TTA Turkey Fund - IP Conference 2014

Report
Technology Transfer Accelerator
Turkey
(“TTA Turkey”)
IP Conference
Turkey
30 October 2014
Istanbul
1
Agenda
1.
2.
About EIF

EIF Resources, Governance and Investments

Equity Highlights

EIF Technology Transfer: History and Characteristics
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
2
What is the EIF?
“
The leading developer of
risk financing for entrepreneurship
and innovation across the EU
Helping
SMEs, microenterprises and
European regions
innovate and grow
by making finance
more accessible
”
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
3
EIF Current
Investment Focus
Involved throughout the Business Cycle
Technology
Transfer Accelerator
Strategic Challenges
Technology Transfer
Proof of Concept
Business Angels
Seed Stage
Instruments to stimulate
innovation, competitiveness
and cross-border investment
European Commission Resources
Investing in
VC funds
Early Stage
Business Angels
Fill funding gap left by
institutional investors
EIB / EIF Resources
Investing in
Growth Capital
Expansion/
Development
Capital
Support VC
ecosystem
and decrease
dependency
on public finance
Mezzanine
Lower
Mid-Market
Catalyse hybrid debt
finance for growth
Member States / Private Sector Resources
4
EIF’s Resources
“
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
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
 Progress Microfinance EUR
200m
5
Equity Highlights
(EUR / m)
2013
2012
2011
2010
2009
2008
Equity Signatures 1 468
1 350
1 126
930
733
409
PE Assets under 7 904
Management
6 952
5 919
5 367
4 103
3 535
6
EIF’s Governance
“
Committed to the highest standards
of governance and integrity
Board of
Directors
has a supervisory
role and approves all
EIF transactions
”
Chief
Executive
is responsible for
the day-to-day
management of
the EIF
Audit Board
and both in- and
external auditors
oversee Chief
Executive and Board of
Directors
Risk
Management,
Legal
and compliance units
7
EIF Technology Transfer
Aims to Bridge the Gap between the Research and the Market
R&D
University /
Research
Organisation
Technology Transfer
“Technology IP”
Spin-out
Marketable Product
“Prototype IP”
Market
Licensing
Collaboration
(Contract Research)
IP / Idea
8
EIF Technology Transfer
History and Characteristics
History of EIF Technology Transfer Investments
Scale-up of activities since TTA study (2005)
No dedicated mandate
Investments so far with own resources, the European Commission and the EIB
33 operations in total
Characteristics of Technology Transfer Operations
Different shapes and sizes
Long lead times and low transformation ratio
Key point: Scale
Difficult fundraising periods
9
Long-term, Sustainable Vehicles
With Like-Minded Investors

Close collaboration with TTOs

Access to good scientific research

IP adequately protected under relevant legislation

No direct financing of research

Governance - no investor involvement in investment decisions

Independence and non-competition of Management Team

Adequate incentives to Management Team

Alignment of interests with long-term focus, up to 10-20 years

Minimum critical size ca. EUR 20-30m
10
EIF Technology Transfer Investments
To Date
Vintage Year
Investment
Country
Fund Size
(EUR m)
EIF investment
(EUR m)
%
Fund
France
Belgium
Belgium
UK
Sweden
UK
Sweden
Belgium
Belgium
France
France
France
UK
UK
France
UK
France
France
Norway
EU
EU
EU
EU
EU
EU
38
15
8
37
17
38
36
16
43
21
35
45
30
31
30
36
57
40
27
44
60
55
50
25
30
4.3
4.5
4
18
9
11
27
8
15
10
15
20
15
10
10
24
15
12
12
20
30
22.5
20
10
12
11%
30%
50%
49%
53%
29%
75%
50%
35%
49%
43%
44%
50%
32%
33%
67%
26%
30%
44%
45%
50%
41%
40%
40%
40%
864
358
42%
8
12
18
11
11
9
10
14
93
7.6
9
6
8.5
11
9
7
9.3
67.4
95%
75%
33%
77%
100%
100%
70%
66%
957
426
TT Funds
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
2001
2003
2006
2006
2008
2008
2009
2010
2011
2011
2012
2012
2012
2013
2013
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
….2014
TOTAL
T-Source
Louvain Vives I
Leuven CD3 (Centre for Drug design and Discovery)
IP Venture Fund
Chalmers Innovation Seed Fund
Manchester UMIP Premier Fund
Karolinska Development
Leuven CD3 II (Centre for Drug design and Discovery)
Louvain Vives II
Telecom Technologies Transfert (3T)
Demeter Cleantech seed fund
Elaia Alpha fund
Cancer Research Tech (CRT) Pioneer Fund
Rockspring
INRIA IT Translation
IP Venture Fund II
Grand Ouest d'Amorcage Sante
Auriga Bioseeds IV
SINTEF Venture IV
"TT Fund" (confidential) in progress
"TT Fund" (confidential) in progress
"TT Fund" (confidential) in progress
"TT Fund" (confidential) in progress
"TT Fund" (confidential) in progress
"TT Fund" (confidential) in progress
……………..
Business Incubation / Acceleration Funds
26
27
28
29
30
31
32
33
2009
2010
2012
2012
2012
2012
2012
2012
TOTAL
TOTAL
Strata/Mes
Imprimatur
Nauseca
Practica
Eleven
Lauchub
Openfund
Piraeus
Lithuania
Latvia
Belgium
Lithuania
Bulgaria
Bulgaria
Greece
Greece
11
Agenda
1.
2.
About EIF

