IVI (Tom Nastas) Presentation At 3rd Moscow Venture Fair
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This document outlines strategies for Russian SMEs to attract foreign capital, detailing current market conditions in venture capital and private equity. It provides a comprehensive plan for SMEs, emphasizing the importance of aligning with multinational interests, benchmarking technology, and building strong relationships with funding organizations. Key action items include understanding market needs, targeting international funding, and learning from past investment rejections.
![Believe in Yourself/Accept
Rejection
Deal Rejected:
StrataCom
(acquired by Cisco)
Felda Hardymon: "[Sierra's] Pete Wendell asked if I'd like
to invest in Stratacom, which was doing a 'fast packet
switch.' I gave him a blank stare."
17/18 June 2009 www.IVIpe.com
Info@IVIpe.com](https://image.slidesharecdn.com/ivitomnastaspresentationat3rdmoscowventurefair-124618943568-phpapp02/85/IVI-Tom-Nastas-Presentation-At-3rd-Moscow-Venture-Fair-42-320.jpg)
IVI (Tom Nastas) Presentation At 3rd Moscow Venture Fair
- 1. Show Me the $! How Russian SMEs can Raise Foreign Capital 3rd Moscow Venture Forum: Moscow Russia, 17/18 June 2009 Innovative Ventures Inc. Haslett, MI. USA Moscow, Russia Thomas Nastas Founder Tom@IVIpe.com www.IVIpe.com 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 2. Today’s Message Part I What’s Happening in the Market, VC/PE? The Good & the Bad Part II Russian SMEs: Raise Foreign Capital! Clarify Motivation & Your Reasons Why Improve Your Chances of Success Specific Actions to Take 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 3. IVI History-Direct Invest & Advisory Canada (1992) Europe (1992/94) C$100MM-Canadian Bus. Dev. Bank TP Fund, $10MM- EU, $-Financière St Dominique, Paris USA (1986) Russia (1997) The Michigan Product Dev. Fund ($5MM) HP LP, $30MM-EBRD & USAID Africa (1993/96) E. Africa $5MM, Sub- Saharan, $200MM, South Africa,$30MM, IFC/WB 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 4. About Me • Founder of IVI,1986. In Russia since 1997 • Moscow Bank, Member, Board of Directors, 2007 Ассоциация независимых • Member, Board of Directors, директоров 2008 • Moscow MBA Program, Prof of VC & Marketing, 2002/9 • Moscow, MBA Advising, 2001 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 5. Part I: What’s Happening in the Market? The Good & the Bad 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 6. Successes in the Market Since 2001 PBC Lasers & Wostec Multinationals w/R&D Labs in Russia 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 7. Limited Success in Raising Int’l $ Insight Venture Partners 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 8. Crisis in Int’l PE/VC Distributions from Funds to LPs (Investors) 100% 90% 15% 29% 80% 41% 70% R e s p o n d e n ts (% ) 6% 42% 74% 60% 50% 40% 37% 30% 65% 20% 43% 22% 10% 22% 0% 4% Winter 2004-05 Summer 2006 Winter 2007-8 Summer 2009 Source: Collier Capital Improve No change Deteriorate 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 9. Crisis in Int’l PE/VC Con’t % LPs Receiving >16% Net Returns 100% 90% 80% R e s p o n d e n ts (% ) 70% 60% 50% 40% 30% 20% 10% 0% Funds-of- North American North American European venture European buyouts Asia-Pacific venture Asia-Pacific funds/generalist venture buyouts buyouts Source: Collier 16% or more Less than 16% Capital 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 10. Crisis in Int’l PE/VC Con’t LP Plans for Investment (Over Next 3 years) 100% 9% 90% 31% 80% 70% 40% Respondents (%) 60% 50% 39% 40% 30% 51% 20% 30% 10% 0% Summer Summer Source: Collier Capital 2006 2009 Increase No change Decrease 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 11. Crisis in Int’l PE/VC Con’t LPs Declining to Invest in Last 12 Months 100% 90% 16% 29% 80% 55% Respondents (%) 70% 60% 50% 40% 84% 71% 30% 20% 45% 10% 0% Source: Collier Capital Summer Summer Summer 2005 2007 2009 Declined some re-investment requests Accepted all re-investment requests 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 12. Crisis in Int’l PE/VC Con’t Likely Valuations; 12/09 vs. 12/08 Lower by Higher by 41-60% up to 20% (4%) (6%) Remain unchanged (18%) Lower by 21-40% (33%) Source: Collier Capital Lower by up to 20% (39%) 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 13. Crisis in Int’l PE/VC Proportion of VC/Buyout Funds Unable to Raise New $ within 7 Years Venture capital firms 28% Buyout firms 23% Conclusions: less $ for VC, more competitive for LP $ & VC $: VC invest in profitable SMEs Source: Collier Capital 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 14. Part II: GoForward Plan to Raising Int’l VC $$ Issues For Entrepreneurs/SMEs: 1. Why Int’l $-location of customers & access the market for expansion vs. start-up or ego 2. Stage of development, seed vs. growth 3. Proof: Are you best in class, top 3 in your industry? 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 15. Reasons Why Components of SME Success Probability Company has enough $$ 80% Mgt Capable & Focused 80% PD Successful 80% Mfging Successful 80% Competitors Behave as Expected 80% Customers Want Product 80% Pricing is Correct 80% IP Issued 80% Combined Probability of Success 17% Success Rate <10% if Probability of One Event falls from 80% to 50% 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 16. Realities of VC Investment Ex: Global Spend in Clean Tech (2006) • Corporate R&D Investment = $22 billion • Government R&D Investment = $24 Billion • VC Investment in R&D = $2 Billion Same Pattern Repeated in Most Industries: VCs Fund Commercialization Risk, not Tech 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 17. Reasons for Rejecting Russian Tech Deals 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 18. Reasons for Rejecting Russian Tech Deals 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 19. Action Item #1 for Entrepreneurs/SMEs 1. Build Demand in the Supply Chain Link to Multinationals Interest: User Pull, Testing, Deploy & Commercialize Solve Tech & Supply Chain Needs/New Apps Don’t Worry about Small Volumes Build Locally, Upgrade Later for National & Int’l Expansion Info@IVIpe.com 17/18 June 2009 www.IVIpe.com
- 20. Where’s the Customer Pain (Need) in the Industry? 1. MORE Perf, Execution & Cost Reduction Not GameChangers; blocking/tackling tech so customers meet business plan 2. MORE Local Content Applications Focus on Tech Challenges for Dev. & Growth 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 21. Examples: Get Integrated into Global/Russian Projects 1. Apps for Smartphone & Social Platforms 2. In <15 months, iPhone, Blackberry, Google & Facebook (fbfund) funds invested over $55 million into 80 companies New Companies & New Employment New Applications for Smartphones, Google Android & Facebook More Investment New Ideas 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 22. Examples: Get Integrated into Global/Russian Projects 3. HP ‘Central Nervous System for Earth Nanosensors & IT to gather, transmit & monitor data on a global scale through intelligent nano- fabric networks 4. IBM’s Smart Planet Initiative 5. Cisco & NASA: ‘Planetary Skin’ Project Capture, collect, analyze & report environment data from satellite, airborne, sea & land sensors across Earth 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 23. Examples: Get Integrated into Global/Russian Projects 6. Russia: Shtokman, Natural Resources for Solar & Alt. Energy Business Models Nitol Solar: Raised $500 million from Chinese & US customers, IFC & Rusnano. Chemical division processes chlorine, caustic soda and others to produce trichlorosilane (raw material for polysilicon production) Polysilicon Division processes raw material into photovoltaic wafers 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 24. Domestic Opts to Build Bio- Tech Supply Chain in Russia Agricultural Drugs & Medical Devices Hospitals Research, Testing, & Feedstock/Chemicals Pharmaceuticals & Equipment Medical Labs Agricultural Medicinal & Laboratory Specialty Biological processing botanicals apparatus & hospitals research Basic organic furniture Pharma- University Commercial chemicals ceutical Surgical, medical medical Ethyl alcohol preparations medical, dental, research research mfg. ophthalmic hospitals Diagnostic & analytical Testing Organic fiber substances instruments & Clinical laboratories mfg. equipment research Biological institutions Medical Fertilizers products Irradiation laboratories & apparatus & diagnostic Pesticides and imaging other agricultural electromedical chemicals equipment centers 17/18 June 2009 Product-Oriented www.IVIpe.com Service-Oriented Info@IVIpe.com
- 25. Action Item #2 for Entrepreneurs/SMEs 2. Benchmark Your Tech to Competitors & Alternative Often & Early Define Strengths & Weaknesses Test Under Different Operating & Customer Conditions Invest to Overcome Deficiencies 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 26. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 27. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 28. The Standard? 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 29. Competition is Every Where 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 30. Multiple Sources of Competition 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 31. Build the Basics 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 32. Action Item #3 for Entrepreneurs/SMEs 3. Create Relationships & Leverage Existing Ones Get Integrated into Supply Chains of SMEs that have raised Russian or Int’l $, e.g., Acronis, Parallels, Ozon, Enforta, Volga Gas, Air-in-Space Prove your contribution to their business Participate in Int’l Biz Plan Competitions to Develop Awareness & Mkt. Reaction 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 33. Action Item #4 for Entrepreneurs/SMEs 4. Target Int’l Funding Orgs’ for $ For R&D, Testing & PD Funding USIC, CRDF, ISTC, EU Eureka/EuropeAid In-Q-Tel (CIA VC fund) & Red Planet (US Army) if you have US presence & in their target for investment Attract $ from Russian groups like Rusnano to start. Build relationships with RVC (РВК) 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 34. Concluding Remarks 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 35. Don’t Give Up 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 36. Believe in Yourself/Accept Rejection Oldest VC Firm, investing since 1911 Deals Rejected: Apollo Computer (acquired by Hewlett Packard) BVP's Felda Hardymon was offered a small position in the company's last private round, and rejected it: too small a position, he thought, at too high a price. In less than a year it was worth 17x more. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 37. Believe in Yourself/Accept Rejection Deal Rejected: Check Point In 1994, Gil Schwed pitched his idea to BVP's David Cowan, who said that Gil would never get distribution in the US. The next year, Check Point got a huge Sun OEM deal and sold $25M of firewall 17/18 June 2009 software. www.IVIpe.com Info@IVIpe.com
- 38. Believe in Yourself/Accept Rejection Deal Rejected: eBay "Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass." 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 39. Believe in Yourself/Accept Rejection Deal Rejected: Federal Express Incredibly, BVP declined on Federal Express seven times. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 40. Believe in Yourself/Accept Rejection Deal Rejected: Google Cowan’s college friend rented her garage to Sergey & Larry their 1st year. In 1999 and 2000 she introduced Cowan to “these two really smart Stanford students writing a search engine.” Students? A new search engine? In the most important moment ever for a Bessemer rejection, Cowan asked her, “How can I get out of this house without going near your garage?” 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 41. Believe in Yourself/Accept Rejection Deal Rejected: Paypal David Cowan declined on the Series A round. Young & unproven team, regulatory problems, and, 4 years later, a $1.5 billion acquisition by eBay. 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 42. Believe in Yourself/Accept Rejection Deal Rejected: StrataCom (acquired by Cisco) Felda Hardymon: "[Sierra's] Pete Wendell asked if I'd like to invest in Stratacom, which was doing a 'fast packet switch.' I gave him a blank stare." 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 43. Technology In Many Places! Just Look & Define Slaughter Raising Genetic Engineering & Breeding Butcher Distribution, Storage & Retail Locations Processing- Ham, Kielbasa Delivery 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 44. Download at www.IVIpe.com News 2007 17/18 June 2009 www.IVIpe.com Info@IVIpe.com
- 45. Thomas D. Nastas Tom@IVIpe.com www.IVIpe.com Tel. 7.985.923.47.27 Innovative Ventures Inc. Moscow, Russia Haslett, MI USA 17/18 June 2009 www.IVIpe.com Info@IVIpe.com