PROBLEMS AND PROSPECTS OF THE BUSINESS ANGELS

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The First Russian-Israel Venture Forum

• PROBLEMS AND PROSPECTS OF THE BUSINESS ANGELS
  ACTIVITY IN RUSSIA

I. Panteleev, Chief Executive of SBAR 14-15
March 2007Tel - Aviv
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National Commonwealth of Business Angels
(SBAR)Non-Commercial Partnership

• Established by the Russian Association of Direct
  and Venture Investment (RAVI) initiative and
  supported by the Investment Policy Committee of
  the RF Chamber of Commerce and Industry (CCI)
• Public registration date
• 27 December 2006

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SBAR combines

• Business-angels-investors of the small innovation
  companies at the early stages of development (the
  seed ones)
• Other natural and juridical persons promoting the
  implementation of the SBAR goals and objectives

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Members of SBAR

• The Volga Region Association of Business Angels
  Start (Initial) Investment
• International Foundation for Technologies and
  Investment
• Non-Commercial Partnership INTECH
• OJSC NIKOR
• CJSC AKADEM-PARTNER
• BISS Ltd
• ATIS company
• NETECH Ltd
• Angel Investor magazine
• Natural persons

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The SBAR development concept was approved at the
meeting of the National Commonwealth of Business
Angels on 26 January 2007
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Table of Contents
SBAR development concept

• General provisions
• Business angels and innovation economy
• SBAR and Russia the society and the state
• 3.1. SBAR and society
• 3.2. SBAR and the state
• 4. Basic directions for the SBAR activity
• 4.1. Self-development
• 4.2. SBAR for its members
• 4.3. Development of the company partnership
• 4.4. International activity
• 4.5. Economic activity
• 5. SBAR and its business partners

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1. General provisions
SBAR development concept

• The SBAR development concept determines the basic
  SBAR activities for the perspective.
• Mission assistance in acceleration of the
  innovation development of the country and growth
  (based on this) of the innovation GDP
  constituent.
• Objective assistance in formation and
  development of a new branch in the countrys
  economy the business angel investment based
  on creation of favorable conditions for the
  business angels activity in Russia.
• Business angels (BA) and small innovation
  companies (SIC) is a single whole. BA are a part
  of SIC.

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2. Business angels and innovation economy
SBAR development concept

• Business angels are a unique investment mechanism
  (long terms, high risks, a single team, smart
  money, etc.), the commercialization process start
  and investment in the so-called seed stage
• BA (pre-ventured financing) together with the
  venture investing (VI) are the key financial
  mechanisms for the SIC of the early stages
• Volumes of the investment resources in the BA and
  VI sectors determine the size and speed of
  innovation development. The BA and VI
  equilibration on stocks and objects for
  investment (SIC)
• BA play out an important social role investment
  in scientists, science and intellectual potential
• Governments of the countries create preferences,
  privileges and benefits for BA and SIC for the
  purposes of capital formation in the small
  innovation sector

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3. SBAR and Russia the society and the state
SBAR development concept

• BA development status by the beginning of 2007
• BA are not formed as a part of the society, state
  and economy
• Fragmentariness the separate BA poorly
  interacting between each other
• UNIDENTIFIABILITY of BA
• Neither by society, nor by the state as an
  investor-subject of economy. There is no idea of
  business angels
• Potential investors (by availability of capital)
  identify themselves as BA lack of information,
  knowledge and experience
• Financial insufficiency a small fund volume in
  the BA sector

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3.1. SBAR and society
SBAR development concept

• SBAR priorities
• Introduction of the BA term to everyday life
• Creation of a positive image for BA and SIC in
  the social consciousness architects of the
  economy of knowledge and the economy of the
  future for the benefit of everyone citizens,
  society and the state
• Explanation and clarification of the essence of
  BA and their activity, a single team (BA,
  inventors, managers, etc.) and objective, new
  relationship, confidence, mutual aid, respect,
  etc.
• Capital formation in the BA sector, demonstration
  of the BA business profitability and
  availability, as well as of the history of
  success
• The slogan is Invest in the innovation Russia

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3.1. SBAR and society
SBAR development concept

• Measures for implementation of priorities
• A broad propaganda of the business angel
  movement and SBAR opportunities based on
• Publication of books and analytical articles,
  practical experience and successful business
  stories
• Appearances at forums, conferences and round
  tables of different level
• The own PR-actions organization
• Participation in TV- and radiobroadcasts
• Organization of the own, or in cooperation with
  partners, printed and information editions, as
  well as of TV- and radiobroadcasts
• Interviews to mass media.

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3.2. SBAR and the state
SBAR development concept

• SBAR and the state are partners in formation and
  development of the innovation economy
• Priority direction to arrange an operating
  interaction with the bodies of executive and
  legislative power at the Federal and regional
  levels
• - on the basis of the principles of
  state-private partnership
• - for the purposes of organization of
  cooperation in the innovation policy development
  and implementation, legislation, projects and
  programs

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3.2. SBAR and the state
SBAR development concept

• Basic measures on implementation
• The SBAR representatives participation in
  boards, commissions, councils, etc. created and
  functioning at authorities
• Initiating of the new and participating in the
  existing public, state-private and international
  programs and projects
• Preparation of drafts for the new, as well as of
  alterations and supplements to the existing
  legislative acts and normative documents, and
  making proposals to the corresponding authorities

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4. Basic directions of the SBAR activity
SBAR development concept

• 4.1. Self-development
• Objective integration and growth of partnership
  in the number of members, stock, aiding to BA in
  the investment process
• Basic directions
• Involvement of the new members in SBAR,
  development of the regional networks
• Arrangement of a close interaction inside SBAR
  based on the state-of-the-art TV- and information
  systems
• The SBAR personnel formation and development

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4. Basic directions of the SBAR activity
SBAR development concept

• 4.2. SBAR for its members
• The main objective is rendering an overall aid to
  BA and SIC during all innovation cycle from
  introduction to the business to way out of the
  projects, as well as within the period of
  formation of a BA as an investor
• Priority directions
• 4.2.1. SBAR for business angels
• Protection of interests of the business angels
  community and SBAR members
• Training business angels, improving the level of
  their professional skills, business trainings for
  the beginners and potential business angels on
  the principles of investment in the companies of
  the early stages
• Search and appraisal for the competitive
  projects, the due diligence conduct
• Rendering various consulting services (business
  planning, marketing, patents, law, etc.)

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4. Basic directions of the SBAR activity
SBAR development concept

• 4.2.1. SBAR for business angels
• Priority directions
• A ground for interaction between business angels
  and innovation entrepreneurs, creation of the
  data base of the innovation companies prepared
  for investors in the form of a virtual trade fair
  for the seed projects, conduct of presentations
  of innovation companies for business angels
• Search for partners for co-investment including
  those among business angels, venture funds,
  direct investment funds, in the framework of
  public projects and programs, etc.
• Creation of the collective investment mechanisms
  in the form of a seed fund and venture fund of
  SBAR
• Business trainings for the business angel project
  managers
• Services on management and co-management of the
  business angels projects

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4. Basic directions of the SBAR activity4.2.1.
SBAR for business angels
SBAR development concept

• A ground for interaction between business angels
  for the purposes of experience exchange, search
  for partners (the Business Angels Club,
  conferences, congresses, conventions, round
  tables, seminars, etc.)
• Popularization of the most successful business
  angels experience
• Creation and development of a powerful and
  intensive information support for the business
  angels activity (the SBAR website)
• Monitoring of development of the business angel
  investment in Russia and abroad, collection of
  statistical data on the business angels
  investment and development of the companies
  invested by them issue of the regular analytical
  reviews

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4. Basic directions of the SBAR activity
SBAR development concept

• 4.2.2. SBAR for the business angels innovation
  companies
• Training, business trainings for managers of
  those innovation companies which are already
  invested by business angels or planning to be
  invested
• Preparation of innovation companies for the
  business angel investing
• Preparation of the business angels innovation
  companies for the capital formation at further
  stages of development in the form of the venture
  and direct investment, as well as from the other
  sources
• Preparation of the business angels innovation
  companies for way out of a project, search for
  a strategic investor, coming out to the IPO

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4. Basic directions of the SBAR development
SBAR development concept

• 4.2.2. SBAR for the business angels innovation
  companies
• Assistance in placing the small innovation
  companies in technological parks and business
  incubators
• Selection of the qualified innovation managers,
  creation and development of a SBAR employment
  agency
• Creation of favorable conditions for sale of the
  innovation products and companies (exhibitions,
  trade fairs, in the framework of a single SBAR
  stand creation and development of the SBAR trade
  house)

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4. Basic directions of the SBAR activity
SBAR development concept

• 4.3. Development of the company partnership
• Objective to promote in arrangement of the good
  private and business relations between the SBAR
  members based on the following basic principles
• - equality of members
• - priority of interests of Russia, society and
  science
• - a solicitous and correct attitude of business
  angels to each other, a mutual respect of the
  SBAR members interests
• - confidence, reliability, OBLIGATORINESS,
  confidentiality and goodwill
• - exclusion of the actions and acts that cause
  damage to the SBAR image and reputation
• - dismissal of those members violated the SBAR
  principles of mutual relationship
• - The Ethic Code of Behavior for the SBAR
  members has been adopted

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SBAR development concept
4. Basic directions of the SBAR activity 4.4.
SBAR international activity

• Objective integration to the International
  Community of BA, experience exchange, foreign
  capital formation, entry of the Russian
  innovation companies to the world market with
  their products, as well as to the world stock
  exchanges
• Basic directions
• Joining and arranging the interaction with the
  European Association of Business Angels
• Interaction with the National Associations of
  Business Angels in different countries
• Training and experience exchange of business
  angels abroad
• Organization and participation in the
  international venture trade fairs and business
  angel trade fairs conferences, forums,
  presentations, etc.
• The foreign capital formation in the Russian
  innovation companies from different sources
  including
• - international and public projects and programs
  focused on Russia
• - foreign grants
• - foreign business angels, venture funds and
  other investors
• Assistance in search for the foreign business
  partners for the purposes of promotion of the
  innovation companies products to the world
  market
• Participation in the Russian programs and
  projects focused on the entry of innovation
  companies to the world market
• Assistance in entry of the Russian innovation
  companies to the world stock exchanges of high
  techs (IPO) and search for the foreign strategic
  partners

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4. Basic directions of the SBAR activity 4.5.
Economic activity
SBAR development concept

• Implementation of the assigned tasks will need
  the significant financial resources the volume of
  which will be increased in the course of time.
• Primary sources
• SBAR members contributions (regular and target
  ones)
• Funds received from paying for the advisory,
  expert and other services and works
• Sponsor funds
• Funds received from the research work execution
• Optional contributions
• International and state/public grants
• Other legal sources.

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5. SBAR and its business partners
SBAR development concept
SBAR is intended to cooperate actively with all
main innovation activity subjects as well as have
an impact on enhancement of the economic mode
for functioning of the objects included to the
national innovation system

• Innovation activity subjects
• Main subject the innovation companies by the
  stages of development
• Knowledge generation subjects (an inventor, the
  organizations carrying out the RD)
• Management subjects (an innovation manager and a
  managing company)
• Financing subjects classified by the stages of
  development of companies (business angels, state
  funds, direct investment funds, banks, etc.)
• Infrastructure subjects (business incubators,
  technological parks, couching centers, consulting
  organizations, etc.)
• Subjects of state and public regulation of
  innovation activity
• Innovation product consumption subjects
  (enterprises, natural persons)___________________
  _______________________
• The classification is published in the article
  titled A new approach to forming the innovation
  legislation (Innovations magazine ?3(90),
  2006).

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5. SBAR and its business partners
SBAR development concept

• Innovation activity objects
• Innovation activity state and public regulation
  objects (laws, acts, normative acts, regulations,
  orders, instructions, statements, standards,
  norms, agreements, etc.)
• Intellectual property objects patents,
  certificates of authorship, certificates for
  useful models, etc.
• Innovation products certificates, licenses,
  etc.
• Innovation manufacture objects technologies,
  equipment, etc.
• Innovation projects state and private projects,
  target programs focused on the innovation
  activity development
• Innovation companies shares
• Contracts and agreements between the innovation
  activity subjects

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5. SBAR and its business partners
SBAR development concept
The SBAR main priorities in respect of the
innovation activity subjects and objects

• Subjects
• Public and business associations and, first of
  all, the Russian Association for Direct and
  Venture Investment (RAVI), RF CCI, Russian Union
  of Industrialists and Entrepreneurship (RUIE),
  DELOVAYA ROSSIYA, OPORa and others
• Institutes of higher education, scientific
  institutions and inventors sources for the new
  knowledge and workouts
• Financial mechanisms venture funds, direct
  investment funds, state and private funds, banks,
  stock exchanges, etc.
• Infrastructure technological parks, business
  incubators, auditing and consulting agencies

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5. SBAR and its business partners
SBAR development concept

• Objects
• State and private innovation projects and
  programs. Proposals on participation in the
  existing, as well as in development of the new
  projects and programs concerned with the support
  for the business angel financing and innovation
  companies
• Intellectual property objects the proposals on
  increase of effectiveness in use of the
  intellectual property objects, motivation of
  inventors in commercialization of technologies
• Shares of innovation companies, perfection of the
  corporate legislation promoting the establishment
  of the managerial balance between business
  angels, inventors, managers and other owners of
  innovation companies
• Contracts and agreements between the innovation
  activity subjects working out of the Russian
  standards for contracts and other documents for
  the business angel investment, as well as
  formation and development of innovation companies.

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We welcome you at SBAR! Tel. [phone] Fax
[phone] E-mail Info_at_russba.ru www.russba.r
u
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Thank you for your attention!