EIF Resources, Governance and Investments

Equity Highlights

EIF Technology Transfer: History and Characteristics
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
12
TTA Turkey
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, IPAPO, and final beneficiary is the Scientific and Technological Research Council
of Turkey.
13
TTA Turkey – Project Level
Background
 Funded by IPA monies

Deadline for Project Implementation: 31 December 2017
 End Beneficiary: The Scientific and Technological Research Council of Turkey
(TÜBİTAK)
2012
2013
2014
2015
2016
2017
Market Needs Assessment carried out
Business Plan for the Project submitted
Negotiations and Approval
 Project Amount: EUR 30.5 million
 Project Components:
1.
2.
3.
4.
Signature Date: July 2014
Cornerstone TTA Turkey Fund – EUR 26.3 million
Advisory Services and Networking for TTOs and TÜBİTAK – EUR 1.35 million
Visibility – EUR 200,000
Impact Evaluation – EUR 100,000
14
TTA Turkey
Project Structure and Main Objectives
IPA Resources
EIF as Advisor & Project Manager
Visibility
Advisory
Services and
Networking
(Technical
Assistance)
TTOs
IPA Commitment
to
TTA Turkey Fund
Impact
Evaluation
proceeds
TÜBİTAK

TTA Turkey’s 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
15
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, spinoffs, 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)
16
TTA Turkey Fund
Structure
17
Main Terms & Conditions
Target Fund Size
EUR 30 million
Maximum Contribution from IPA Funds
EUR 26.3 million
Maximum Investment Amount to a Single
Company/Project
EUR 2.5 million
Maximum Duration of the Fund
10 years
Indicative Maximum Amount of Funding
Minimum Third Party Capital (Private Investors)
Applicant’s Own Commitment in the Fund
EUR 40 million
EUR 2.8 million
1-5% of the total Fund size
Over 12 months
Possibility of extension for 1+1 years  12 years
Deadline for the Fund’s Investment / Selection
31 December 2017
Period
31 December 2017
Deadline for Disbursements by the Fund
Portfolio Diversification
Minimum of 30 projects/companies
Target Industry Sectors
Generalist with preferred and excluded
sectors as covered in details in the Call for
EoI
18
Flow of Funding
IPA Contracting Authority
Monies to Contracting
Authority from Special
Account – after 31 Dec 2017
Thereafter from whomever
transfer of holding has been
made to (if anybody)
Monies to Special Account
EIF Special Account
Monies to Fund on
Capital Calls from Fund
Manager based on
establishment of
Companies once start up
invested
Monies to Special Account
on receipt from TTA Fund
TTA Fund
Monies to Fund due to
project spin-outs,
licensing, contract
research with consequent
dividend payment
Monies to Companies
once Projects identified –
before 31 Dec 2017
Co A
Monies to projects on
milestone basis during
the Term of the Fund
1
2
3
4
1
5
2
Co B
Co C
Co D
Start
up
Co D
6
1
3
4
1
5
2
2
Co D
Start
up
3
4
Monies to Companies
from successful projects
on spin-outs, licensing,
contract research, other
5
6
6
3
4
5
6
19
Time Frame and Process
Next Steps
Deadline
Requests for Clarifications from Applicants Accepted
Friday, 15 August 2014
EIF to Reply to Clarification Requests
Friday, 22 August 2014
Call for EoI Open for Applications
Thursday, 11 September 2014
First Screenings
September 2014
Scoring and Second Screenings
October 2014
Due Diligence of Shortlisted Applicants
October 2014
Legal Negotiation & Execution
December 2014
20
Assessment Criteria & Scoring
QUALITY ASSESSMENT CRITERIA
WEIGHTING
1
Project Relevance, Quality and Coherence
• Evaluation of the Fund focus and proposed investment strategy, including viability of Fund’s size.
• Evaluation of the Fund Manager’s 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 Applicant’s investment processes, including deal flow generation, ability to invest, ability to add value
to companies and exit strategy.
40 points
2
Project 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
3
Institutional 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
21
Investment Process and Indicative
Timelines
12 months
First Screening
Understand
concept
Based on preliminary
questionnaire / concept
note
Second
Screening
Due Diligence
Investment
readiness
Stress testing and
verification
Legal
documentation
EIF team conducts on
site visits (min. 2 days).
May, or may not lead to
term sheet
After EIF BoD approval,
legal docs drafted on
behalf of Manager. EIF
reviews importance of
legal counsel
Physical meeting
(typically in
Luxembourg),
opportunity to
articulate investment
opportunity,
understand EIF
Board Approval
22
Investment Considerations
First Screening
Second Screening
Due Diligence
Board Approval
Partner
Institutions
Market
Investment
Strategy
Deal flow
Potential
Investors
Investment
Process
Team
Track Record
Governance
Management
Company
Economics
Remuneration
/ Incentives
23
Criteria (1/4)
Partner Institutions
Metrics: Research budget, peer group
comparisons, invention disclosures, IP
filed, IP awarded, growth rates,
commercialisation income,
encumbrances, 3rd party agreements
Structure: Organisation structure of
TTO, roles, ownership of TTO
Deal flow and pipeline
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
Policies: IP policy, rules, regulations,
ownership rights
Historical Analysis: e.g. 3-5 years
evolution of deal flow by source, sector,
etc.
Activities: Industry co-operations,
advisory services, contract research, etc.
Selectivity Ratio: Historical examples /
experience
Financials: For TTO; revenues, royalty
income, grants, licenses, cost of sales,
gross profit, operating costs, gift aid,
dividends
Pipeline: Current and future
opportunities
Investment strategy
Licensing / Spin-outs: Proposed route
for commercialisation
Strategy: Geographical focus, stage
focus, sectors, investment sizes, followon 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
Criteria (2/4)
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
Potential Investors
Sponsors: Main investors , anchor
investors , special rights (e.g. fees, carry,
information, co-investment, etc.)
Names / Profiles: Like-minded, longterm 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)
Investment Process
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
Fundraising Strategy: List of other
potential / targeted investors, status of
contacts, potential commitments
25
Criteria (3/4)
Team
Track Record
Composition: Envisaged team
responsible for managing fund, key
individuals from TTO / other, secondees,
new recruits (profiles)
Previous funds: Metrics, vintage, total
size, fund cash flows, net and gross IRR,
LPs, amounts
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
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 spinout company creation, notable success
stories (e.g. Nobel prizes), products
developed
Governance
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.
Workload: Time commitment to fund
vs. other activities, activity allocation,
other board seats
Board Members: CVs
26
Criteria (4/4)
Management Company
Economics
Remuneration /
Incentives
History: Evolution, founders, key dates
and events in development, significant
changes in organisation, strategy,
ownership
Budget: Detailed forecast budget for
Management Company over lifetime of
the fund, under different scenarios, e.g.
min / target / max size
Alignment of Interests: Team
investments to fund align with investors,
long-term time horizon, team stability /
instability
Legal Status: Capital structure,
ownership
Management Fee: Justification for level
of management fee, use of fees, fee
offsets
Remuneration: Detailed breakdown of
remuneration for all team members
including base salaries, bonuses
Regulation: How the management
company shall be regulated, adherence
to AML/KYC
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)
27
Thank You!
Jose Romano
Head of Region
[email protected]
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
28
Technology Transfer Accelerator
Turkey
(“TTA Turkey”)
IP Conference
Turkey
30 October 2014
Istanbul
29

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