accelerating value creation with venture capital · 2016-03-29 · * source: evca yearbook 1999...

Investors in Industry

Benchmarking Industry-Science Relationships October 16, 2000

Accelerating ValueCreation with

Venture Capital

Agenda

• How do we define Venture Capital?

• What are our Investment Criteria?

• What is our Investment Process?

• Who are we?


* Source: evca yearbook 1999

High-Tech27,8 %

"Non-Tech“72,2%

Venture Capital mainly invests in young innovative high-techcompanies in early stages of their development

Seed 1,2%Start-up 10,2%

Expansion 30,0%

Buy-out 51,1%

Replacement 7,5%

ActualVC market1.664 Mio. Euro

Investment focus in Europe 100 % = 14.461 Mio. Euro (1998)


• Short- and long-term loans as liabilities

• Investment companies of banks• Federal investment companies

• Independent VC-companies (as 3i)• Corporate VC of big industrial companies

• Kreditanstalt für Wiederaufbau (KfW)• Deutsche Ausgleichsbank(DtA)

• Private persons (Business Angels)• Direct investments of industrial companies

Banks and financial institutions

Capital investment companies

Venture Capitalcompanies

Government support programs

Other investors


Venture Capital is an essential financing possibility foryoung innovative companies

Classic financing Venture Capitalforms

Targeted established company young, innovativecompany type high-tech company

Industrial and technicalknow-how of could mustinvestment company

Support low high

Aim of interest, dividends, increase of company‘sinvestment company increase of value value

Participation „unlimited“ four to eight years

Number of financing one severalsteps

Valuation traditional future- and success-oriented

Venture Capital differs from classic financing formssignificantly


Financing

• providing equity• preparing the financing plan

including other financial sources(public resources, banks,investment companies)

• preparing further financing rounds• selecting and acquiring

international co-investors• syndicate leader / lead-investor

Qualified management support

• Contract structure/shareholder‘sstructure/investment plans

• complete management• Company strategy and development

plan• Marketing and sales strategy• Internationalisation• identify and select partners• Going public and trade sale

Venture Capital offers active management support based ondetailed product and business know how and experiences incompany build-up

+


Companies could organise their growth successfully withventure capital

Venture Capital financed companies ...

• with a turnover development twice or three times bigger than other companies, expandfar stronger

• have a better return despite higher expenditures for investment and R & D

• have a higher return on turnover than other German companies

• have a very good equity financing with 27% on average(in comparison: average of German companies - 17%)

• employ staff above average

Source: Coopers & Lybrand, BVK (1998)


Agenda




• Who are we?


There are several decisive criteria for the assessment of a business plan ...

No No investment or revision of business planYes

No

No

No

No

No

No

No investment orcompleting management team

No investment

No investment

Yes

Yes

Yes

Yes

Yes

Yes

Is there a qualified business concept ?

Is there a competitive product/technology advantagethat can be expanded ?

Is there an attractive, fast growing market ?

Are there a convincing strategy and operation planning ?

Is the qualified management able to realise the businessplan and to take on own risks ?

Is a ROI of 40 - 100 % p.a. for the investors realisable due to the plan AND investment conditions ?

Is an exit possible later?

Investment

No investment orrevision of business plan




For a successful investment a number of factors are important

• Internationalisation strategy• Partnerships• Time-to-market• Aiming at international market

leadership, e.g. acquisition ofother technologies and shares

• „Option plan“ for staff

• Qualified business plan• Sufficient financing• Potential of management

teams• Right calculation of

marketing and sales costs

• Defined added-value• Measurable

competitiveadvantage

• New/fast growingmarket

Keyfactors:

Phase:

Business idea/ technology

Product/ services

Product launch and marketing


Agenda




• Who are we?


