1、VENTURE CAPITAL ROLE and CHARACTERISTICS,Franz R. Krejs Bratislava, November 2006,HORIZONTE VENTURE MANAGEMENT,VENTURE CAPITAL OVERVIEW _,THERE HAVE ALWAYS BEEN RISKY VENTURES AND PEOPLE OR INSTITUTIONS WHO FINANCED THEM, e.g sailing shipsexpeditionsVC: SYSTEMATIC APPROACH TO THE FINANCING AND MANAG
2、ING THE RISKS OF VENTURESPORTFOLIO APPROACH (SPREAD OF RISK)PROFESSIONAL MANAGEMENTADDITION OF VALUE,VENTURE CAPITAL,Globalization:improved transportation systemsimproved communication systems Increased Competitive PressureStrategies to meet this pressure automation shift labour intensive production
3、 to low wage countries lessen or remove competitive pressure by producing unique, innovative, superior products/services(often technology based),COLLATERAL SECURITY _,capital,Financier (Bank),collateral,The collateral is the fall back positionReduced need to understand the primary projectDanger of p
4、lug pulling when there are deviations from expectations,VC: UNSECURED: NO COLLATERIAL _,NO COLLATERAL:* the investee company has to be successful* if successful: significant success participationCONSEQUENCES:* different level of due diligence* differently structured deals* addition of value,capital
5、(equity),VC-Fund,MANAGEMENT SUPPORT,sounding boardorganizational developmentteam buildingINTERNATIONALIZATION,VENTURE LIFE CYCLE OF AN INDIVIDUAL INVESTMENT,Project acquisition and screening due diligence negotiations of conditions investment investment development exit,contact,screening,deal negoti
6、ation,exit,due diligence,investment development,Horizonte Slovene Enterprise Fund Volume: 8.4 million Vintage Year: 1995 Portfolio: 12 investments Total sales of all portfolio companies: 1995 24 million 2004 104 million (+330%) Employment: in 1999 the Horizonte portfolio was the second largest forei
7、gn employer in Slovenia. Technology: 40% of the Fund was invested in technology based companies. Not taking the large pharmaceutical companies (Lek, Krka) into account, two of the portfolio companies hold 50% of all foreign patents granted to Slovene companies.,Addition of Value:,HOW TO APPROACH A V
8、C,THE MEDIUM TO COMMUNICATE IS THE BUSINESS PLANBUSINESS PLAN: it should describe concisely and thoroughly the business venture It should address all relevant aspects:business, products, market, competition, production, sales & marketing, management, IPRs, financials, etc.,HOW DO VCs OPERATE,PRINCIP
9、LE: Go where there are many fish Fish with a loosely knit net to only catch the big fish (never mind if you miss a few)CONSEQUENCE: VCs see and screen many deals (2-4% acceptance rate) They look for killer factors to eliminate projects You need to get over this first stop/go-barrier,DUE DILIGENCE OV
10、ERVIEW _,Basic understandingDUE DILIGENCE PROCEDURE_OPPORTUNITY- product- competition- market there is an opportunity,II. STRATEGY AND ORGANIZATION _,Does the company have a realistic strategy and how will it organize itself to exploit the opportunity?“sales and distribution strategymanufacturing/su
11、ppliers/QAproduct developmentorganization/financial controls there is an opportunity and a strategy to exploit it,FINANCIAL, ECONOMICS AND HARVEST ISSUES _,opportunity and strategy finally are reflected in a financial forecast:- income statement- cash flow- balance sheetissues: profit after taxtime
12、to break eventime to pos. cash flow and capital requirementROI-Potential,IV. MANAGEMENTAre the people there to execute the strategy?“V. EXITHow will we get out of the investment?“VI. VALUATION AND DEFINITION OF A DEAL,HORIZONTE VENTURE MANAGEMENT Vienna, Ljubljana, Sarajevo _,Founded: 1985 Ownership
13、: * Management* FinanzierungsgarantiegesmbH (FGG)* Advent International Corp.* Dr. Uwe BurkheiserOffices: Vienna, AustriaLjubljana, SloveniaSarajevo, Bosnia & HerzegovinaFunds: Horizonte Slovene Enterprise FundHorizonte Bosnia & Herzegovina Enterprise FundHorizonte Austrian Technology FundAlpe Adria Venture Fund,
