High growth prospects 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


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Checklist - is venture capital for you?


Need funding for growth Good growth prospects Viable product or service Management ability Willing to sell shares Willing to work with others Exit route for investor


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Where’s the money?


Some now - more in the future…

2012:Serbian Business Angels Network www.sban.eu

– next meeting 15th - 16th NovemberBalkan Venture Forum www.balkanventureforum.org

– 22nd - 23rd November11 Accelerator Venture Fund – www.eleven.bg

2013/14Western Balkan Enterprise Development and Innovation Facility (WB EDIF) – Innovation, Expansion & Loan FundsOther VC Funds - >$200m being raised for region

http://www.sban.eu/

http://www.balkanventureforum.org/

http://www.eleven.bg/


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Investment Readiness


Knowing your potential funding market Having your “tool kit” ready for investors. Knowing your investors Knowing when to approach the market Understanding the investment process


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IISP Investment Readiness Training


• Training for 100 SMEs• Coaching for 20 SMEs • Application and assessment from January 2013• Starts February 2013

For pre-registration, go to www.iisp.rs and click on “investment readiness” or email [email protected]

http://www.iisp.rs/

mailto:[email protected]


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IISP Contact info.


Tel: 011 362 0923Email: [email protected] Web: www.iisp.rs

Robert Sheffrin - Finance Expert Aleksandar Vesic – Innovation Funding Expert

mailto:[email protected]

http://www.iisp.rs/

finance for innovative smes

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