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Business Angels as alternative source of financing early-stage investments

Business Angels as alternative source of financing early-stage investments. Jacek Błoński Warsaw, April 22, 2008. WHO IS AN ANGEL INVESTOR?. Business Angels: Wealthy individuals Good business experience Good contacts and marketing skills Very often cashed out entrepreneurs or managers

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Business Angels as alternative source of financing early-stage investments

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  1. Business Angels as alternative source of financing early-stage investments Jacek Błoński Warsaw, April 22, 2008

  2. WHO IS AN ANGEL INVESTOR? Business Angels: • Wealthy individuals • Good business experience • Good contacts and marketing skills • Very often cashed out entrepreneurs or managers • Actively supporting development of the company

  3. Growth Capital needs IPO High risk Venture Capital Funds Business Angels Low risk Friends, family and fools Time Seed Early stage Expansion START-UP BUSINESS ANGELS ON THE RISK CAPITAL MARKET

  4. LBA KEY DATA • A group of ca. 70 individual investors associated with LBA, interested in early-stage companies with extraordinary growth prospects, no sector specialization • Typical investment – between EUR 50k and EUR 1.5m • Services provided to investors: • provision of carefully selected business plans, according to individual preferences and investment criteria • Services provided to entrepreneurs: • access to selected group of active investors

  5. STRATEGY LBA has established an extensive angel network in Poland and between 2005 and 2007 finalized 7 investments in different sectors/branches. 350 Ideas screened 2% of business plans submitted get financing Many of the projects submitted to investors came from LBA’s partners Negotiation process is less formal than with VCs, but also less predictable Ideas refined in Meetings 45 Ideas submitted to the Investors 25 Number of Investments 7

  6. PROJECT SELECTION CRITERIA • Experience and competences of the management team • Strong growth potential • Growing market or attractive niche • Competitive advantage • Founders involvement and commitment (also financial) • Identified and clear exit options • Business plan and financial projections – coherent and well thought

  7. INVESTMENTS

  8. COOPERATION WITH BUSINESS ANGELS–BENEFITS • Benefits for entrepreneurs seeking financing from business angels: • Provision of adequate financing, flexible terms • Experience and strategic know-how • Business contacts and relations within industry

  9. BUSINESS ANGELS NETWORK – MAIN PROBLEMS • Problems with self financing of the network – especially at the beginning (external financing highly needed) • Low quality of the incoming project at the initial phase of the new network (good training and PR needed) • Lack of appropriate know-how • Very limited number of business angels with experience in capital investments and exits strategies.

  10. Opportunities for Ukrainian entrepreneurs • Some Business Angels associated with LBA do not exclude investing in foreign start-ups • LBA is interested in cooperation with Ukraine entrepreneurs looking for alternative sources of financing • Special interest in projects that can be developed internationally • Communication in English is necessary • And finally LBA can help in founding new Business Angel Network in Ukraine (next to Private Investors of Ukraine) and share some experience and thoughts to stimulate angel market.

  11. Jacek Błoński LEWIATAN BUSINESS ANGELS www.lba.pl Tel: 022 845 95 96 Fax: 022 845 95 51

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