Technology Transfer Accelerator Turkey (“TTA Turkey”) IP Conference Turkey

1. Technology Transfer Accelerator Turkey (“TTA Turkey”) IP Conference Turkey 30 October 2014 Istanbul

2. Agenda • About EIF • EIF Resources, Governance and Investments • Equity Highlights • EIF Technology Transfer: History and Characteristics • About TTA Turkey • Background, Structure and Objectives • TTA Turkey Fund • Targets, Investment Criteria, Investment Process and Structure • Main Terms & Conditions, Flow of Funding, Time Frame and Process • Investment Considerations and Assessment Criteria

3. What is the EIF? “ The leading developer ofrisk financing for entrepreneurshipand innovation across the EU ” HelpingSMEs, micro-enterprises and European regions innovate and grow by making finance more accessible Fulfillingour dual goal and pursuing EUpolicy objectives as well as financial sustainability Addressingmarket needs by acting as a countercyclicalinvestor in tough economic times Workingwith financial intermediaries across the 27 EU countries, EFTA and all Accession countries

4. Involved throughout the Business Cycle TechnologyTransfer Accelerator Investing inVC funds Investing inGrowth Capital Mezzanine EIF Current Investment Focus Technology Transfer Proof of Concept Business Angels Seed Stage Early Stage Business Angels Expansion/DevelopmentCapital LowerMid-Market Instruments to stimulateinnovation, competitivenessand cross-border investment Support VCecosystemand decreasedependencyon public finance Catalyse hybrid debtfinance for growth Fill funding gap left by institutional investors Strategic Challenges European Commission Resources EIB / EIF Resources Member States / Private Sector Resources

5. EIF’s Resources “ EIF manages resourcesfromdifferent stakeholders ” • National & Regional Funds • 20 European and regionalFunds-of-Fundsincluding Germany, Portugal, Spain, Turkey, UK • 14 Holding Fundssupported by structural fundsEUR1.3bn • European Investment Bank • RiskCapital Mandate(RCR) EUR5bn • Mezzanine Facility for Growth (MFG) EUR1bn • European Commission • Competitiveness and Innovation Framework Progr. (CIP) EUR1bn allocated to equity and guarantees • Risk-Sharing Instrument (RSI) EUR 120m • Progress MicrofinanceEUR 200m

6. Equity Highlights (EUR / m) 2013 2012 2011 2010 2009 2008 Equity Signatures 1 468 1 350 1 126 930 733 409 PE Assets under Management 7 904 6 952 5 919 5 367 4 103 3 535

7. EIF’s Governance “ Committed to the highest standardsof governance and integrity ” Board ofDirectorshas a supervisoryrole and approves all EIF transactions ChiefExecutiveis responsible forthe day-to-day management ofthe EIF Audit Boardand both in- and external auditors oversee Chief Executive and Board of Directors Risk Management, Legal and compliance units

8. EIF Technology Transfer Aims to Bridge the Gap between the Research and the Market R&D Technology Transfer “Technology IP” Marketable Product“Prototype IP” University / Research Organisation Spin-out Market Licensing Collaboration (Contract Research) IP / Idea

9. EIF Technology Transfer History and Characteristics

10. Long-term, Sustainable Vehicles With Like-Minded Investors  Close collaboration with TTOs  Access to good scientific research  IP adequately protected under relevant legislation  No direct financing of research  Governance - no investor involvement in investment decisions  Independence and non-competition of Management Team  Adequate incentives to Management Team  Alignment of interests with long-term focus, up to 10-20 years  Minimum critical size ca. EUR 20-30m

11. EIF Technology Transfer InvestmentsTo Date

12. Agenda • About EIF • EIF Resources, Governance and Investments • Equity Highlights • EIF Technology Transfer: History and Characteristics • About TTA Turkey • Background, Structure and Objectives • TTA Turkey Fund • Targets, Investment Criteria, Investment Process and Structure • Main Terms & Conditions, Flow of Funding, Time Frame and Process • Investment Considerations and Assessment Criteria

13. This project is co-financed by the European Union and the Republic of Turkey TTA Turkey This financing is provided from IPA funds allocated to Regional Competitiveness Operational Programme which is supported by EU and Republic of Turkey. The Contracting Authority of this Project is the Ministry of Science, Industry and Technology, DG for EU and Foreign Relations, IPA-PO, and final beneficiary is the Scientific and Technological Research Council of Turkey.

14. TTA Turkey – Project LevelBackground • Funded by IPA monies • Deadline for Project Implementation: 31 December 2017 • End Beneficiary: The Scientific and Technological Research Council of Turkey (TÜBİTAK) • Project Amount: EUR 30.5 million • Project Components: • Cornerstone TTA Turkey Fund – EUR 26.3 million • Advisory Services and Networking for TTOs and TÜBİTAK – EUR 1.35 million • Visibility – EUR 200,000 • Impact Evaluation – EUR 100,000 2012 2013 2014 2015 2016 2017 Market Needs Assessment carried out Business Plan for the Project submitted Negotiations and Approval Signature Date: July 2014

15. TTA TurkeyProject Structure and Main Objectives IPA Resources EIF as Advisor & Project Manager IPA Commitment to TTA Turkey Fund Visibility Advisory Services and Networking (Technical Assistance) Impact Evaluation TTOs proceeds TÜBİTAK • TTA Turkey’s main purpose is to: • Establish an independently managed Technology Transfer Accelerator Fund that invests in commercialisation of technology intensive research coming out of universities and research centres • Increase the R&D commercialisation capacities of TTOs so that they can play a successful interface role between the industry and the university

16. TTA Turkey FundTarget Investments and Region • TTA Turkey to invest in: • proof of concept generation projects • university / research center spin-offs, start-ups • intellectual property (IP) assets / projects • return for equity into start-ups, spin-offs, and SMEs • 100% of the investments to be made in Turkey • A minimum of 30projects to be selected by the Fund Managerby 31 December 2017 • At least 15projects shall be identified and invested in the Target Region (12 NUTS II, 43 provinces)

17. TTA Turkey FundStructure

18. Main Terms & Conditions

19. IPA Contracting Authority Monies to Contracting Authority from Special Account – after 31 Dec 2017 Thereafter from whomever transfer of holding has been made to (if anybody) Monies to Special Account EIF Special Account Monies to Fund on Capital Calls from Fund Manager based on establishment of Companies once start up invested Monies to Special Account on receipt from TTA Fund TTA Fund Monies to Fund due to project spin-outs, licensing, contract research with consequent dividend payment Monies to Companies once Projects identified – before 31 Dec 2017 Co D Start up Co A Co B Co C Co D Monies to projects on milestone basis during the Term of the Fund Monies to Companies from successful projects on spin-outs, licensing, contract research, other 1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 5 6 Flow of Funding Co D Start up

20. Time Frame and Process

21. Assessment Criteria & Scoring

22. Investment Process and Indicative Timelines 12 months Investment readiness Physical meeting (typically in Luxembourg), opportunity to articulate investment opportunity, understand EIF Legal documentation After EIF BoD approval, legal docs drafted on behalf of Manager. EIF reviews importance of legal counsel Understand concept Based on preliminary questionnaire / concept note Stress testing and verification EIF team conducts on site visits (min. 2 days). May, or may not lead to term sheet

