financing and supporting innovation sidney chameh [email protected] 2007
TRANSCRIPT
Financing and Supporting Financing and Supporting InnovationInnovation
Sidney ChamehSidney Chameh
[email protected]@dgf.com.br May May 20072007
AgendaAgenda
I. Innovation and Economic Development
II. Innovation Stages and Financing
Sources
III. ABVCAP
IV. DGF – Decisão Gestão de Fundos
AgendaAgenda
I. Innovation and Economic Development
II. Innovation Stages and Financing
Sources
III. ABVCAP
IV. DGF – Decisão Gestão de Fundos
What is innovation?What is innovation?
New products and services
New methods of production,
supply and distribution
Changes in management and work
organization
Creation of new patterns of use or
consumption
What is the importance What is the importance innovation to economic innovation to economic
development?development?
Improve knowledge and
competitiveness
Innovation can produce new
technologies that increase the
productivity;
Higher productivity, higher
economic growth;
AgendaAgenda
I. Innovation and Economic Development
II. Innovation Stages and Financing
Sources
III. ABVCAP
IV. DGF – Decisão Gestão de Fundos
Innovation StagesInnovation Stages
Research Stage•At this stage, the R&D activities are the major
concerns of the project in order to complete the prototype/application/service.
•Finance is used to research, assess and develop an initial concept before a business has reached the start-up phase.
•Funding will come, usually in the form of non-reimbursable grants, basically from the Public Sector.
Source: European Commission
Innovation StagesInnovation Stages
Development Stage• As the project reaches the stage where a
prototype or pilot plant can be built to demonstrate its feasibility, the situation begins to change.
•Relevant Sources of Finance:•Public Sector•Corporate: industrial/commercial companies.•Seed Capital: venture funds prepared to make
pre-start-up investments in the technology, followed by further investment if/when the project results in a company formation.
•Venture Capital: provides financial support to a company in the form of a participation in its equity or an option to convert a loan to equity. The relatively high risks are compensated by the possibility of high returns. It has a strong risk-bearing character, focusing on industries with high growth potential.Source: European
Commission
Innovation StagesInnovation Stages
Start up Stage• At this stage, a new company is created or
exists a pre start-up commercial project. •In some respects this remains the most difficult
stage to finance, though much depends on the size and type of project involved.
•Relevant Sources of Finance:•Founders and Entrepreneurs: normally put all
the finance that they are able to afford, as well as non-financial contributions, e.g., little or no salary, working from home (no rent);
•Friends and Family: a "helping hand" rather than a serious investment;
•Business Angels: may be able to provide the start-up equity and "hands on" advice and help to the new company.
•Venture and Seed Capital Source: European Commission
Innovation StagesInnovation Stages
Exploitation Stage•At this stage company is in full commercial
operation.•Banks and all kinds of venture funds can be
interested. •It is also a stage at which the management
might wish to consider a stock market flotation as a mean of raising additional capital.
•The capital may be used to finance increased production capacity, market or product development and/or to provide additional working capital.
•Relevant Sources of Finance:•Venture Capital•Private Equity•Banks•Stock market: companies can gain access to a
broad international base of institutional and retail investors.
Source: European Commission
Very High High Moderate LowRisk/Return
Fin
an
cin
g S
ou
rces
(Deb
t an
d E
qu
ity)
Micro Small Medium Big Size of
Company
Promotion Agencies
Commercial Banks
Developing Banks
Venture Capital e Private Equity
Capital Markets
Financing Sources by Financing Sources by Company SizeCompany Size
M
ark
ets
/
Investm
en
t V
eh
icle
sLong Term; < liquidity Short Term; > liquidity
Long Term Investment Vehicles and Corporate Stage of Developing
PIPE
Mezzanine
Private EquityStocks,
Bonds,
Derivatives
Seed Capital
VentureCapital
Corporate Stage Start-up Developing Consolid.
Liquid and Competitive Markets
Investment StagesInvestment Stages
AgendaAgenda
I. Innovation and Economic Development
II. Innovation Stages and Financing
Sources
III. ABVCAP
IV. DGF – Decisão Gestão de Fundos
ABVCAPABVCAP
ABVCAP is a non-profit institution working for the
development, stimulation and promotion of long-term
investments in the Brazilian economy, through
investment vehicles which invest in companies,
company projects and the infra-structure in Brazil.
ABVCAP acts a representative institution in Brazil for
the private equity and venture capital sector. ABVCAP
consists of over 100 different “Members”, participants
in the investment community with institutional or
individual interest, in either business or services, in the
development of market activity in long-term
investments in the country – through the model of
venture capital and its variations.
