Blaž Kos, Beograd, 2010 ANGEL INVESTING EXPERIENCES IS SLOVENIA

The beginning… What do you need to start your own business? You with the right/crazy “Mental Blueprint” – Everything is always impossible before it works – Safe job is risky, not starting your own company – I don’t need a job, I want a fu*king adventure – Life is too short to spend 1/3 at the job you hate Excellent Idea Top Team Funding (money, money, money,…)

Sources of financing Retained earnings (Internally Generated Funds) – You reinvest your money into growth of the business Grants and other support on offers (incubators, TP) – Usually the cheapest money you can get (consider kg of reports) Debt financing (credit, leasing, factoring, franchising…) – You borrow money and return the borrowed amount + interests in agreed time periods. There must be insurance for every penny, it influences your cash flow and there is usually no added value from Mr. Banker. Equity financing (!) – The investors becomes co-owner of the company

Equity financing Inside – 4F (founders, friends, family, fools) Outside – Business angels – Venture Funds – Private Equity Funds – Stock Exchange Venture Capital

4F Founders – Blood money: put your money where your mouth is – Savings, Credit Cards,… – Knowledge, sweat and tears Friends – Not always wise; don’t mix business with pleasure Family – Financial and moral support: Big difference between US and SI Fools – You can always find a fool

Three types of ventures Bad businesses Good businesses (organic growth) – Family business – Lifestyle companies Good investment opportunities (high growth) Venture Capital Venture Capital

Concept of Venutre Financing In most cases business angel REALLY trusts in the team. Therefore is willing to take the high risk, because investor believes the team will find way to make business successful. Investor wants to become partner in the company, have some rights and add additional value to lower the risk. The money will be made at liquidity event - EXIT (selling shares). But because of the high risk and low liquidity of the investment the RETURN must be SKYHIGH. 9 out of 10 ventures fail in 5 years 6 out of 10 BA invested companies fail 1 out of 10 invested ventures makes more money than expected 1 out of 100 invested is homerun - and that’s the name of the game

Business Angels Successful high net-worth individuals who have already built one or more successful companies Equity financing – with his/her investment the Business Angel becomes a shareholder of the company “Smart Money” - high value-added for entrepreneurs – Know-how – Business experience – Social capital (!!!) High personal engagement into growth of the company (hands on investors)

What do they look for? Innovative idea – problem, pain, solution Business model – scalability, profit margins etc. Big market – PEG – Potential for Explosive Growth Top executive team with strong leadership Exit strategy Enthusiasm (spark in the eyes) and Competences (knowledge, skills, values, beliefs + experiences, network)

Adding Value Higher credibility Strategic and business consulting Sales contacts Helping to close the deal Contacts of potential strategic partners Organizing a business HR contacts Getting additional funding Exit

VC Funds - difference It’s a FUND (like mutual fund) with hired management team (some of them are partners) Established for 10 – 12 years (fund raising, investing, exits) They have their own investors who expect return Investment policy Investments in later stages (in our region) – Expansion capital Higher investment size: 1 mio € to 3 mio € Different added value: CFO, Exit Different type of funds ( Sector, Geography, Stage of development)

Angel Networks Why investors join BANs? Better deal-flow – More deals – Pre-screened deals Better quality of business plans and pitches – Investment readiness programs Syndications (risk sharing, different sectors coverage) Help with deal structuring and legal aspects Networking with other high net worth individuals Having more fun

Our portfolio OBS d.o.o. – mountvacation.com internet booking portal Versor d.o.o. – systems for parking optimization in car parks Sonia d.o.o. – fashion accessory store Acies E d.o.o. – biotechnology development company British International School in Ljubljana d.o.o. Sosed d.o.o. – computer assistance at home Ekstundo d.o.o. – patent for eliminating dead spots in cycling VentureLab d.o.o. – management and business service company

Why Business Angels of Slovenia? A big lack of early stage financing sources for SMEs, even bigger in the financial crises Fast development of new entrepreneurial activities In the past, few successful business angel investments were made, but no network Business angels are a very important fragment of the capital market in every country and have a significant role in the development of successful new companies We had first sponsor for €

Profile of the Association Legal founding form: Non for profit association (club) Founding date: June 2007 Official name: Poslovni angeli Slovenije International name: Business Angels of Slovenia Webpage: Primary investment region: Slovenia Secondary investment region: Countries in the Balkan region (cross border investments - trend) Our members: More than 35 carefully selected top high net-worth individuals from Slovenia

Association activities Promoting equity investing Scanning and evaluating the projects/teams/companies Educating potential business angels and entrepreneurs Cooperation with entrepreneurial support organizations Organization of internal events (investment dinner) Deal structuring (legal, financial structure etc.) Due Diligence Monitoring and adding value (hands on investing) Information exchange between members Cooperation with foreign business angel networks

Investment criteria Phase of the company: Seed or startup (founded company with first revenues) Investment size: € € (syndication, trend) Investment mechanisms: Equity financing, convertible loan agreements Sectors: No limitations (ethical business) Investment time: 3 to 5 years Expected: Minimum 30% annual return Targets: Companies with high growth potential, excellent management and viable exit strategy.

Investment process Inflow and selection of potential projects Internal training and business plan preparation Investment dinner Due Dilligence Preparation of investment agreement and negotiations Investment, addition of value and exits BAN Manager Review

Pipeline development Public relations Appearance at entrepreneurial conferences Promotion through key partners –Educational institutions (faculties, institutes etc.) –Support environment (incubators, technology parks etc.) –Student initiatives –Co investments Webpage Networking and word-of-mouth advertising

Our own projects StartUp Slovenia Business Plan competition (co organizers) 100% StartUp Forum (co organizers) iTIME Business Accelerator (don’t) SKIP conference (early stage financing conference) Slovenian Innovation Forum (co organizers) Investment Readiness Program (StartUp School) More than 40 entrepreneurial events per year!

Start Up School The purpose is to help entrepreneurs write appropriate investment documentation: – Business plan – Executive summary – Business plan presentation (10/20/30) The emphasis is on financial projections for a 3 to 5 year forecast For every project, we try to make a basic deal structure which is the starting-point for further negotiations between the investors and entrepreneurs We also prepare the entrepreneurs for their presentation to the investors

EU Projects EBAN Members Easy Cross Border Early Stage Financing (2008 – 2009) Inno Deal Innovations (2008 – 2009) Ready for Equity 2 (2009 – 2010) – 4 years of program development – Business angel trainings – Entrepreneur trainings – EBAN Accredited International oriented BAN!

Club financing Memberships fee for Business Angels (1.500€) Investment Readiness Program (200€) 3% Success Fee of the Investment Consulting services Sponsorships and donations Public sources of financing (EU projects) It’s good to have a sponsor (private or public)

Current results Founded in June 07 (very young BAN) 35 members, business angels Over 300 companies reviewed (100+ annually) Over 100 companies took part in our IRP 50 projects presented at 5 investment dinners 8 projects supported, total investment value of 1,65 mio € Business angels Fund (5,4 mio €)

Business angels Fund Starts to operate in October ,4 mio € business angel fund 51% business angel money, 49% public money Most active business angels are in investment committee Sectors allowing for high returns Seed and early stage fund (50.000€ €) We plan to make 15 investments in next 5 years

Contact information Business Angels of Slovenia Železna cesta 18, SI – 1000 Ljubljana Phone number: