Angel+Investing+and+Venture+Capital

Financing Bringing Ideas to Market
A challenge for early-stage technology-based companies is raising investment to support their growth. Venture capital is frequently regarded as the only investment to seek, but there may be more appropriate alternatives. Furthermore, a typical technology company developing in a middle-income country is not attractive to venture capital funds. Also, there may be insufficient deal flow to provide the venture fund with a sufficiently large number of business plans from which to select the potentially most profitable investments. In several countries governments have proposed investing public funds to attract private sector investors in to the early-stage investing space. While government programs may be effective, there are often constraints which discourage private co-investment. Venture capital financing and other investment alternatives for technology companies: Risk Capital in Developing and Middle-income Countries

[add section on basic economics of seed and venture funding - see recent iCyte. Relate to above link]

Investment model issues and questions @Investment model general considerations

Investment model examples

Business Angel Investing in Emerging Economies: Policy Implications for Southeast Asia
@http://sites.kauffman.org/irpr/resources/Scheela,%20William%20-%20Business%20Angel%20Investing%20in%20Emerging%20Economies.pdf

Innovation Policy: A Guide for Developing Countries
@http://www.innovation.lv/ino2/publications/Innovation_policy_World_Bank.pdf

This volume, prepared by the World Bank Institute (WBI), presents a conceptual framework for understanding and learning about the principles of innonvation policies and programs in various policy contexts, with an emphasis on low- and medium-income countries. It is intended primarily for policy-making communities in charge of technology, industry, science, and education, as well as economics and finance—indeed, government as a whole, since innovation policy entails, by its very nature, a whole-of-government approach. The book contains a set of distinct and complementary chapters and provides both policy principles and a host of examples from countries at various levels of development.

Financing technology entrepreneurs and SMEs in developing countries : challenges and opportunities
@http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/02/19/000333038_20090219022633/Rendered/PDF/474830REPLACEM10Box334138B01PUBLIC1.pdf

In developing countries, small and medium-sized enterprise (SME), particularly micro and small enterprises, have great difficulty in obtaining the necessary financial resources to effectively scale up and grow their businesses. Access to traditional growth capital, including debt and equity, is often prohibitively costly, due to such factors as insufficient legal and regulatory policies, and inadequate financial markets. The development community has tried to address this challenge by creating microfinance lending instruments and private sector investment intermediary institutions, including those supported by the International Finance Corporation (IFC). Microfinance has made considerable strides in improving access to capital for individuals seeking US$10 to more than $1,000 to start or expand a business. Similarly, the IFC and other investment institutions have improved access to capital for established firms seeking US$5 million and above to expand their operations nationally and internationally.

Lessons from the Korean venture industry development
@http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/04/10/000020953_20070410132631/Rendered/PDF/393790KR0Ventu1Dec20040WBI01PUBLIC1.pdf 1/1/2007

This paper traces the development of the Korean venture sector from the 1990s. It explains that the development of Korean venture sector was not just an outcome of the government's policy to bring up venture business. Rather it was the result of the restructuring efforts from the whole Korean economy sector that tried to survive throughout the 90s. The study points out three fundamental lessons from Korea's venture industry growth: 1) Government should plan when to reduce its role in the market, as the market grows. Sometimes it is helpful for the government to intervene when the market is not functioning effectively by itself but it also has to know to back out when it has done its role. This will lead to the respect for market function and for the enterprises to manage its business with predicting the future; 2) A desirable venture capitalist has to provide not only investment but also has to support human resources, business consulting and marketing using his professional knowledge and human network. To do this, he should invest in the areas with high potential to grow, and the areas that will allow him to utilize his knowledge, experience and know-how's most; and 3) Government should support the Research and Development of the areas which require the long term investment and has the publicity and the basic technology field.

Expanding horizons : equity finance in Vietnam
@http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/08/04/000090341_20060804143907/Rendered/PDF/3675000Expanding0horizons0PSDP1No1161EN.pdf

This discussion paper examines the current state and future prospects of equity financing activity in Vietnam. Equity financing can be broadly defined as the method by which companies raise long-term capital through the sale of shares (or equity) to outside investors, rather than through more conventional financing means, such as commercial bank loans, or other kinds of non-bank debt arrangements, such as issuing corporate bonds or leasing agreements. This paper focuses on two main elements of equity financing activity in Vietnam: i) the country's fledgling stock market, and ii) venture capital (hereafter referred to as VC) activity. Both the stock market and VC activity are relatively new and undeveloped in Vietnam; the former being a product of the new millennium. And their presence necessitates the introduction of fairly new business terminology, concepts and principles to Vietnam. It will therefore take time for companies, financial institutions, policy-makers, and individual investors alike to fully understand these new financing vehicles and feel comfortable with their application in Vietnam.

 This volume, prepared by the World Bank Institute (WBI), presents a concep­tual framework for understanding and learning about the principles of inno­vation policies and programs in various policy contexts, with an emphasis on low- and medium-income countries. It is intended primarily for policy-making communities in charge of technology, industry, science, and education, as well as economics and finance—indeed, government as a whole, since innovation policy entails, by its very nature, a whole-of-government approach. The book contains a set of distinct and complementary chapters and provides both policy principles and a host of examples from countries at various levels of development.

“WE HAVE MET THE ENEMY… AND HE IS US”
===Lessons from Twenty Years of the Kauffman Foundation’s Investments in Venture Capital Funds and The Triumph of Hope over Experience=== May 2012 @http://www.kauffman.org/uploadedFiles/vc-enemy-is-us-report.pdf

A compelling report out from the Ewing Marion Kauffman Foundation describes how most institutional investors, including larger state pension funds, endowments and foundations, may be shortchanged by their investments in venture capital funds. Over the past decade, public stock markets have outperformed the average venture capital fund and for 15 years, VC funds have failed to return to investors the significant amounts of cash invested, despite high-profile successes, including Google, Groupon and LinkedIn.

Interviews with fund managers and limited partners also suggest that many institutional investors commonly maintain inadequate fiduciary oversight and are anchored to narrative fallacies about the benefits of venture capital as an investment class.The report, "We Have Met the Enemy … And He is Us," is based on a comprehensive analysis of the Kauffman Foundation's more than 20 years of experience investing in nearly 100 VC funds. It illustrates a persistent pattern of inflated early returns in funds that may be used to raise subsequent funds and shows the poor historical performance of funds with more than $500 million in committed capital.

The authors call upon institutional investment committees to require deeper due diligence of VC investments and more rigorous data analysis of VC portfolio performance relative to the public markets. The authors also urge limited partner investors to charge more for providing capital to risk assets by insisting on preferred investment returns before sharing profits with general partners – as is often the practice with buyout and growth investment firms. The authors also recommend that foundations, endowments and corporate and state pension funds negotiate investment terms that better align their interests as limited partners with those of the general partners in which they invest. The report suggests potentially troubling asymmetries between the information required by venture capital funds from portfolio companies and the information they are required to provide to limited partners of the funds.

The Foundation found that the most significant excess returns earned from venture capital occurred in funds raised prior to 1996, and those funds averaged $96 million in committed capital. Many of those successful funds led managers to raise successively larger funds; which significantly eroded returns and maximized general partner profits through fee-based income at the expense of limited partner success.

The report goes on to outline a series of steps the Kauffman Foundation itself will take to correct its approach to venture capital investing.