Importance of business angel co-investment funds and brief European overview of models Claire Munck, Managing Director, EBAN JEREMIE Networking Platform May 20 th 2011

2 ABOUT EBAN Business angel networks Federations of networks Individual angels Associate members 114 member organisations – Representing 300 BANs – 27 countries Seed funds

3 WHY ARE CO-INVESTMENT FUNDS IMPORTANT Equity gap is expanding Business angels continue to need to be involved more and longer in their investee companies Facilitate exits and build ecosystem Private investors need to be mobilised to fund knowledge economy – interest from policy makers >One of the most important incentives for angels

4 ADDED VALUE For the network Expansion of the activity Bridge between angels and other investors Professionalisation of angels (shareholder agreements/exit routes) For the angels Leverage of their participation Portfolio building – new sectors and larger deals For the company Fast decision making (average 4 weeks) Angel involved as mentor through a longer period

5 BACKGROUND - EBAN/BDO ANNUAL RESEARCH Definitions 37 funds reviewed in 2010 under different schemes, 16 case studies Presentation of data sheets/characteristics Summary of key challenges Majority of public-private partnerships (59%) Investment focus national (56%)

6 KEY FINDINGS – SIZE OF THE FUNDS Majority of funds below 10 m€

7 KEY FINDINGS – SIZE OF INVESTMENTS Funds take over after the angels

8 IMPORTANT VARIABLES Type of co-investment model On what does the public sector carry out the due diligence (partners/deals) When does the co-investment occur The type of investment Any privileged role of the federation or BANs Economic model (carried interest, etc) N.B: Maturity of the market important to build on existing trust between angels

9 DIFFERENT MODELS Enterprise Capital Funds (UK) Technopartner (NL) Scottish Coinvestment (UK) Compete (PT) Type Fund Public due diligence on Fund BA Group Investment Vehicle SCF partners BA Group Investment Vehicle Co-investment To fund To fund (incl. BA fund) Per deal In a BA investment vehicle Type of investment Equity (favorable terms) Loans to BA Group Investment Vehicle Equity/debt (equal terms) Loans to BA Group Investment Vehicle Role of federations/ BANs 9 BANs working together in case of Seraphim - Pre-selected angel networks validated by LINC FNABA approved the angels during the tender process

10 KEY FINDINGS – OPERATIONAL More investments if: -Strong collaboration between public sector and angel groups/networks -Existing legal structures (ISF Fund, Seed Facility, ECF) -Practitioners (investors) as decision makers on deal N.B: New trend of serial entrepeneur/super angel funds

11 KEY CHALLENGES IDENTIFIED BY SURVEY Deal flow Portfolio management, follow-on support to companies Sourcing follow-on investors Exits

12 ROLE OF EBAN Professionalisation and capacity building of BAN Data collection & transparency European mapping of models – advocacy Building demand – investment readiness Promote co-investment model at national and cross- border level

13 CONTACT EBAN Secretariat Rue Vautier Brussels