1. 1 private equity

2. 2 Topics for today Topics for today  What is venture capital?  What do VCs look for?  VC process  VC value added process  VC terms

3. 3 What is Venture Capital?  Investments in early stage small or medium sized, unlisted companies,  Can also consider investing in big projects and sometimes listed companies, if strategic- termed Private equity  Aim to increase the value of its investment without taking control by active participation in the management process  Exit by way of redemption,selling shares back to the promoters, to a third party in a private transaction, a trade sale or an IPO within a fixed time

4. 4 Venture / Private Equity Funding Stages  Seed  Start-Up / Early Stage  Expansion Stage  Mezzanine Financing  Buyout / Leverage or Management More risk More mone y

5. 5 What Do VCs Look For?  Management team  Market  Competitive Advantage  Capital Requirements  Exit Strategy

6. 6 Management Team  (People) 3  Managing a business, especially a start-up is not easy  We look to the founders to have the vision, drive, tenacity, conviction, experience, flexibility etc  Proven track record…serial entrepreneur  Chemistry is also important

7. 7  Potential market size is very important  VCs look for winners Difficulties: Identifying change  Some products / services create the market  Some change the industry  Others are yet to be tested but has great potential Large Growth Market

8. 8 What is the Business Model?  Blinding Idea / Technology  Product / Service  Can it be commercialized?  Is it a Strong Value Proposition

9. 9 Does the firm have a clear Competitive Advantage?  What is your unfair advantage? Is it sustainable?  Do they know market & competitors intimately  What do they have that others don’t?  What do they do better than any other company?  What if they’re up against copycats, reverse-engineers, 800lb gorillas? Need to answer the question What do they do differently from their competitors that their clients value?

10. 10 Reasonable Valuation are important  What is too expensive?  What is too cheap?  P/E, Revenue Multiple, NPV, EBITDA?  Exit Strategy?

11. 11 VC PROCESS  Marketing- news articles, talks, networking  Only meet people who cold call that have been recommended by someone who the VC respects.  Review business plans. The VC wants to check out the quality of your thinking. This is a work in progress but it needs to be done by you.  Court the business man. Check out their management ability by reviewing what they done in the past.  If we agree to proceed we may do some preliminary due diligence. In our case we review market size and do some character references.  If agreed in principal we prepare a PIM- Preliminary Investment Memo.  If approved we may give a draft term sheet. This outlines the broad terms on which we invest.  Due Diligence. Technical Due Diligence maybe outsourced to a technical expert. Accounting due diligence by an accounting firm, legal due diligence by a legal firm. This should take one month.

12. 12 VC PROCESS (cont.)  Technical due diligence will include simple things like does it work? is it stable? competition analysis,- trying too understand the competitive edge in the technology.  Once due Diligence completed, move to agree term sheet. We go back to our investment committee to report our findings. No adverse findings then we move to contract.  Term sheet finalised move to completion.  Go to documentation.Need to complete all the conditions precedent. This process can take one month or more.  All the CP’s completed the deal becomes unconditional and money is released.

13. 13 VC’s Add Value by taking a active role Help management  Identify Business Opportunities  Strategic Planning  Develop Scalable Business Models  Raise Sufficient Capital to Execute Business Plan  Build World Class Management  Increase Market Share  Build Barriers to Dominate

14. 14 Examples of how VC’s can help Ø Network àCountries, companies, people – àAjia Partners Ø Strategic & Business Advice àMarkets, trends, technology, financials, overseas àBusiness courses Ø Executive Recruitment àTop management: CEO, CTO, Marketing, etc àInvestment in JObstreet Ø Strategic Alliances àMacro picture and contacts àHelp companies make contacts- use advisors Ø IPO & M&A Experience àTiming, Valuation, Expertise

15. 15 Choosing the right VC is important  VC’s are NOT money lenders or banks  Choosing a VC is NOT about money  Choose one:  That you can work with  That can help you take your company to the next level  That has a proven track record  That share your views and aspirations  That has network and connections  That gives you a good valuation

16. 16 Different VC have very different characteristics  Investment  Size, Instruments, Time to Exit  Stage of Company  Start-Up, Early Stage, Expansion, Mezzanine  Purpose of Funding  Industry Focus  Broad-based vs. focused  Management Participation  Active vs. laissez-faire

17. 17 VC Terms  Typically use Redeemable Preference shares  Right to redemption in 5 years  Right to take over firm if not redeemed.  Breach of reserve matters means prefs can be redeemed  Have rachet provisions in case of down round  Value stays the same  Typically have board seat and reserve matters  Regular meetings, monthly accounts  Valuation maybe dependent on future performance  Based on future PE or sales multiple  Tranched release of money  Based on milestones to reduce risk

18. 18 Evaluate thoroughly  Be prepared – trends move fast  A business plan is a living thing – if its broke fix it!  Rejection & failure are NORMAL  Learn learn learn  Chase your dream

19. 19 Intelligent Capital  Partnership of three partners and a analyst  All partners have industry experience  Have started and owned 30 companies between the partners  Manage $15m first fund. Made 5 investments to date.  Focus on early stage companies where we can add value

20. 20 Call Asgari Stephens tel:+6-03-9281-6588 fax :+6-03-9281-6598 email: asgari@intelligentvc.com Further Information

21. 21 Thank you