1. Challenges in building up early stage companies
venture capital perspective
Vladislav Jež
JV Capital Management/Credo Ventures
Prague Summer Conference on IP & Innovation, Sept 14, 2010 1

2. What is PE/VC?
Private Equity
Venture Capital
Early stage
Replacement
Seed Start-up Expansion Capital Buyout
Sept 14, 2010 Prague 2

3. Investment stages
Maturity
Revenues
Expansion IPO,
Acquisition
Buyouts
Growth
Banks,
Leasing
Start Launch
Time
Setup
FFF
Prototype VC
Business Angels
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4. How to finance the growth
of early stage companies
• Business Angels
• Venture Capital
• Governmental support
encouraging technology transfer
commercialization of intellectual property
Maximase leverage of public sector funds and the engagement of private sector investors
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5. Priorities of VC Investors
• Partnership with Entrepreneur
• Management team – strongly motivated
• Growth potential
• Solid business plan with a clear vision
• Clear exit strategy
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6. Fundraising, Investments & Exits
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7. Fundraising for CEE – PE/VC
2003 - 2009
4000
3500
3000
2500
mil.EUR
2000
1500
1000
500
0
2003 2004 2005 2006 2007 2008 2009
Source: EVCA/PEREP
Sept 14, 2010 Prague 7

8. CEE funds raised – incremental closings during the year
(€1,000s)
2007 2008 2009
Funds raised by fund stage focus Amount % Amount % Amount %
Early-stage 6,000 0.2 49,010 2.0 0 0.0
Later-stage venture 38,150 1.0 132,850 5.3 26,000 6.9
Balanced 32,700 0.8 28,200 1.1 3,000 0.8
Total venture 76,850 1.9 210,060 8.4 29,000 7.7
Growth capital 260,500 6.5 154,500 6.2 6,300 1.7
Buyout 3,277,630 82.3 1,893,250 76.1 146,140 38.7
Mezzanine 225,000 5.6 161,200 6.5 140,000 37.1
Generalist 143,470 3.6 69,610 2.8 56,070 14.9
Total funds raised 3,983,450 100.0 2,488,620 100.0 377,510 100.0
Source: EVCA/PEREP_Analytics
Disclaimer: Data is continuously updated and therefore subject to
change.
Sept 14, 2010 Prague 8

9. New VC Fund – Credo Stage One Fund
• Size - EUR 20 mil.
• Geography – CEE (primary focus CR+SR)
• Investment Size – min.EUR 250.000,-
• Investors – HNWI, institutional investors
• Sectors – Internet, Software, Mobile, Health
Sept 14, 2010 Prague 9

10. Investments in 2009
stage distribution by % of invested amount
€ ´000 CZECH REP. CEE Europe
seed 0,0% 0,1% 0,6%
Start-up 0,0% 0,4% 8,1%
Later stage VC 0,02% 1,3% 8,1%
Total VC 0,02% 1,8% 16,8%
Growth+Buy-out 99,98% 98,2% 83,2%
Total 2009 1,396,000 2,456,000 22,690,000
Total 2008 450,000 2,480,000 52,675,000
Source:EVCA/Perep
Sept 14, 2010 Prague 10

11. Investments (mil.EUR)
Czech republic
1600
1400
1200
1000
mil.EUR
800
600
400
200
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
roky
Source: EVCA/CVCA
Sept 14, 2010 Prague 11

12. Number of Investments
Czech rep.
25
20
počet investic
15
10
5
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
roky
Source: EVCA/CVCA
Sept 14, 2010 Prague 12

13. Returns in PE/VC
Europe
Stage 1Y IRR 3Y IRR 5Y IRR 10Y IRR
Early Stage 5,7 2,3 -4,7 -1,1
Development 2,4 6,9 1,2 7,1
Balanced 35,3 6,6 -1,8 7,9
All Venture 17,2 5,0 -2,0 4,1
Buyouts 29,6 15,3 8,3 14,3
Generalist 98,6 15,8 5,9 10,0
All Private Equity 36,1 13,0 5,4 11,0
Source: Thomson Financial for EVCA
Sept 14, 2010 Prague 13

14. Why not more deals in early stage?
• Limited participation by local investors
• Public incentive missing
• Limited number of experienced Fund
Managers
• Limited contacts with Universities
• Missing more success stories
Sept 14, 2010 Prague 14

15. Early stage investments
backed by VC
• NetCentrum – web portal
• Voicetronics – voice recognition technology
• Nostromo – entertainment mobile content
• Systinet – provider of web services
infrastructure software
• NewsTin –cross-language news
aggregation
• Geewa –multiplayer casual games
Sept 14, 2010 Prague 15

16. Czech Private Equity&Venture Capital Association
• Founded in 1995
• 40 members
- Full members: 14 fund managers
- Associate members: 26 companies
Sept 14, 2010 Prague 16

17. Contacts
Tel.: +420 737 238 278
E-Mail: info@cvca.cz; jez@credoventures.com
www.cvca.cz;www;credoventures.com
Sept 14, 2010 Prague 17