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IV CC

IDRO Venture Capital Company “Turning Great Ideas Into Great Solutions”

Agenda: Part I: Introduction Part II: High-tech Market in Iran Part III: IVCC-Overview Part IV: Investment Strategy Part V: How to Apply for Funding Part VI: IVCC.ir & IdroVC.com Conclusion / Q&A

Introduction  Iran’s

High-tech Industries  Iran’s Demographic Advantages & Challenges  Lack of Suitable Financing Avenues  The Value Add of VCs to Development of High-tech Sectors

Iran-Emerging Industries ICT Fixed, Mobile, and Data Telephony Information Technology Software Hardware/Networks

Technology Non-ICT High-Tech

Medical Engineering Biotechnology Nano-technology

Services Banking & Finance Insurance Transportation Tourism

Education Health Care

Iran Demographics  Large

young population (65% under 30)  Massive talent pool for high-tech (Iran, along with India, Israel, and Russia, among the top potential IT centers in Asia  Unemployment and brain drain of the highly educated are major issues for the government

Financing Issues in Iran  Limited

financing channels for

SMEs  Inappropriate banking regulations (collateral the main obstacle)  High cost of financing when available through normal channels  Lack of support for high-tech industries as opposed to traditional industries

The Value Add of VCs   





Significant role of VCs in development of high-tech industries Creation of alternative investment and financing markets Significant role in promoting best practices and professional management methods within SMEs Significant role in promoting standards for business plans and other business tools Significant contribution to the overall economy

IVCC- Introduction  Iran’s

1st High-Tech, High-Risk Venture Capital Company  Brainchild of IDRO’s Deputy of High Technology Industries  6-month research completed and the Pre-feasibility study and the constitution are being finalized  Expected launch date: Sep./Oct. 2004

IVCC-Mission To promote innovation by nurturing ideas and supporting high-tech companies through direct investment and management Participation Also:   

To establish the VC sector in Iran as an alternative financing channel for SMEs To grow IVCC into one the region’s most progressive and dynamic VCs To attract foreign participation (financially & technologically) in Iran’s high-tech sectors

SWOT Analysis Strengths  IDRO’s financial power  IDRO’s credibility with Iranian industries and business community  IDRO’s experience in similar types of investment

Weaknesses  IDRO’s non-financial mission/motives may overshadow the commercial success of IVCC  Negative view of private sector on the efficiency of the governmentmanaged projects/companies

Opportunities  Iran’s vast technical talent pool (especially in ICT)  Lack of competition (no other VC’s in the market)

Threats  Lack of proper management resources in Iran (VC experts)  Lack of proper entry/exit vehicles  Lack of models to follow (business plan and company/idea assessment/valuation)

IVCC-Quick Facts         



Name: IVCC (IDRO Venture Capital Company) Launch Date: Sep./Oct. 2004 Type of Company: Private Limited Liability Initial Capital: $50 million Initial Cash Investment (Cash Flow): $10 million Investment Range: $1-8 million Investment horizon: 3-5 years Location: Tehran (Initially within IDRO’s facilities) IDRO’s Participation: 40% preferred shares with veto and decision making privileges Partners: Foreign VCs and investment banks (in phase 2)

IVCC Structure-General Strategy    

Small and flat organization to begin with IDRO as the main LP If no GP is found, IDRO will play both roles initially IVCC Development Stages: 1. 2. 3.

Stage 1

Start as a department of IDRO Launch as a separate company after 6-12 months Open to local and foreign private participation

IVCC as a Dept. of IDRO and based within IDRO premises

Stage 2

IVCC launched as an independent company

Stage 3

Open IVCC to local and foreign participation

Target Companies 

Companies Supported:  



Sectors Supported:     



Iranian companies active in high-tech projects Int’l companies with Iranian majority ownership/management IT Telecom Biotech Nano-tech Medical Engineering

Stages supported (company life span):   

Seed Start-up First-stage

Idea/Project Sourcing  Conferences,

seminars, and exhibitions  Universities & Research Centers  IDRO’s subsidiaries such as MAGFA  Partners such as (could be TAKFA, SANARAY…)  Greater public through the Internet and the media

Project Assessment 

Idea itself  



Business Plan   



Market Financials Competition

Management & HR  



Uniqueness Feasibility

Skills and experiences Technical and managerial/commercial

Valuation

Entry Strategy  Participation

through share acquisition (with controlling power if minority) for a period of 3 to 5 years  Strong contractual commitment from the investee  Company constitution usually amended to accommodate fast and decisive management style

Management Participation  

  

Presence at BOD level Participation in major decision such as management change, product development and sales strategies Guiding the company using past experience and expert advise Establishing reporting mechanisms and performance evaluation Frequent and comprehensive Reporting back to IVCC’s investment comittee

Exit Strategy  Management

buy-out  IPO (initial public offering) if possible  Sales of shares to 3rd party interest  Exit after the investment goals are satisfied and/or if the situation calls for it

IVCC.ir & IdroVC.com  First

VC portal in Iran  Business plan submission and through the web  SME services (including business plan writing guidelines and tips)  Private section for partners and IVCC staff  Ultimately in 2 or more languages

IVCC Org Chart Investment Committee

Fund Raising

Fund Management Outsourced

LP’s

Accounting,

MP

GP’s

Legal, …

‫شریک مدیریتی‬

Advisors/Consultants‫م‬ ‫شاورین‬ Principal + 80% Profit

IVCC

Investment

2-3% Annual Mgmt Fee + 20% Profit

Fund Manager

Fund Manager ‫مدیر‬

‫مدیر‬ ‫صندوق‬

‫صندوق‬

Associate ‫کارشناس‬ ‫ارشد‬

Analyst

‫تحلیل گر‬

Profit

Fund Manager ‫مدیر‬ ‫صندوق‬

Associate

Associate ‫کارشناس‬ ‫ارشد‬

‫کارشناس‬ ‫ارشد‬

Analyst‫ت‬ ‫حلیل گر‬

Administration/Communication/Marketing ‫ ارتباطات و بازاریابی‬، ‫امور اداری‬

Analyst

‫تحلیل گر‬

IV CC

IDRO Venture Capital Company “Turning Great Ideas Into Great Solutions”

Questions