23. Investment Considerations

24. Criteria (1/4) Partner Institutions Deal flow and pipeline Investment strategy Licensing / Spin-outs: Proposed route for commercialisation Strategy: Geographical focus, stage focus, sectors, investment sizes, follow-on and reserve policy, holding periods, role in financing rounds Fund Size: Justification for size through bottom-up analysis, min / target / max size, modification to strategy according to size scenarios Target Profiles: Criteria for investment targets (company profiles) Co-investors: Envisaged co-investors at different stages of investments Exits: Strategies based on previous examples Metrics: Research budget, peer group comparisons, invention disclosures, IP filed, IP awarded, growth rates, commercialisation income, encumbrances, 3rd party agreements Structure: Organisation structure of TTO, roles, ownership of TTO Policies: IP policy, rules, regulations, ownership rights Activities: Industry co-operations, advisory services, contract research, etc. Financials: For TTO; revenues, royalty income, grants, licenses, cost of sales, gross profit, operating costs, gift aid, dividends Origination: Source of projects, networks (formal and informal), privileged / preferential access, rights of first refusal, option rights Fees: Payments in lieu of access to pipeline Historical Analysis: e.g. 3-5 years evolution of deal flow by source, sector, etc. Selectivity Ratio: Historical examples / experience Pipeline: Current and future opportunities 24

25. Criteria (2/4) Market / Competitors Potential Investors Investment Process Trends: Targeted sectors, challenges faced, evolution in previous years Competitors: Financing, other sources of finance, private / public Demand Side Economics: Analysis and evidence of demand for targeted projects Sponsors: Main investors , anchor investors , special rights (e.g. fees, carry, information, co-investment, etc.) Names / Profiles: Like-minded, long-term investors with soft and hard commitments Team Investment: Investment to fund, e.g. 1%, 2%, 5%, absolute amount, split between team members (see also remuneration / incentives) Fundraising Strategy: List of other potential / targeted investors, status of contacts, potential commitments Process: Origination, screening, project / deal review, due diligence, deal approval, deal structuring, negotiation, deal completion, contracting third parties Decision-making Bodies: Bodies, or individuals take final decisions at each stage, delegations foreseen

26. Criteria (3/4) Team Track Record Governance Previous funds: Metrics, vintage, total size, fund cash flows, net and gross IRR, LPs, amounts Companies: Previous / current funds, dates of investment, investment at cost, FMV (EVCA), gross multiples, forecast exit dates, exit scenarios Individuals: Track record of individuals, other investment / relevant activity (e.g. licensing deals) Partner Institutions: Licensing and spin-out company creation, notable success stories (e.g. Nobel prizes), products developed Composition: Envisaged team responsible for managing fund, key individuals from TTO / other, secondees,new recruits (profiles) Profiles / CVs: Full CVs of team members and key individuals, specific dates, positions held, achievements Experience: Collective team experience in IP management, licensing, creation of companies, investing,, strategy, consulting, etc. Team Collaboration: Years worked together, prior collective working relationships Workload: Time commitment to fund vs. other activities, activity allocation, other board seats Board Members: CVs Structure: e.g. UK-LP, SCR, FCR, NV, SPRL, SICAR, KB, etc. Relationships: Overall structure and relationships between governing and decision-making bodies. Role and function of each of the bodies. Specific individuals involved and respective voting powers and rights CoI: Conflict of interest management, for example with (other) investors in fund, any investor (LP) involvement in decision-making Advisory Board: Composition, largest investors, etc.

27. Criteria (4/4) Management Company Economics Remuneration / Incentives Budget: Detailed forecast budget for Management Company over lifetime of the fund, under different scenarios, e.g. min / target / max size Management Fee: Justification for level of management fee, use of fees, fee offsets Alignment of Interests: Team investments to fund align with investors, long-term time horizon, team stability / instability Remuneration: Detailed breakdown of remuneration for all team members including base salaries, bonuses Evolution: Historical evolution of remuneration for individual team members in previous years Incentives via Carry: Repartition of carry to individuals, unallocated carry if applicable, carry to partner institution(s) History: Evolution, founders, key dates and events in development, significant changes in organisation, strategy, ownership Legal Status: Capital structure, ownership Regulation: How the management company shall be regulated, adherence to AML/KYC

28. Thank You! Jose Romano Head of Region j.romano@eif.org European Investment Fund 37B, Avenue J. F. Kennedy L-2968 Luxembourg Tel.: (+352) 42 66 881 Fax: (+352) 42 66 88 200 www.eif.org

29. Technology Transfer Accelerator Turkey (“TTA Turkey”) IP Conference Turkey 30 October 2014 Istanbul