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

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Agenda 2 1.About EIF EIF Resources, Governance and Investments Equity Highlights EIF Technology Transfer: History and Characteristics 2.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

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What is the EIF? 3 The leading developer of risk financing for entrepreneurship and innovation across the EU Fulfilling our dual goal and pursuing EU policy objectives as well as financial sustainability Addressing market needs by acting as a countercyclical investor in tough economic times Working with financial intermediaries across the 27 EU countries, EFTA and all Accession countries Helping SMEs, micro- enterprises and European regions innovate and grow by making finance more accessible

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Lower Mid-Market Expansion/ Development Capital Early Stage Business Angels Early Stage Business Angels Involved throughout the Business Cycle 4 EIF Current Investment Focus Strategic Challenges Technology Transfer Proof of Concept Business Angels Seed Stage Technology Transfer Proof of Concept Business Angels Seed Stage Technology Transfer Accelerator Catalyse hybrid debt finance for growth Support VC ecosystem and decrease dependency on public finance Fill funding gap left by institutional investors Instruments to stimulate innovation, competitiveness and cross-border investment Investing in VC funds Investing in Growth Capital Mezzanine European Commission ResourcesEIB / EIF ResourcesMember States / Private Sector Resources

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EIFs Resources 5 EIF manages resources from different stakeholders European Investment Bank Risk Capital Mandate (RCR) EUR 5bn Mezzanine Facility for Growth (MFG) EUR 1bn European Commission Competitiveness and Innovation Framework Progr. (CIP) EUR 1bn allocated to equity and guarantees Risk-Sharing Instrument (RSI) EUR 120m Progress Microfinance EUR 200m National & Regional Funds 20 European and regional Funds-of-Funds including Germany, Portugal, Spain, Turkey, UK 14 Holding Funds supported by structural funds EUR 1.3bn

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Equity Highlights 6 20122011201020092008 Equity Signatures PE Assets under Management 1 3501 126930733409 6 9525 9195 3674 1033 535 (EUR / m) 2013 1 468 7 904

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EIFs Governance 7 Committed to the highest standards of governance and integrity Audit Board and both in- and external auditors oversee Chief Executive and Board of Directors Risk Management, Legal and compliance units Chief Executive is responsible for the day-to-day management of the EIF Board of Directors has a supervisory role and approves all EIF transactions

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

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EIF Technology Transfer History and Characteristics 9

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

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11 EIF Technology Transfer Investments To Date

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Agenda 12 1.About EIF EIF Resources, Governance and Investments Equity Highlights EIF Technology Transfer: History and Characteristics 2.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

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TTA Turkey 13 This project is co-financed by the European Union and the Republic of 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.

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TTA Turkey Project Level Background 14 Funded by IPA monies Deadline for Project Implementation: 31 December 2017 End Beneficiary: The Scientific and Technological Research Council of Turkey (TBTAK) Project Amount: EUR 30.5 million Project Components: 1.Cornerstone TTA Turkey Fund EUR 26.3 million 2.Advisory Services and Networking for TTOs and TBTAK EUR 1.35 million 3.Visibility EUR 200,000 4.Impact Evaluation EUR 100,000 2012 20132014 Market Needs Assessment carried out Business Plan for the Project submitted Negotiations and Approval Signature Date: July 2014 201520162017

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15 TTA Turkey Project Structure and Main Objectives TTA Turkeys 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 IPA Resources EIF as Advisor & Project Manager IPA Resources EIF as Advisor & Project Manager IPA Commitment to TTA Turkey Fund IPA Commitment to TTA Turkey Fund Advisory Services and Networking (Technical Assistance) Advisory Services and Networking (Technical Assistance) TTO s TBTAK Visibilit y Impact Evaluatio n proceeds

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16 TTA Turkey Fund Target 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 30 projects to be selected by the Fund Manager by 31 December 2017 At least 15 projects shall be identified and invested in the Target Region (12 NUTS II, 43 provinces)

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17 TTA Turkey Fund Structure

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18 Target Fund Size Indicative Maximum Amount of Funding EUR 30 million EUR 40 million Maximum Contribution from IPA Funds Minimum Third Party Capital (Private Investors) Applicants Own Commitment in the Fund EUR 26.3 million EUR 2.8 million 1-5% of the total Fund size Maximum Investment Amount to a Single Company/Project EUR 2.5 million Over 12 months Maximum Duration of the Fund 10 years Possibility of extension for 1+1 years 12 years Deadline for the Funds Investment / Selection Period Deadline for Disbursements by the Fund 31 December 2017 Portfolio DiversificationMinimum of 30 projects/companies Target Industry Sectors Generalist with preferred and excluded sectors as covered in details in the Call for EoI Main Terms & Conditions

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19 Flow of Funding Co D Start up

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Time Frame and Process 20 Next StepsDeadline Requests for Clarifications from Applicants Accepted Friday, 15 August 2014 EIF to Reply to Clarification RequestsFriday, 22 August 2014 Call for EoI Open for Applications Thursday, 11 September 2014 First ScreeningsSeptember 2014 Scoring and Second ScreeningsOctober 2014 Due Diligence of Shortlisted ApplicantsOctober 2014 Legal Negotiation & ExecutionDecember 2014

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Assessment Criteria & Scoring 21 QUALITY ASSESSMENT CRITERIAWEIGHTING 1 Project Relevance, Quality and Coherence Evaluation of the Fund focus and proposed investment strategy, including viability of Funds size. Evaluation of the Fund Managers team profile, including but not limited to: (i) Team stability and dynamics. (ii) Its ability to implement the Financial Instrument (iii) Operational, financial, technical and VC competences. Capabilities as members of Boards and/or committees of an investment and/or advisory nature. (iv) Prior experience in technology transfer field, commercialisation of research and development, business development, IP law. Evaluation of Applicants investment processes, including deal flow generation, ability to invest, ability to add value to companies and exit strategy. 40 points 2Project Maturity, Investment Readiness Demonstration of ability to raise at least EUR 2.8 million of the Fund from private investors. Demonstration of ability to source deals in Turkey (SMEs/projects). Investment readiness of the proposed structure like maturity of the proposed legal structure, including internationally proven best market practices; outline of any different legal entities required; planned establishment costs and details thereof; detailed term sheet; proposed law firm etc. in order to execute the closing of the fund timely and efficiently. 40 points 3Institutional Capacity & Sustainability Fund Manager organisation, structure and long-term viability. Assessment of the corporate governance in place. Assessment of legal structures and independence. Terms and Conditions, including management fee and profit share arrangements. Assessment of the alignment of interests between the Fund Manager and the Investors. Assessment of Reporting and Control Procedures. 20 points

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

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23 First ScreeningSecond ScreeningDue DiligenceBoard Approval Partner Institutions Market Investment Strategy Deal flow Potential Investors Investment Process TeamTrack Record Governance Management Company Economics Remuneration / Incentives Investment Considerations

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Criteria (1/4) Partner Institutions Metrics: Research budget, peer group comparisons, invention disclosures, IP filed, IP awarded, growth rates, commercialisation income, encumbrances, 3 rd 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 Metrics: Research budget, peer group comparisons, invention disclosures, IP filed, IP awarded, growth rates, commercialisation income, encumbrances, 3 rd 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 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 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 24 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 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 Deal flow and pipeline

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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 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 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 Potential Investors Investment Process 25 Market / Competitors 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 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 Criteria (2/4)

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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 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 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 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 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. 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. Team Track Record Governance 26 Criteria (3/4)

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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 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 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 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) 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) Management Company Economics Remuneration / Incentives 27 Criteria (4/4)

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Thank You! 28 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

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