IBAN Association

The Italian Informal Venture and Angel Capital Market

www.iban.it

SummaryThe Italian Informal Venture and Angel Capital Market

1) IBAN Association

2) IBAN Survey 2013: national situation of Angel Investing

3) Angel Investing and Innovation

1.1. IBAN Association Our Network to sustain Informal Venture Capital Market

FINANCING INSTITUTIONS

NATIONAL AND INTERNATIONA

L PARTNERS

BUSINESS ANGELS

SERVICES TO SME’s

TECHNOLOGY CENTRES

IBAN

Over the years IBAN has created a strong"relationship network" that provides acommon factor to the skills andexperiences of many organizations andoperators in the sector, covering theentire "value chain" of "early stage”phase of SME’s.

In this way IBAN can effectively supportthe start-up in the process of growth andvalue creation.

*They are former business owners or managers in business who have financial resources(although limited), a good network of knowledge, a strong management skills and a good trackrecord. They have the taste of running a business, the desire to acquire a stake in companies withhigh growth potential and interest to monetize a significant gain at the time of the exit, the goalof Business Angels is to contribute to the economic success of company and the creation of newjobs.

IBAN Association is the institution that best understands and represents Italian Business Angels*

1.2. IBAN AssociationAt glance – 1/2

Italian Business Angels Network Association (IBAN) is a non-profit making association under the Italianlaw, focused on the development and the growth of the Business Angels phenomena in Italy. It wasfounded on March 1999 in the framework of a project launched by the European Commission – DGEnterprise. Early 2013, IBAN has been founding member of BAE, Business Angel Europe association.

In Italy, IBAN represents and promotes investment initiatives in the venture capital market coming frominformal investors, usually called Business Angels (BA).

IBAN has been founder member of EBAN.

IBAN is founder member of WBAA - World Business Angels Association.

IBAN is founder member (2013) of BAE - Business Angel Europe Association. BAE contribute to create thelobbying and market platform for angel investing in Europe and the reinforcement of NationalAssociations.

Today, IBAN represents more than 450 informal investors community across all Italy.

In addition, IBAN has links with Italian Venture Capital Association (AIFI) and local and national associations of entrepreneurs; together with AIFI.

1.3. IBAN AssociationAt glance – 2/2

IBAN’s expertise include:

• Increasing the sources of financing for unlisted SMEs and start-ups.

• Scouting and helping the financing of start-ups and SMEs (investment readiness).

• Recruiting BAs and facilitate the setting up of BA networks and clubs (ready to invest).

• Organizing investments forum between investors and companies searching for capital.

• Organizing Business Angels Academy training events.

• Stimulating the exchange of experience among business angels networks and encouraging “best practices”.

IBAN’s members are BANs, investors clubs, business angels and professionals in matching investors(formal and informal) with entrepreneurs.

4.4. Italian BA ProfileBA's personal profile from a recent Survey

IBAN Association

Business Angels & professionals

B.A.N. - regionaloperating area and

focus on cross-sector businesses

B.A.N. -national/international

operating area ad focus on cross-sector

businesses

Angel InvestorsClub

1.4. IBAN AssociationNetwork structure

IBAN has close relationships with leading Italian law firms and fiscal&tax advisors. Thanks tothis, IBAN members are entitled to access detailed information on Angel Investing and on legaland fiscal news related to risk capital investing, as well as an operating guide on maincontractual obligations and terms that Entrepreneurs and Investors have to agree upon, inpreparation to the closing of the deal.

1.5. IBAN AssociationMain actions carried out by IBAN

• IBAN created http://www.iban.it , a website with an average of 10,000 visitors each month.

• Published a "White Paper” about innovation business, according to the dictates of theEuropean Charter of Lisbon, presented proposals to the Italian Ministry and EuropeanCommunity.

• Organized and / or participated in over 350 seminars and conferences in all Italian regions andabroad.

• Received the European Award of EBAN, for "Best Lobbying initiative in support of businessangels and early stage investors“.

• Received positive recognition from the Italian government, Consob, Italian Stock Exchange,the Chamber's system, the Industrial Districts Club, various regional and provincialAdministrations, as well as the business community.

• Over the years, IBAN has appeared in many articles of national media andfinancial&innovation press. http://www.iban.it/it/dicono-di-noi

8

1.6. IBAN Association Our Publications to sustain Informal Venture Capital culture

• “White Paper – proposals for the development of startup” – 2014, in partnership with CBA StudioLegale e Tributario.•“White Paper – proposals for the development of Venture Capital in Italy” – 2011, by theCommission Venture Capital AIFI. IBAN Association oversaw the part of the Angel Investing.•“Legal and Fiscal handbook for BA” - 2010, in partnership with Studio Legale Gianni, Origoni, Grippo& Partners.•“Formal Documents for Early Stage Phase” (NDA, Investment Agreement,Term Sheet) - 2010, withStudio Legale Rossotto & Partners•“Business Angels and Informal Venture Capital in Italy” - 2009, in collaboration with SDA BocconiUniversity – Finance Department•“Implementation of European MiFiD Directive and IBAN circuit activity”, 2008 – in collaborationwith Studio Simmons & Simmons.•“Guide to setting up a business with Business Angel” - 2008, in collaboration with KPMG Italia.•“Business Angel in Italy” - 2003, in cooperation with the II° Università di Napoli.•"Guide to Business Plan" - 2002, in collaboration with AIFI and PriceWaterhouseCoopers.•“Standard Behavior Handbook for BAN” – 2001, in partnership with ISTUD Foundation.

