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Business Plan Challenge

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Title: Business Plan Challenge Author: Dana.Matrook Last modified by: Audra Elena Shallal Created Date: 12/19/2005 6:35:39 AM Document presentation format – PowerPoint PPT presentation

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Title: Business Plan Challenge


1
ANGEL INVESTING AND THE ROLE OF ABAN
MENA-OECD Enterprise Financing Network 20th
21st March 2007
Rabih Khoury Head of MENA Investments Dubai
International Capital
www.aban-18.com
2
Arab Business Angels Network
What is Angel Investing?
  • Angel investment is funding and mentorship
    provided by private investors, professional
    investors and money managers to young, rapidly
    developing companies
  • Investment is typically in the form of pure
    equity
  • Has high potential rewards, although there is
    much more risk associated than with later stage
    investments

3
Arab Business Angels Network
Some well known companies funded by Angel
Investments
4
Arab Business Angels Network
What is required to make successful Angel
Investments?
  • Deal Generation market awareness of investors
    existence, interest areas and channels to get
    deals through
  • Due Diligence calculation of risk, screening of
    deals, researching market opportunities,
    investigating management and track records of
    entrepreneurs
  • Determining Valuation ascribing a value to
    companies that lack traction, revenues or
    seasoned management. Subjective process that
    requires negotiation to structure deals and set
    terms. Earn-outs are common and capital is
    deployed on milestones
  • Entrepreneurship Experience Ex-entrepreneur
    that started up with angel funding is desirable
    as is having a firm grasp of direct private
    equity investing.

5
Arab Business Angels Network
Who are Angel Investors
  • Savvy investors who channel a portion of their
    time and investment portfolio between 5 and 20
    into the private equity market or alternative
    asset classes
  • Angel investors are successful private equity
    direct investors, pre-IPO investors who are
    investing their own money
  • Active participants in the investment process
    in the absence of a middleman, typically also
    provide guidance and expertise to their investee
    companies
  • Angel investors are increasingly joining
    organized groups (Angel Networks) to facilitate
    and share deal flow generation

6
Arab Business Angels Network
What is a Business Angel Network?
  • A network that brings together entrepreneurs
    seeking to fund early-stage businesses and
    investors looking for high-potential seed capital
    investments
  • Angel Networks function in the same manner as the
    investment committees of PE funds
  • Characterized by a social element and the absence
    of a middleman
  • Created to facilitate successful Angel Investing
    and channel deal flow in investors interest areas
  • Facilitate collaboration on deals thus spreading
    the deal risk over multiple investors
  • Their numbers have grown substantially in the US
    and Europe in recent years

Region Region Region
Year US Europe MENA
1999 100 66 ?
2004 200 282 ?
Source Angel Capital Association Kauffman
Foundation presentation 2004, EBAN 2004,
7
Arab Business Angels Network
Examples of business angels networks in the US
and Europe
8
Arab Business Angels Network
Why a regional Business Angel Network?
  • Current economic environment within the MENA
    region is supportive for SME development with
    markedly above-average real GDP growth
  • Contributes to job creation and economic
    diversification high population growth rates,
    high unemployment rates and a growing
    concentration of young people in MENA populations
  • Estimated minimum 4 jobs created per angel
    investment in the US during 2005 (Prof. J Sohl,
    Centre for Venture Research 2005)
  • Increasing number of high net worth individuals
    (HNWI) within the region and growth of liquidity
  • Growing sophistication of investors and demand
    for alternative asset classes

9
Arab Business Angels Network
Growth in HNWIs in Middle East Region
The Middle East has one of the fastest growing
markets of HNWIs globally
HNWI Population by Region, 2002 - 2004 (in
Millions)
Source Cap Gemini Merrill Lynch World Wealth
Report 2005).
10
Arab Business Angels Network
Growth in Demand for Alternative Asset Classes
HNWIs are increasingly looking for investments in
alternative asset classes
HNWI Asset Allocations by Investment Class, 2002
- 2004
Source Cap Gemini Merrill Lynch World Wealth
Report 2005).
Includes Structured products, hedge funds,
managed funds, foreign currency, commodities
(including precious metals), private equity and
investments of passion (the art
collectibles) Includes Direct real estate
investments and REITS, which are not common
instruments outside the US.
11
ARAB BUSINESS ANGELS NETWORK
www.aban-18.com
12
Arab Business Angels Network
What is ABAN?
  • ABAN is the acronym for the Arab Business Angels
    Network
  • ABAN is a non-profit organization, set up to
    exchange information and channel regional
    investor appetite in start-up and early-stage
    companies within the Middle East and North Africa
  • Based in Dubai, ABAN is building a community of
    Angel investors in the Arab region and aims to
    have a network of investors across 18 countries
    in the Middle East and North Africa (MENA)
  • The proposed structure and organization of ABAN
    is modeled after the leading Business Angel
    Networks in Europe and North America

MATCHING
ENTREPRENEURS
ANGEL INVESTORS
13
Arab Business Angels Network
Who is behind the creation of ABAN?
  • Conceived by the Young Arab Leaders (YAL) and
    Dubai Holding during the Clinton initiative in
    September 2005
  • Dubai International Capital (DIC) is the founder
    and lead angel of ABAN

14
Arab Business Angels Network
ABANs Mission
ABAN is a non-profit organization set up to
exchange information and channel regional
investor appetite in start-up and early-stage
companies within the Middle East and North Africa.
WHAT IS ABANS MISSION?
  • Provide a platform to complement the economic
    development objectives of the Arab world and
    launch young, dynamic ventures
  • Support Arab entrepreneurs and encourage the
    commercialization of promising ideas
  • Act as a vehicle for the promotion of angel
    investing in the Arab region

15
Arab Business Angels Network
ABAN membership is extended by invitation to
  • Experienced and proven entrepreneurs, CEO's,
    venture capitalists and business leaders
  • Active contributors to mentoring, coaching and
    supporting entrepreneurs that receive investment
  • HNWIs who are interested in making individual
    investments in early-stage, privately-held
    ventures that have the potential for high
    returns, but may involve the loss of capital

16
Arab Business Angels Network
ABANs Initiatives to Date
  • Held in 2006 in conjunction with DIC YAL
  • ABANs founding partners and promoters
  • Up to US 1 million each to two winning plans
  • Equity funding from DIC

17
Arab Business Angels Network
Rationale for the Arab Business Challenge
PROMOTION OF ARAB ENTREPENEURSHIP
COMMERCIALIZATION OF BUSINESS IDEAS
Encourage individuals to turn innovative ideas
into operating businesses by providing a funding
mechanism
A dynamic entrepreneurial environment is
essential in the push for innovation, and the
development of the economy as a whole
Challenge
INTRODUCING ABAN TO THE ARAB REGION
PROMOTION OF ANGEL INVESTING IN THE REGION
An introduction to Arab investors and
entrepreneurs about ABAN and its role and mission
in the region
Demonstrating to the sizeable regional investor
community the scope for angel investing in the
region
18
Arab Business Angels Network
The Arab Business Challenge - Overview
The Challenge ran for nine months between January
and September 2006
United Arab Emirates
19
Arab Business Angels Network
Arab Business Challenge - Supporting Partners
Sponsors
Dubai International Capital
ORGANISING PARTNERS
Young Arab Leaders
HSBC
SPONSORS
SHUAA CAPITAL
MEDIA PARTNERS
Al-Arabiya TV
CHALLENGE ADVISORS
McKinsey and Company
CHALLENGE ASSESSORS
PricewaterhouseCoopers
UNIVERSITY PARTNERS
American University of Dubai Yarmouk University
in Jordan Lebanese American University
20
Arab Business Angels Network
Arab Business Challenge Process and Phases
Phase I
Phase II
Phase III
Pre-launch
Finals
Refine the offering 200 Teams Qualify
Mobilization phase
Prepare full business plan 20 Teams Qualify
Develop the idea Submissions Assessed
11 weeks
8 weeks
12 weeks
3 weeks
4 months
01/2006
05/2006
09/2005
08-2006
09/2006
04/2006
  • Phase I 933 Teams Register
  • Registered participants submit 5 page
    business concept
  • Phase II 200 Qualifying Teams
  • Assessment of 5 page business concept
    identifies 200 teams. Teams in this phase
    received
  • - Training workshops held in 4
    centers (Amman, Beirut, Cairo and Dubai)
  • - Panel presentations filmed by
    Al-Arabiya TV
  • - Coaching from YAL members
  • Phase III 20 Qualifying Teams
  • Assessment of 15 page business plan
    identifies 20 teams. Teams eligible for coaching
  • and filmed panel presentation in Dubai
  • Finals 5 Qualifying Teams. 2 Winners Announced
    at Televised Gala Dinner
  • Assessment of complete business plan
    identifies 5 finalist teams. Teams received
  • further coaching and took part in filmed
    judging panel in Dubai

21
Arab Business Angels Network
Arab Business Challenge - Statistics
  • 933 Teams registered with all eligible countries
    represented (both in terms of country of
    residence and nationalities)
  • The largest proportion of teams registered from
    the following 5 countries Egypt, UAE, Jordan,
    Lebanon and Saudi Arabia. (Based on team leader
    country of residence)

22
Arab Business Angels Network
Arab Business Challenge Winners
The two winning teams receive up to 1 million in
equity funding from Dubai International Capital
  • Palm Paper
  • Egypt

Use of annually trimmed, waste leaves from date
palm trees to make valuable commodities such as
Kraft packaging paper and paper bags with various
applications for the Egyptian market
Progress to date
  • Detailed assessment and valuation completed by
    DIC
  • DICs evaluation identified a funding
    requirement of 1.55 million
  • Funding structure with earn-out has been agreed
    by the team and DIC
  • Legal documentation currently in the process of
    completion

23
Arab Business Angels Network
Arab Business Challenge - Winners (Cont.)
  • Ostrich Farm Slaughterhouse
  • Jordan

Provide local slaughterhouse, marketing and
export services for growing ostrich meat and
leather production in Jordan
Progress to date
  • Detailed assessment and valuation currently in
    process
  • Further evaluation of market entry mechanism and
    product viability in process
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