A structured process is applied to evaluate investment projects

• Businessplan review

• On-site visit• Definition of

timing anddeliverables

• Firstfeedback

• Letter of intent• Negotiation of

financial andcontractualterms andconditions

Financial & legal due diligence

Investment decision and

contract

Subscription and financial

transactionPre-selection Due diligence Term-sheet

• Product,market andmanagementassessment

• Initialreferences anddata collection

• Project review

• Financialand legalreview

• Projectreview withreferencesand marketexperts

• Formalproceduresaccording toapplicablelaw

• Financialtransaction

• Formalapproval bythe fund’ssupervisoryboard

• Completing allnecessarycontracts

• Applying forgovernmentprograms

Close teamwork between investor and company management

Time required between 5 to 16 weeks


u Evaluation of business plan

u Re-orientation of strategy

u Financing

u Selection of American co-investors

u New legal structure (GmbH, Inc., AG)

u Stock option concept u France Telecom as co-investor

u Deutsche Telekom as co-investor

u Bridge-financing

u Bank syndicate

u IPOu IPO - concept

u Bridge-financing

u Support of the board

u Support of management selectionu “Sales support“

u Support in legal structure and negotiationsu Coaching of organisational growth

INTERSHOP: Support-components

1996 1997 1998


Agenda




• Who are we?



3i Deutschland

• Total of 8 offices with 100 employees, 65 of whom are investment specialists

• Teams of Technology and Transaction experts in each office

• Currently approx. 300 companies in the portfolio of 3i Germany

• Successful IPO’s, e.g. MobilCom, INTERSHOP, BROKAT, ACG, Morphosys, Openshop, ISRA

• Acquisition of Technologieholding in February 2000– Strengthening of 3i market position and know-how in the area of early-stage financing– Expertise of Technologieholding in globalisation of portfolio companies

• 3i offers Venture Capital for all stages, from Seed Capital to IPO

3i Group plc

Product Venture capital for start-up companies and providing fundsfor growing, independent medium-sized businesses,management buy-outs and management buy-ins.

Year of foundation 1945

Offices Headquarter in London36 offices in Europe (18 of them in Great Britain)2 offices in Asia: Singapore and Tokyo2 offices in the USA: Boston and Palo Alto

Shareholders A large number of institutional investors and smallshareholdersListed on the London Stock Exchange since 1994

Investments Since 1945 in over 13,400 companiestotal investment volume about DM 38 billion


3i Philosophy

• Europe’s leading venture capital company

• Market leadership not only in relation to the number of investments, butalso with respect to

– Innovation - Customer service– Marketing - Fast decision-making– Professionalism and competence - Supply capability

• Flexible exit policy• “Involved investor” – partnership instead of control• Independent of banks• Trust in management as primary focus• Each case is different – individual customer-tailored solutions


The 3i service

• Venture Capital for new, fast-growing companies, typically in thetechnology sector

• Growth capital for established, but growing medium-sized companies(Mittelstand)

• Private Equity for restructuring and succession solutions

– Management buy-out (MBO)– Management buy-in (MBI)

• Pre-IPO financing


6080

51463732292818

7

121

276

9 43

546

97 112 132 151236 231

292379

1100

0

50

100

150

200

250

300

350

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000010020030040050060070080090010001100120013001400150016001700180019002000

Number of companies

Portfolio costs in DM million

each as at 31.03.

* Investments of 3i Group plc including co-investment funds.

The portfolio in German-speaking countries *


in DM million

MBOs 14%

MBIs8%

Growth finance18%

Young technology companies

(emerging business)56%

Other (incl. BIMBO)4%

Status: 31.03.00* Investments of 3i Group plc and co-investment funds1 Basis: number of companies

The portfolio in German-speaking countries *broken down according to

up to 50 million87%

50-100 million

5%

100 million or more8%

Product categories1 Sales volumes in DM1


Rhineland- Palatinate, Saarland

5%

Hesse14%

NRW19%

Baden-Württemberg11%

Bavaria24%

Others3%

"Neue Länder" **5%

Hamburg7%

Foreign Countries7%

Berlin11%

Status: 31.03.00* Investments of 3i Group plc and co-investment funds1 Basis: number of companies

The portfolio in German-speaking countries *broken down according to

Communication/ Networking

7%

Telecoms/ IT / Services

28%

Electronics and other technologies

11%

Non-Technology35%

Life Sciences/Health

Care17%

Software/ Computer services

22%

Sector distribution1 Regional distribution1


** Saxony, Saxony-Anhalt, Turingia, Brandenburg, Mecklenburg-Vorpommern

Stock market flotations


To date almost 1,000 3i-backed companies have listed on stock exchanges in Europe and theUS. Flotations in the German-speaking countries include:

Category Example Sector Stock market Stock marketflotation segment

1. Growth MobilCom Telecommunikations 1997 Neuer Marktcapital 1 & 1 Marketing Services 1998 Neuer Marktyoung INTERSHOP eCommerce 1998 Neuer Markttechnology BROKAT Online-Security 1998 Neuer Marktcompanies i:FAO Internet and travel 1999 Neuer Markt

Morphosys Biotechnology 1999 Neuer MarktBinTec Communication products 1999 Neuer MarktACG ChipCards 1999 Neuer MarktMicronas Chips and Microsensors 1999 SWX/NMRicardo.de Online-auction house 1999 Neuer MarktAdcon Telemetry 1999 Neuer MarktWaveLight Medical laser systems 1999 Neuer MarktPOET Database systems 1999 Neuer MarktDCI eCommerce 2000 Neuer MarktOpenShop Internet Shopping 2000 Neuer MarktInternolix eCommerce 2000 Neuer Markt



1. Growth Kontron Computer hardware 2000 Neuer Marktcapital Actelion Biotechnology 2000 Neuer Marktyoung ISRA Automation Software 2000 Neuer Markttechnology Girindus Scale-up Production 2000 Neuer Marktcompanies Alphaform Rapid prototyping 2000 Neuer Markt

microlog logistics Logistic services 2000 Neuer Markt

Curasan RegenerativeBiomedicine 2000 Neuer Markt

CAA SW for in-carcomputing systems 2000 Neuer Markt

GeneScan Biochips 2000 Neuer MarkteJay Music software 2000 Neuer Markt





2. Growth Teles Telecommunikation 1998 Neuer Marktcapital Gretag Image processingestablished systems 1998 Neuer Marktcompanies

3. MBO/MBI Schlott Gravure 1997 AH/SMAXWesumat Washing machines 1997 AH/SMAXAS Création Wallpaper manufacturer 1998 AH/SMAXAC Service IT services 1998 Neuer MarktLoewe Consumer elektronics/TV 1999 AH/SMAX

4. Preparation Markant Food retail chain 1994 Geregelterfor Südwest Marktstock market CPU Bank software 1999 Neuer Marktflotation Miracle Enterprise Rosource 1999 SWX

PlanningAbit Software & Services 2000 Neuer Marktweb.de Internetportal 2000 Neuer Markt

Office MünchenBavaria, AustriaMaximilianstraße 3580539 MünchenTel. 089/24 23 77-0, Fax -77Contact: Dr. Sebastian Kern

Office ZurichSwitzerlandOthmarstraße 8CH-8008 ZurichTel. 0041 1 250 44 -00, Fax-10Contact: Markus Reich

3i Deutschland Gesellschaft für Industriebeteiligungen(65 Professionals, 35 Support Staff)


Office DüsseldorfNorth Rhine-WestphaliaBurggrafenstraße 540545 DüsseldorfTel. 02 11/9 54 44-0, Fax -49Contact: Ulrich Eilers

Office LeipzigSaxony, Saxony-Anhalt, ThuringiaNikolaistr. 5504109 LeipzigTel. 0341/98 44 5-0, Fax -99Contact: Stefan Friese

Office FrankfurtCentral GermanyBockenheimer Landstraße 5560325 FrankfurtTel. 069/71 00 00-20, Fax -39Contact: Peter Cullom, Stephan Helmstädter

Office HamburgNorth GermanyNeuer Wall 7120354 HamburgTel. 040/37 47 67-0, Fax -67Contact: Robert Stein

Office BerlinBerlin, Brandenburg, Mecklenburg-VorpommernFriedrichstr. 6010117 Berlin030/76 71 53-0, Fax -19Contact: Stefan Friese

Office StuttgartBaden-WürttembergKronprinzstraße 1170173 Stuttgart07 11/22 29 22-0, Fax -29Contact: Andreas Kochhäuser

Office MunichBavaria, AustriaLenbachplatz 380333 MunichTel. 089/548 62-0, Fax -299Contact: Rudolf Franz

accelerating value creation with venture capital · 2016-03-29 · * source: evca yearbook 1999...

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