bait md infodev

16.04.13 BAIT MD Draft Strategy v1 April 2013 1

BAIT MDBusiness Angels IT in Moldova

infoDev experiences in Eastern Europe and Central AsiaMoldova ICT Summit 2013, ICT4Competitiveness Track- Access to Finance Session Chişinău, April 2013

infoDev global network

Supporting business angel networks in various countries, including Belarus, Vietnam, Kazakhstan, Kenya, Jordan and others


BAIT MDDRAFT STRATEGY FOR DISCUSSION

DEFINITIONS

Business Angel:

A knowledgeable private individual, usually with business experience, who

directly invests part of his or her personal assets in new and growing unquoted

businesses. Besides capital, business angels provide business management

experience for the entrepreneur.European Commission Enterprise and Industry, Glossary

http://ec.europa.eu/enterprise/policies/finance/glossary/index_en.htm#

Angel capital:

Fills the gap in start-up financing between seed funding (“friends and

family”/FFF) and formal venture capital.

http://ec.europa.eu/enterprise/policies/finance/glossary/index_en.htm



GLOBAL GOOD PRACTICE

USA 2010:

61,900 ventures received angel funding; 265,400 business angels; 370.000 new jobs

created; About half of the angel exits were at a profit and annual returns for angel’s

exits (mergers and acquisitions and IPOs) were between 24% and 36%; share of ICT

sector around 21% (University of New Hampshire 2011)

Europe 27 2010:

Est. 30,000 business angels – France and UK with around 4.500 each, Germany 1,000

– 1,400, Poland 200;

Overall investment value 220 – 660 Mio EUR; ICT between 26 (SE) and 100% (PL)

(CSES/EBAN 2012)




Eastern Europe and Central Asia:

Russian Federation: 2 national angel association, emerging local/regional

networks and association (supported by the Government), since 2010

Belarus: 1 angel association (BAVIN), no local networks, since 2011

Serbia: 1 national angel network (SBAN)

Initiative in Kazakhstan started 2012

EUPoland: Business angel networks (BANs) were mostly financed by the Operational Programme (OP) Innovative Economy, 10 regional BANs (2010, EBAN)




Case studies



POLICY RECOMMENDATIONS

General policy recommendations drawing from lessons learned in CIS countries

1. Awareness raising: At current stage of development of a business angel culture in Moldova, Government and donor role should be helping raising awareness as well as building up capacity on side of potential business angels (investor readiness), early stage entrepreneurs (investment readiness), and innovation ‐development promoters including Government agencies.

2. Private sector involvement: For successfully initiating local angel networks, Moldovan (local and national) business champions taking on the role of local angel network leaders are essential.

3. Co-investment fund: A co investment fund (partly) financed by the Government ‐is considered to be a highly effective instrument for promoting angel investment for technology entrepreneurship.

Recommendations are based on infoDev’s A2F Access to Finance Program findings along with international good practice





4. Incentives: The Government should research and assess further opportunities for incentives such as tax incentives and co-investment funds.

5. Legal framework: The Government should furthermore address problems with regard to company law that may inhibit easy investing.

6. Networking platform: The creation of a platform connecting different players of the innovation ecosystem involved in early-stage technology enterprise financing is recommended. Key tasks of this platform include the stimulation of collaboration and information exchange among players as well as the joint preparation of policy recommendations.






7. Association: A National angel network association, to which local angel networks will be members, can provide connections between angel networks in Moldova on one hand and links to international groups and associations on the other hand. It can also help setting standards to be adopted by local angel networks. Yet, this should emerge from existing angel networks (bottom-up), not vice versa.

8. Investment-readiness of R&D sector: Business orientation of the R&D sector needs to be strengthened in order to reduce costs and investment needs for R&D commercialization.

9. Internationalization of angels: Domestic market constraints such as limited market size can be overcome by stimulating transnational activities of business angels and entrepreneurs. International links can also foster knowledge transfer to MD.




Further findings

Romania (UBIT Software incubator Timisoara): Links to business partners, contracts, mentoring more important than “cash”

Belarus (BAVIN): Create win-win situation with partners and develop trust!




Conclusions

• Angels are out there, and talents are out there!

• Bottom-up, not Government-driven.

• Champion!

• It takes time, and trust.

• Win-win situations with partners are needed.

• International links are crucial for capacity-building.

• ICT is a pioneer, and mentoring is as important as investment.

Thank you very much!

Stefan Schandera, [email protected] www.infoDev.org Recommendations are based on infoDev’s A2F Access to Finance Program findings along with international good practice

mailto:[email protected]

http://www.infoDev.org/



BAIT MD VISION AND OBJECTIVE

VisionThe BAIT MD vision is a vibrant, internationally competitive and innovative ICT landscape of Moldova, that provides investment opportunities for Moldovan and international investors and that generates business opportunities for Moldovan and international ICT entrepreneurs.

GoalThe overall goal of BAIT MD is to establish an efficient investment network mechanism that identifies and helps to qualify early-stage investment cases of high-growth nature in the ICT sphere in Moldova, while it at the same time fosters the investment readiness of private investors.



