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0:00
My name is Pierangelo Rosati.
The topic of this talk is
new sources of
entrepreneurial finance.
0:08
Startups and new ventures
are the lifeblood of innovation.
In the traditional setting,
the entrepreneurial
journey typically
starts with a business plan.
This is a document that contains
the go-to-market strategy and
the projection for
future growth.
When looking for funding,
this document is typically
sent to a series of
venture capitalists.
These are professional
investors,
who receive tens or hundreds
of business plans every week.
So they will go to
a screening and
decide which ideas are
worth of pitching.
Once an idea gets
to a pitch stage,
they stimulate competition given
the resources are quite limited.
The best idea is typically
brought to the next stage,
which is a due diligence stage
where the company and the idea,
and the vastness of
the projections are typically
tested and checked.
If the outcome of the due
diligence stage is successful,
then the venture
capitalists will
decide how much they
want to invest in
the company and they start
a negotiation process
with the entrepreneur
or the entrepreneurs to decide
what they're asking
in exchange for it.
Venture capitalists
will typically stay in
the company as an every
day part of the equity
until the company is brought to
an international problem public
offering if they are
particularly successful.
1:21
Since the beginning
of the century,
major structural
changes have occurred
in the entrepreneurial
finance market.
This can be classified
into five main changes.
The first one is the demise
of classic venture capital,
which is seen as essentially
the institutional venture
capital move away from
the startup and
early-stage capital market
and moving more towards
scale-up companies.
This is mostly due to
the economics of managing and
investing increasingly
larger funds.
The second trend is the
closure of the IPO market,
which now is available
only to larger companies.
It's just become way more
expensive and more and more
competitive than it used to be.
The third change is the emergence
of formal angel groups.
Development of them with
the government support of
business angel networks,
which act as
matchmaking services
for entrepreneurs and investors.
The first trend is the
so-called scale-up problem.
It sees essentially
the displacement of
individual business angels by
business angels networks
and the requirement for
larger long-term
investment commitments
may result in a
first equity gap.
The fifth trend is the change in
geography or venture
capitalists,
which sees the venture
capital investment being
concentrated more and more into
a relatively small number
of cities around the world.
All these trends have
created a gap in
the entrepreneurial finance
market that needs to be
addressed in order to
exploit the future
opportunities for growth.
