Family and friends
◦ Funding to grow business sufficiently to outsiders ◦ First step towards exposing business to investors

Angel
◦ Give money without expecting much returns ◦ May invest in idea/ plan, but for smaller amount of money ◦ Some are professional angels – assist in developing business and access to further funding

Venture capital
◦ The “real” thing

 Equity investor (Cash for Shares)  Early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company  Compliment bank lending/facilities to finance innovative (high-risk) SMEs at various stages of life cycle (seed to expansion/late)  Provide alternative source of financing especially for early stage SMEs in ICT sector, biotech, ..  Enhance “bankability” of SMEs, entrepreneurship, corporate governance, marketing, product development and technology enhancement.

  

New companies with limited operating history Too small to raise capital in the public markets Too immature to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company's ownership (and consequently value).

FUNDING (RM)

Concept
<50K

Co Formation
<2M

Alpha Beta Early Adopter

3-6 months 12-24 months

Commercialization

Product Expansion Market Expansion

24-60 months

Listing or Sale

TIME

Preferably when there is more than idea to fund – funding of ideas only works in US  Pre-seed or research money is the first step – not necessarily VC funding  VCs are in no hurry to invest: Intro-toinvestment may take 3 – 12 months  Try to develop a relationship with a VC with the intention of talking about the investment in the future

  

Product and/ or technology review Management team Business review
◦ Can the team execute? ◦ Estimated market size: growing/ shrinking rate? ◦ Customer acquisition potential ◦ Are costs an issue? ◦ What are the competitive advantages? Sustainable? ◦ What are the risks and mitigating factors? ◦ What is the exit potential?

Risk factors

Point to note! A good business may not necessarily be a good VC investment

Product / Service
 Is value proposition defined ?  How will value proposition develop ? Is product locally or globally benchmarked ? What are competitive offering ?

Mgmt Market Potential / Access
 Is it growing ?  Are drivers known ?  Acceptance of new products ?  Are there dominant suppliers ?

Funding / Capital Markets
 What is the need for further funding ?  Are grants available ?  Availability of further funding ?  Access to capital markets for exit ?

Value Per Share

VC Funding $2,000,000 for 40,000 shares at $50 each. Family & Friends $200,000 for 20,000 shares at $10 each.

Seed Capital $50,000 for 20,000 shares at $2.50 each, with Founder getting 30,000 “free shares”.

Time

Value Per Share

Financing Rounds

Shareholder Founder Seed Investor F&F Investor VC Investor Total

No of Shares 30,000 20,000 20,000 40,000 110,000

Share Price 2.50 10.00 50.00

Amount Raised 50,000 200,000 2,000,000 2,250,000

Seed Pctg. 60% 40%

Angel Pctg. 42% 29% 29%
Time

VC Pctg 27% 18% 18% 37% 100

Company Value 125,000 700,000 5,500,000

Value Per Share

Family & Friends $200,000 for 20,000 shares at $10 each.

Bail-out Funding $400,000 for 100,000 shares at $4 each. No of Shares 30,000 20,000 20,000 100,000 170,000 2.50 10.00 4.00 50,000 200,000 400,000 650,000 Share Amount Price Time Raised Company Value

Seed Capital $50,000 for 20,000 shares at $2.50 each, with Founder getting 30,000 “free shares”.

Shareholder Founder Seed Investor F&F Investor Bail Out Total

Pctg. 18% 12% 12% 58% 100%

125,000 700,000 680,000

No proper understanding of the business
 Value proposition is “unclear” and hence cannot be communicated.

Wrong focus
 Focus on valuation & funding  Focus on technology  No customer engagement  No sales (revenue) focus

Unable to manage the business
 Financial and other controls  “Hire fast” but “fire slow”  Team not rowing in the same direction.

      

A technology venture capital company Wholly-owned by Minister of Finance Inc. Launched in April 2001 RM1 billion currently under management Invests in ICT related domain and high-growth sectors More than 90 portfolio companies in the past 7 years Successful exits:
◦ IPO - UnrealMind, MEMs, GPRO Technologies, ISS consulting ◦ Trade sale - Ada Cellworks, Leinet Technology, iNavigate, INix Technologies

Empower entrepreneurs to create new wealth ◦ Invests in ICT and high-growth sectors ◦ Seed  pre-IPO Develop the local VC industry ◦ Outsource Partners Program 1 (RM100 mil) 4 VC funds ◦ Outsource Partners Program 2 (RM200mil) up to 7 VC funds

Information Technology (CMC inclusive)  Internet  Electronics/Semiconductor  Communications & Networking  Other high-growth technology businesses

   

Invest in technology-based private startup companies 3-5 year investment horizon Board seat, participate/drive key decisions Seed and early-stage Initial investments and follow-on rounds to fund company through to exit Geographical Focus
◦ Mainly in Malaysian incorporated companies ◦ Foreign companies with Malaysian angle (technology, regional expansion, etc) for strategic reasons ◦ Initial investments of RM$1-3Mil ◦ Typical for Mezzanine ~ RM5 - 10Mil

 

Proactive value-adding  Corporate governance  Management team  Network and portfolio linkage  Operating experience (insights)  Commercialization strategies  Fundraising strategy

THANK YOU
Visit us at www.mavcap.com
Tel : +603.2050.3000 Fax : +603.2698.3800

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