SITUATION MD: SWOT

Strengths• Existing, but not consolidated

network of entrepreneurs.• Existing ongoing entrepreneurship

and startup supporting activities• Succesful examples on international

level• Existing private investors looking for

projects to invest into

Weaknesses• Low entrepreneurship culture• Small market for innovative projects

(need to grow international)• Low access to information about

financing methods• Low Government support in startup

development

Opportunities• Green field to build upon• ICT sector strategy incuding

entrepreneuship support which might attract gov support

• Boost of entrepreneurship projects

Threats• Bigger markets around• Loss of interest in case of slow

development• Lack of unified efforts and leadership



BAIT MD KEY STAKEHOLDERS

Stakeholder Role in BAIT MD

Private individuals as potential angels Business angels and mentors

ICT start-ups and potential start-ups Investment cases

International angel networks (BANs) International links, know-how (investment-readiness)

Public sector and government Framework, incentives, co-investment fund, initiation of BAIT MD, awareness

International donor community Capacity-building, funding, awareness

Civil society and mass media Awareness, acceptance

Other players of ICT ecosystem Collaboration, outreach, awareness



BAIT MD VALUE PROPOSITION

BAIT MD identifies and qualifies early-stage investment cases of high-growth

nature in the ICT sphere in Moldova, while it at the same time fosters the

investment readiness of private investors.

Value proposition to business angels (BAIT MD members)

BAIT MD identifies and provides access to superior early-stage ICT investment

opportunities, and supports BAIT MD angels to make use of these opportunities

Value proposition to start-ups

BAIT MD angels provide access to capital, business management and mentoring, and

business links.



BAIT MD SERVICE PORTFOLIO

Services for business angels (members)

Generating superior deal-flow for angels;

Preparing investment cases (and investment readiness of start-ups);

Organizing pitches;

Increasing investment-readiness of business angels;

Advocacy and fundraising (public sector and donors);

Public relations and BAIT MD branding;

Creating and maintaining international links.



BAIT MD SERVICE PORTFOLIO

Services for start-ups (investment cases)

Pre-incubation services and investment readiness;

Access to investors, mentors and capital;

Incubation services;

Next phase investment readiness;

Quality management and monitoring of angel investment and mentoring

processes;

Angel network coordination.



BAIT MD BUSINESS MODEL

Business model option

Management structure: Manager-led vs. member-led

Legal structure: Informal vs. formal (registered); non-profit versus for profit

Investment structure: Group investments versus individual investments

KEY REQUIREMENT: Champion or group of champions



BAIT MD BUSINESS MODEL

Proposed business model BAIT MD

PHASE 1

Manager-led (coordinator, board, key functions)

Legal structure: Informal, non-profit -> membership fees?

Investment structure: Individual investments

PHASE 2

Manager-led (and supported by members)

Legal structure: Formal, non-profit

20


BAIT MD ORGANIZATIONAL STRUCTURE

PHASE 1 STRUCTURE

Coordinator

Board <- Champion

External administration supportAngels

• Meeting and pitch coordination• Deal-flow management including

PR and communication

• Activity planning• Quality and process management

and monitoring• Membership recruitment and

relationship management• Financial management• PR and Branding

• Deal screening• Member recruitment• Outreach and communication

Constitution

Strategy and Business Plan

Rules and Procedures

Resources and Funding

Membership in international associations ?

Tools such as GUST, ANGELIST



BAIT MD MARKETING

Basic communication tools

Brand & CI

Website, providing basic information

Facebook etc.

Information materials for partners and start-ups

Information materials potential angels (good practice!!)

Network meetings (informal)

Requests for proposals / pitches

Public relations instruments (mass media/public)

Advanced communication tools

Virtual incubator



BAIT MD DEVELOPMENT MILESTONES

Core group

Structure and rules

Awareness raising

Successful investment cases

Institutional sustainability

Investment readiness

Phase 1 milestones

Is there a potential champion and core group, ready to take over responsibility?

Branding and PR

Fundraising

First angel pitcheswill be the main catalyst in the process

covering the angel network office and administration costs



BAIT MD BUDGETING

Budgeting considerations

Branding, website, communication

Setting up structures and rules

Costs for network meetings and pitches

Membership in international associations?

½ time administration assistant or external support?

Office?

Revenue considerations

Membership fees?

Member resources (meeting locations, staff, marketing…)

Fundraising considerations

Fundraising for pitches?

Funding for awareness raising?

Funding for capacity building

(investment readiness)?



BAIT MD MEASURING SUCCESS

Success measures

1000 proposals screened -> 100 pitches -> 5 investment cases

Number and dynamics (increase) of deal-flow

Quality of proposals -> and number of investments placed

Quantity and quality of angels/members, and their level of activity

Key recommendations

Keep expectations realistic!

Start informal and bottom-up!

Find a champion!

Raise awareness by using good practice! Exploit success stories!



BAIT MD DISCUSSION

1. Is the selected model the right one for MD?

2. Can we find a champion?

3. What are the objectives for 2013 – 2014?

4. What are the next steps?

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