3. Overview Jeremie/Mezzanine/Equity/Venture Capital – Simeon Karafolas, Scientific Partners

Simeon Karafolas of Scientific Partners gives a presentation on Overview Jeremie/Mezzanine/Equity/Venture Capital at the DIFASS Jeremie/Mezzanine/Equity/Venture Capital Workshop held on 3-4 June 2014 in Borlänge, Sweden.

So nice to see you all again here in a bowling game i’m going to talk about two cases of financial instruments let’s say that the venture capital mezzanine and the jeremy case let’s begin with the venture capital when we talk about vigil capital means a financial instrument and father a financial institution that gives money to a company which company either cannot

Have money from other sources or does not want to get money from other sources in the case of venture capital the venture capital financial institution which usually is an affiliate of a bank gives the demanded money to the company and it takes as a contra party a part of this company so we talk here about equity the venture capital gives the money and quite

Probably participates also to the board of directors that means that the venture capital does not give only money but it’s very much interested on the growth of the company because the goal the target of the venture capital is the growth of the company and for a after a time period usually of five years to sell the equities they received from the company to a very

Much bigger price and take the profit and leave the company usually they sell the stocks either to the old owners of the company or to the new owner to new investors who want to get in the company there are several stages in which our venture capital can participate to a company we have the first state in which during which either we have an idea for a scientist

For example who has a very good idea that can be transformed it to a product in this case we have no company we just have an idea this is a very risky case and if it works it’s also a very profitable case in the same almost case we have the beginning of the company we don’t have a really production or we adjust the beginning of the production in this case as well

We have a very high risk we have an intermediate case in which we have the company that always exists as a network produces and needs money to grow up and we have a third case in which we have a mature company that wants to get public we have in this case the mezzanine or the breed case the two last are the less risky cases that’s why they receive more of money if

We want to talk a little bit about the mezzanine usually is this is the last round of the investor in which the investor gives money to a company that wants to get public and usually wants to go to the stock market it can be combined by a depth and the equity the investor has a case in which there is no a big risk or the contrary it’s a case of loris the profit

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Is not as big as in the case of the startup or the first stage and usually is in the case where the company wants to get public to get into the stock market why maybe need a financial institution that can be the venture capital for several reasons one is to get money just before grow up and go get public the second is that heaven beside the company a financial

Institution that is very important for the company and is very important for the trust fasting of the public who wants to invest in a company and we have another case that will see later in the table that’s why i put it here this is the buyout in the case of buy out the investor takes at least 51 percent of the company this is a globally usually which is other

Evaluated but it has potentialities the investor takes the company build up again the company and sells with much more profit i remember the film the movie pretty woman richard gere i think he did the same thing buying bad companies or go balancing problem fix it again the waking world and sell it with profit i have here a table that was taken from the european

Venture capital association and here we have a habit two tables one indicating the amounts and the other indicating the number of fans that have been created the time period goes from 2007 to 2013 as you can see the buyout is the more important considering the amount invested this is the less risky case and maybe can give a lot of profit in the case of mezzanine

We have an important part of bounds that has been given there for the start up there are less money investing there which is normal because this is a very risky case we also can see that before the crisis if we consider for example 2007 and even 2008 we have a lot of money that have been invested just after the crisis or during the crisis the amount appears to get

Decrease very much and we see that the last year’s when we go just out the crisis this amount begins to grow up again if we consider now the number of fans that are interesting they are according to the european battle capital association we have some slight differences we see that for example we have a good number of funds that invest on early stage and balance

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It cases that means that we have less found in comparison to the amounts for the big cases as buyout and mezzanine that means that we have exactly small number of ounce that invest a lot of money which is normal as we will see later on the early states less money are invested of the contrary or they mature cases much more money are invested considering the evolution

Of the novel we have a similarity to them up to the amount of ounce of our fans invested we have a lot of found that are at they begin before the crisis we have a decreased a continuous decrease of number of fans during the crisis the two other tables show this devolution as percentage i don’t think we are going to insist on that now i go to the second part of my

Presentation which is the jeremy jeremy is one of the four are initiatives undertaken by the european ah fans let’s begin with the three others we have the jasmine jasmine is interested to immigrant finance we have just bet that is the support for the european regions and we have jessica wits in the race which is interesting to the support of the city areas and then

We have the jeremy jeremy is the acronym of the european resources to micro and medium enterprises so jess jeremy gives money to small and medium enterprises but it’s not directly from the jeremy that smes receive this money let’s begin how the assistant is provided from the jeremy the money comes from the european regional development fund and the money that has

Given is either as a loan or a guarantee or venture capital funds will see later how it goes i have here a table of the cases of the money that is given through the jeremy as you can see here in the vertical we have how much money is given we don’t have numbers but you can see here we’re approaching 20 and then growing up we’ll have much more money so what happens

Here is in the precede seed in start-up cases that concern technology transfer business angel funding microcredit loans we don’t have so much money given these are very high-risk cases going to the development or growth or module cases in which we have a lower risk that concerned they founded risk-sharing products the private equity and the guarantees and credit

Enhancement in those kids we don’t have so much risk we see that much more money are given those money are given through the jeremy initiative how does it work jeremy is an umbrella and targets to financial intermediaries not to sms directly that means that we have a holding fund that gives money to even financial intermediaries and those financial institutions

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Give the money to smes that are interested let’s go just to a table to move on quickly i have here the number of countries that have been profited by the jeremy we have 17 countries the number of holding fans who have 41 and without the participation of the european investment fund we have 11 fans and then we have the amount that has been dedicated in 2010 which

Is 3 billions and half from the european regional development fund and i have another table that is in 2013 that indicates encounter cases how it goes we see for example that greece and romania and bulgaria especially profited more from the jeremy cases and we see that money is given to equity is given to guarantee and is given to risk sharing products and for

2013 we have about 2.6 billion money that is given there what is important in the case of jeremy is the catalyst amount that means that the jeremy found gives an amount that is completed by the fount that is given by the other financial institution as well it’s not only this money that is given because of this money other money of other financial institution is

Given as well that means that if i want to make an invest i received money from the jeremy initiative but i need more money to make my investment so having the jeremy part of this investment another financial institution or either me is easier to complete the amount needed for the investment this is the catalyst case that we have in the case of jeremy and here

I have just an example of jeremy that i found in the in the internet you see that you have in the case of bulgaria you have an institution that is the wi-fi zone bank that plays the role of the holding fund in the case of bulgaria that takes another part of had another group of other banks and together manage in the case of olga ria the jeremy in bulgarian so we

Have the jeremy that gives money to a financial institution that takes the role either of a holding fund or specific fans those funds takes the money and give the money to sms this money that is given is part of the investment the other part of investment is funded by other institutions thank you complete this mess

Transcribed from video
3. Overview Jeremie/Mezzanine/Equity/Venture Capital – Simeon Karafolas, Scientific Partners By DIFASSWorkshops