Associação Brasileira de Private Associação Brasileira de Private Equity &Equity &
Venture CapitalVenture Capital
ABVCAPAvenida Rio Branco, 123, sl. 806
20040-005 Rio de Janeiro RJ Brasil+55 21 3970 2432
Contact informationContact information
ABVCAPABVCAP
AgendaAgenda
I. Innovation and Economic Development
II. Innovation Stages and Financing
Sources
III. ABVCAP
IV. DGF – Decisão Gestão de Fundos
May 2007May 2007
Institutional PresentationInstitutional Presentation
DGF DGF Decisão Gestão de Gestão de FundosFundosDGF - Decisão Gestão de Fundos – founded in 2001 with the purpose of
managing Venture Capital and Private Equity funds, generating returns to
investors over the average of the comparable market.
DGF is authorized by Comissão de Valores Mobiliários (CVM) to manage
investments funds in Brazil and is a leading&founding member of ABVCAP
(Brazilian Association of Private Equity and Venture Capital). and CEPE (Private
Equity and Venture Capital Studies Center) from Fundação Getulio Vargas.
www.dgf.com.br Fone/Fax: (55) (11) 3884.5827
Ethics
Satisfaction
LoyaltyDiscipline
Professionalism
Determination
ValuesValues
DGF focus its action on managing Investment Funds:
Origination, research and selection of projects Projects that fits into the
investment policy of their funds;
Market studies and companies analysis Development of studies which are
going to be analyzed by the Investment Committee;
Constant Monitoring Studies and analysis update of the investments by the
fund;
Corporate Governance Continuous action in the Corporate Governance of
the invested companies;
Divestiture - Continuous research of divestiture opportunities.
FocusFocus
PartnersSidney Chameh
Eduardo PamplonaFrederico Greve
Financial dep’t.Paulo FerreiraCristiane Fiori
Administrative dep't. Rosana Buoso
CEO/ Funds´ChampionSidney Chameh
REIF FIPAC
Analysis teamDaniel Busquets, Luiz Henrique Spinardi, Thiago Pongelli and others (to be hired)
Investment Officers Frederico Greve
Investment Officers Frederico Greve,and Celso Nunes
Organizational StructureOrganizational Structure
Sidney Chameh Sidney is founding partner of DGF, and manages Private Equity funds since 1998. The first fund managed totaled $40mm. Graduated in Business Administration with an MBA in Finance from McGill University (Montreal - Canada) and FGV/SP, Mr. Chameh has more than 22 years of practice in capital markets as investment analyst and prtfolio manager. Has worked for Banco Sudameris, Emerging Markets Company; Banco Multiplic, Banco Crefisul and FAR.
Eduardo PamplonaEduardo, partner of DGF since 2003, is graduated in Economics from UFRJ and hold an MBA from University of Michigan. With more than 15 years of professional experience. Eduardo was a vice-president of GE Capital, being responsible for represent GE as board member in a fund with some relevant investments such as TeleNova, LatinTech, Fotoptica, DASA and Atrium. Pamplona has previously worked for Mckinsey&Co and Calyon.
Frederico GreveFrederico has been working in private equity for close to 10 years. He started his career working in tech start-ups and soon went on to to work as a private equity analyst at Banco Fator, a leader in equity fund management in Brazil. Later he joined local private equity group BPE Investimentos, which managed local and international funds in excess o $100 million. Frederico has been a partner at DGF since late 2003.Celso NunesGraduated in Computer Engineering from ITA (Aeronautic Institute of Technology) with an MBA from UCLA. Prior to his MBA he worked as manager at Oracle for more than 5 years. As finishing his MBA Mr. Nunes was invited to be an associate at Angel Led Capital a Venture Capital firm from California. Returning to Brazil he worked as a consultant for Pyxis Management Consulting and MGM Partners, prior to join DGF in 2006.
Key PersonnelKey Personnel
Funds ManagementFunds Management
Funds under Funds under ManagementManagement
Corporate Governance / Corporate Governance / Strategic consultant to Strategic consultant to
invested companiesinvested companies
Partnerships Partnerships and and
AssociationsAssociations
REIF FundREIF Fund
50,0%
18,2%
6,8%
25,0%
REIF Limited REIF Limited Partners:Partners:
The Fund started
operations in 2002
with committed
capital of USD 10
million. The
investment period
ended in late 2005
with 12 investments
Portfolio CompaniesPortfolio Companies
All current portfolio companies of REIF Investment Fund.
New Venture - FIPACNew Venture - FIPAC
Description:
Investment in equity and convertibles of companies that are able to consolidate a niche sectors, or able to be consolidated by larger players (roll-up strategy). Fill a gap in Brazilin private equity offering; Multi-sector but 100,0% of the portfolio in IT, Pharmaceuticals and Services.
Fund StructureFund Structure
Institutional Investors
IDB/MIF, BNDES, FINEP and Petros
FIPAC
USD 50 MM
Multi-Sector
IT, Pharmaceutical, Services
$ Convertible Debentures
$ Equity EXIT IPO;
Sell to a strategic buyer
“equity to debt”
Investments Committee:
7 votes, one vote with at least 20,0% of committed capital + 2 representatives of general partners and 1 independent