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CAPITAL FORMATION FOR ENTREPRENEURS IN NORTH CAROLINA

CAPITAL FORMATION FOR ENTREPRENEURS IN NORTH CAROLINA. A PROGRAM TO INCREASE ACCESS TO CAPITAL AND PROVIDE EDUCATION FOR I NVESTORS AND ENTREPRENEURS May 23, 2008 UNC PEMBROKE. FOOD FOR THOUGHT.

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CAPITAL FORMATION FOR ENTREPRENEURS IN NORTH CAROLINA

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  1. CAPITAL FORMATION FORENTREPRENEURS INNORTH CAROLINA A PROGRAM TO INCREASE ACCESS TO CAPITAL AND PROVIDE EDUCATION FOR INVESTORS AND ENTREPRENEURS May 23, 2008 UNC PEMBROKE

  2. FOOD FOR THOUGHT • IN THE FIRST 4 MONTHS OF 2008, WE HAVE LOST OVER 175,000 JOBS WHEN WE SHOULD HAVE CREATED 600,000. • A TOTAL OF 2.8 MILLION JOBS HAVE BEEN LOST IN THE MANUFACTURING SECTOR DURING THE PAST 8 YEARS. • (U.S. Department of Labor, Bureau of Labor Statistics)

  3. IS THERE ANY GOOD NEWS? • ON AVERAGE, THERE WERE OVER 400,000 PEOPLE CREATING NEW BUSINESSES EACH MONTH OVER THE PAST TEN-YEAR PERIOD. • ENTREPRENEURIAL ACTIVITY IS ON AN UPWARD TREND.

  4. INNOVATION & GOOD IDEAS • INNOVATION MAY BE ONE OF THE LAST AND BEST ADVANTAGES NORTH CAROLINA AND THE U.S. RETAINS. • INNOVATION (GOOD IDEAS) REQUIRES CAPITAL. • GOOD IDEAS WITHOUT CAPITAL….GO NOWHERE.

  5. CAPITAL EXISTS IN A SPECTRUM….. FROM PURE DEBT TO PURE EQUITY.

  6. OPPORTUNITIES FOR OUR ENTREPRENEURIAL GRADUATES AND COMMUNITIES SHOULD BE CONSIDERED AS A SPECTRUM AS WELL….. THIS REQUIRES THE AVAILABILITY OF INVESTMENT CAPITAL.

  7. North Carolina’s Economic Growth THE NEED: Stimulate the formation of committed private equity investment groups in : 1. True seed funding (first money in) 2. Early stage funding ( $250K to $500K) Traditional VC models cannot meet this need. THE SOLUTION: Create the IMAF Family of Funds and deliver capital using the successful experience with IMAF Triad-1, other angel groups, private and institutional investors and the broad spectrum of educational programs and counseling resources of the SBTDC on a state wide basis.

  8. THE FUNDING GAPSSource: Kauffman Foundation – “Power of Angel Investing” Angels Number of Investors SEED GAP EARLY STAGE GAP VCs $50K - $100K $5 million $10 million

  9. North Carolina’s Funding Model SBTDC COUNSELING, SBIR/STTR SPECIALISTS, PRIVATE EQUITY INITIATIVES, INVESTOR-READY & POWER OF ANGEL INVESTING EDUCATIONAL SERVICES. IMAF SOURCE CAPITAL FUND SYNDICATED VENTURE & ANGEL FUNDING NCBC BATONPROGRAM NC IDEA GRANTS SBIR/STTR GRANTS IMAF LOCAL FUNDS ECONOMIC SUCCESS UNIVERSITY RESEARCH FUNDING GAP SEED STAGE PROTOTYPE PROOF OF CONCEPT FUNDING GAP EARLY STAGE COMMERCIALIZATION UNIVERSITY BASED RESOURCES AND COLLABORATIVE PROGRAMS INVOLVING RESEARCH, BUSINESS AND LAW STUDENTS COORDINATED THROUGH THE SBTDC.

  10. IMAF SOURCE CAPITAL IMAF SOURCE CAPITAL FUND IMAF WEST W.C.U., UNC-A, ASU IMAF EAST ECU, Elizabeth City IMAF TRIAD WFU, NCA&T UNC-G, WSSU, NCSA IMAF COASTAL UNC-W, FSU, UNC-P IMAF RTP NCCU, NCSU, UNC-CH, DUKE IMAF KANNAPOLIS UNC-C = FORMED AND OPERATING = IN PROCESS

  11. = University Campuses = IMAF Sites

  12. IMPACTIMAF-TRIAD 67 JOBS CREATED OR RETAINED (POTENTIAL FOR 300 + JOBS ON A STATE WIDE BASIS) $2,158,350 INVESTED IN 13 TRIAD COMPANIES AND 1 FROM R.T.P. 1:1 LEVERAGE OF ADD ON INVESTMENT DOLLARS.

  13. SBTDC PARTNERSHIP 2007 ATTRIBUTES: • 26 YEAR HISTORY OF DEMONSTRATED SUCCESS WITH STATE WIDE COVERAGE. • SBIR/STTR GRANTS IN EXCESS OF $40M • SECURED OVER $1.4B IN GOVERNMENT CONTRACTS FOR N.C. SUPPORTING MORE THAN 35,000 JOBS. • R.O.I. EQUATES TO $6.88 IN INCREMENTAL TAX REVENUE FOR EVERY $1.00 INVESTED IN THE SBTDC.

  14. IMAF MODEL A MEMBER - OWNED AND MEMBER - MANAGED LIMITED LIABILITY COMPANY, ORGANIZED TO PROVIDE MEMBERS AN OPPORTUNITY FOR ACTIVE INVOLVEMENT IN A DIVERSIFIED AND DISCIPLINED CAPITAL INVESTMENT PROCESS FOCUSED ON ROI AND ECONOMIC GROWTH.

  15. BENEFITS OF THE FUND DESIGN AND THE OVER-ALL IMAF FAMILY OF FUNDS PROGRAM • DISCIPLINED AND ORGANIZED INVESTMENT APPROACH • SHARED DUE DILIGENCE AND DEAL FLOW AROUND THE STATE ( AND SOON THE NATION ) • PORTFOLIO MODEL • MODEST COST TO JOIN ( $15,000 PER UNIT ) • INDIVIDUAL ADD ON OPTION AVAILABLE THROUGH THE FUND • NC QUALIFIED BUSINESS VENTURE TAX CREDIT AVAILABLE TO FUND MEMBERS-NC BIOTECHNOLOGY CENTER INVESTMENT • CONTINUING EDUCATION AND PROGRAM DEVELOPMENT THROUGH THE SBTDC • OPPORTUNITES TO ENGAGE UNIVERSITY RESOURCES FOR COMMUNITY DEVELOPMENT

  16. PROJECT STATUS AND NEXT STEPS IMAF-TRIAD, 14 DEALS AND CONTINUING TO SEEK INVESTMENTS IMAF-TRIAD II, ANTICIPATED EARLY 2008 IMAF-WEST, FORMED, RAISING MONEY, 2 DEALS DONE IMAF-EAST, FORMED, RAISING MONEY IMAF-KANNAPOLIS, FORMED, RAISING MONEY IMAF-RTP, ANTICIPATED MID 2008 IMAF-COASTAL, ANTICIPATED MID TO LATE 2008 IMAF SOURCE CAPITAL FUND, START RAISE MID 2008

  17. HOW DO WE TIE ALL OF THIS ACTIVITY TOGETHER ? • NORTH CAROLINA CAPITAL HIGHWAY • WWW.NCCAPITALHIGHWAY.COM • AND • US CAPITAL HIGHWAY • WWW.USCAPITALHIGHWAY.COM

  18. WHAT IS THE NEXT LEVEL ? • VIA THE U.S. CAPITAL HIGHWAY WEB BASED BACKBONE, • INCEPTION MICRO ANGEL FAMILY OF FUNDS MEMBERS IN N.C. AND ACROSS THE COUNTRY CAN ACCESS: • CONTINUOUSLY UPDATED EDUCATIONAL PROGRAMS FOR BOTH ANGELS AND ENTREPRENEURS • DEAL FLOW THAT HAS BEEN SCRUBBED AND IN CONSISTENT FORMAT • DUE DILIGENCE REPORTS AND INDUSTRY INFORMATION • HUMAN CAPITAL • BEST PRACTICES IN PRIVATE EQUITY INVESTING

  19. THE ULTIMATE RESULT • TAKING ANGEL INVESTING OUT OF THE “BACKYARD” • MAKING MORE PRIVATE EQUITY CAPITAL AVAILABLE • FUELING INNOVATION FOR THE FUTURE

  20. QUESTIONS AND DISCUSSION

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