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Riding the Venture Capital cycles in Europe

Riding the Venture Capital cycles in Europe. Dr Jos B. Peeters Managing Partner 7 November 2013 . Capricorn Venture Partners. Partners-owned 20 people organisation, 20 years existence Licensed asset manager – AIFMD compliant Over € 250 million under management. ICT € 15 million.

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Riding the Venture Capital cycles in Europe

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  1. Riding the Venture Capital cycles in Europe

    Dr Jos B. Peeters Managing Partner 7 November 2013
  2. Capricorn Venture Partners Partners-owned 20 people organisation, 20 years existence Licensed asset manager – AIFMD compliant Over € 250 million under management ICT € 15 million CLEANTECH € 112 million HEALTHTECH € 42 million Quest for Growth € 115.8 million* * September 31, 2013 Quest CleantechFund € 13.2 million* * September 31, 2013 Head office, Leuven, Belgium AFC Leuven - November 2013
  3. The basics of our business AFC Leuven - November 2013
  4. The VC Business Definition : Invests at its own risk Seeks medium term capital gains Works in partnership with the entrepreneur Seeks exceptional opportunities and individuals Reasonable probability to make 5 to 10 times multiple We made 16 investments out of 2,000 proposals over the past 6 years in 9 countries AFC Leuven - November 2013
  5. Alternative Assets - AFIMD Hedge Funds Real Estate Private Equity Buy-out Expansion Venture Capital MBO/I Seed Early-Stage Start-up Spin-off / Spin-out LBO AFC Leuven - November 2013
  6. A history of building companies From early development To global leadership Mature technology Idea Production Team Laboratory Product Commercial products IP Exit prospects Market traction AFC Leuven - November 2013
  7. Riding the Cycles 1987 - 2011 AFC Leuven - November 2013
  8. New Funds Raised in Europe
  9. Early Stage Investing in Europe
  10. UNITED KINGDOM FRANCE 120 100 100 80 12000 2500 80 60 10000 2000 60 8000 40 1500 40 6000 20 20 1000 4000 0 0 500 2000 0 0 1987 1993 88 89 90 91 92 1983 1993 84 85 86 87 88 89 90 91 92 IPOson Parallel Markets VC Fund raising V.C. Fund raising and IPO’s AFC Leuven - November 2013
  11. The Contribution of Easdaq Easdaqprovided growth capital, exits and success stories Easdaqproved that Europa has growth companies, non-risc adverse investors and specialised intermediaries Easdaqinitiated a reaction from traditional stock exchanges A.I.M. - (Alternative Investment Market) London Small U.K. Companies, Limited Disclosure Chapter 20 - (Main List) London Scientific Companies, mainly U.K. Biotech Nouveau Marché – Paris - Small French Companies NeuerMarkt– Frankfurt - Small German Companies Nasdaq – Washington 6.3 billion € raised by 63 companies 100 million € average daily volume AFC Leuven - November 2013
  12. Returns !!?? 1995 1996 Early Stage 12.9 27.2 Development 15.7 18.7 Buy-outs 33.8 41.9 Generalists 13.1 22.9 Top-quartile I.R.R.’s - Source EVCA AFC Leuven - November 2013
  13. Returns 1999 ?!! Top-quartile Upper half Early Stage 42.9 19.2 Development 17.3 14.8 Buy-outs 43.9 30.5 Generalists 22.6 13.8 Pooled I.R.R.’s - Source EVCA AFC Leuven - November 2013
  14. Growth IPO’s and Fund Raising AFC Leuven - November 2013
  15. A goldrush that ended in tears ... AFC Leuven - November 2013
  16. When greed prevails... AFC Leuven - November 2013
  17. Fund raising and IPO’s AFC Leuven - November 2013
  18. ...and lasting loss of value European VC Investments AFC Leuven - November 2013
  19. 2002 A New Driver AFC Leuven - November 2013
  20. A New Wave of European VC - PE Auto shape Default Source: EVCA AFC Leuven - November 2013
  21. But not for VC investments in Europe AFC Leuven - November 2013
  22. Banks’ return on net equity AFC Leuven - November 2013
  23. Returns venture capital Europe AFC Leuven - November 2013
  24. Risk – reward relation AFC Leuven - November 2013
  25. Risk – reward anomaly AFC Leuven - November 2013
  26. The 1 trillion € question in 2009 Are the venture capitalists stupid amateurs or Are banks and buyouts taking more risks than perceived AFC Leuven - November 2013
  27. European VC – PE today Auto shape Default Source: EVCA AFC Leuven - November 2013
  28. AFC Leuven - November 2013
  29. Fundraising in Europe Source: EVCA AFC Leuven - November 2013
  30. AFC Leuven - November 2013
  31. AFC Leuven - November 2013
  32. Average European VC fund Source: EVCA Average amount at final closing AFC Leuven - November 2013
  33. The Role of Political Europe In 1993 EU sponsored an EVCA working group that developed the case and wrote the business plan for Easdaq Profitability criteria were withdrawn for stock market listing requirements Relaxation of the banking rules In 2012 Venture Capital considered a systemic risc and imposing the AFIMD on VC managers Solvency II, Basel III, Occupational Retirement Provision (IORP) Directive hampering inflow of capital AFC Leuven - November 2013
  34. Core Problem Starvation at both ends of the capital pipeline Study by R. Abbanat of MIT on behalf of Easdaq AFC Leuven - November 2013
  35. There is no substitute for IPO’s Provide Liquidity for Entrepreneurs, Business Angels, Venture Capitalists Allow Companies to Raise Additional Equity Transforms Paper Value in Cash Provides a Yard Stick for Valuations Control Remains with Entrepreneurs It’s the engine that drives returns and fundraising AFC Leuven - November 2013
  36. Fall-out of the funding gap Venture capital portfolio becomes digital Average to good don’t receive follow-on investment Syndicates take much longer to form No confidence that follow-on investors will be found Reducing number of VC players & decreasing size of funds Terms are getting rough Liquidation preferences Pay to play provisions AFC Leuven - November 2013
  37. AFC Leuven - November 2013
  38. Being contrarian pays off 2009-2010 2005-2008 Now… AFC Leuven - November 2013
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