1.7. IBAN AssociationObjectives reached in 15 years of business

1. Improvement of European best practices, through close collaboration between IBAN and the other partners of BAE

2. The role of business angels, as an economic operator, continues to grow:• sharp increase in the number of deals closed in the last 5 years• recognition of the importance of BA in the financial market

3. The Italian government has approved the tax exemption on capital gains on Angel Investing (Law 133/08, article 3)

4. During 2012 the Association IBAN has been approached both by Banca d’Italia and by the Ministry of Economic Development with regard to measures to support the sector (Law 221, 17 december 2012).

Total business projects received in 2013 (through IBAN website): 667

Business projects with structured Executive Summary: 202

Business projects - High Rating: 103

Business projects - Low Rating: 99

Limited number of business project with high-quality documentations

Source: IBAN Association, internal data 2013

1.8. IBAN AssociationBusiness projects received by IBAN (2013)

IBAN Survey 2013 (1/3)Data at glance

• IBAN Survey 2013 Sample Size is composed by 246 Business Angels, divided in direct IBANMembers, indirect IBAN Members (belonging to Club or BAN associated with IBAN), and otherinvestors selected by IBAN Association.

• In 2013, thanks to IBAN Survey, we observed that the investments’ total amount is about €31.857.000. This amount was invested through 324 investment operations, concerning 165companies (27% startup stage & 44% seed stage).

• The average total amount is about € 193.072 for invested project and € 98.000 for individualinvestment transactions.

• IBAN Survey 2013 confirms the strengthening of operations made by Business AngelsSyndications. This is due mainly to the bigger capital gathering (that gives the possibility to investin larger startups and in more industries) together with lower risks.

• BA investments were targeted mainly on ICT, followed by Media&Entertainment and Medtech,industries characterized by high potential growth and high innovation. Moreover, investments(also by Corporate Venturing) are increasing in the following business sectors: food, industrydevices and social media.

2.1. IBAN Survey 2013Data at glance – 1/3

IBAN Survey 2013 (1/3)Data at glance2.2. IBAN Survey 2013Data at glance – 2/3

Source: IBAN, Survey 2013

Main Figures Year 2013

Sample ( 50% IBAN Members) 246 answers

Total investments 31.857.000 €

Individual investment operations 324

Invested Companies 165

Analyzed projects 767

Individual Investment Average amount 98.000 €

Declared Exit 19

Sample ExaminedProjects

Average amount

Declared exit

Single investment operations

Comparison between the two most recent IBAN Surveys

Source: IBAN, Survey 2013

2.3. IBAN Survey 2013Data at glance – 3/3

11.556

18.700

31.100 31.46033.334

34.847 33.80031.857

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

Value of Investments (mln €)

2006 2007 2008 2009 2010 2011 2012 2013

Source: IBAN, Survey 2013

The Italian Market of informal venture capital is consolidated in a range of 30 - 35 mln €

2.4. Business Angels’ InvestmentsValue of Investments – 1/2

Source: Iban, Survey 2013

2.5. Business Angels’ InvestmentsValue of Investments – 2/2

Source: Iban, Survey 2013

Business Angels’ Investments (3/4)Number of investment by sector2.6. Business Angels’ InvestmentsBusiness Sectors

Source: Iban, Survey 2013

• During last year, only 19 disinvestment operations (exit) were declared. It is clear that thecurrent economic environment influences investors’ behavior: exits were delayed, waiting forbetter economic conditions;

• Only 10% of sample declared a disinvestment operation in 2013;• The greatest number of exits is concentrated in ICT and Medtech sectors.

2.7. Business Angels’ disinvestmentsData at glance

Source: Iban, Survey 2013

• The typical Italian BA is a 40-50 years old man, he has a high educational degree (82,7%) whomainly lives in Northern Italy.

• Generally is an entrepreneur with past experience as a manager, declare assets lower than € 2mln and invests 10% of its available “cash” assets in the angel investing market.

2.8. Business Angels’ identikitCharacteristics and investment behavior

• At the moment of the BA investments in a start-up, most of them have an avg. of 0-5employees;

• At the moment of the BA exit (avg. around 4 year), the same company employ 8-10 people;

• In the past three years, on a 62 deal sample, the investment of a Business Angel and his/herengagement in the company management have contributed to the creation of 650 new jobsand working places;

• Recent indicators show that majority of new jobs come from companies that no more than 5year old;

• BA involvement in early stage developments also facilitates deals of Corporate Venturing,industry players and market leaders investing in start-ups.

3.1 Angel Investing supports StartupsFacilitating new jobs creation and the matching of Innovationwith Industry

www.iban.it

Via Ampère, 61/A20131 Milan – Italy

Tel. +39 02 30.51.60.49Fax +39 02 30.51.60segreteria@iban.it

Paolo Anselmo - IBAN Presidentpresidenza@iban.it

Member of: