Quality Alchemist (品質煉金術師): HKSTP Lunch & Learn

2017年12月12日星期二

HKSTP Lunch & Learn – Investment

HKSTP Lunch & Learn named “Investment” presented by our investment team. The agenda included “Global Investment Trends”, “Favorable Government Policies”, “Investment Jargons”, “Investors” and “Buy Side & Sell Side”.

Firstly, comparison of new and old economy in different market were discussed and Hong Kong was found that only 3% of new economy in the stock market. USA’s stock market for new economy form 47% to 60%.

Then we reviewed some favorable government policies including R&D Spending, Tax Deduction on R&D, University Research Funding, Technology Talent Scheme, IT Hub – Park & Bay Area, Investment Fund, etc.

One of jargon named unicorn was stated that invested upto USD 1B. Then the financing cycle was discussed. We need to assist potential company in the Valley of Dearth region.

The different between CVF (HKSTP fund) and ITVF were summarized in the following table. However, CVF is designed for early stage of start-up and ITVF for series A & B. There were four types of investors for early stage investment and they were Angel Investors, Venture Capitalists, Family Offices and Strategic Investor.

The second part was Investment – Sell-side Fundraising & Capital Market. My colleagues briefed that five elements made the value chain on investment support. And they were “Training”, “Consulting”, “Matching”, “Transaction Support” and “Investment Community / Ecosystem”.

Fundraising Process was briefed.

i) Preliminary

- Meet with VCs

- Provide materials: Teaser (2~3 page summary), PowerPoint, Business Plan, etc.

- Deeper discussion (Preliminary Due Diligence)

- Term sheet / MOU / LOI (Major business terms)

ii) Negotiation

- Term sheet negotiation

- Official Due Diligence

- Negotiation revised terms

- Negotiate / prepare transaction documents (S&P, Shareholder’s agreement, etc.)

- Closing

The comparison of Angels and VC was discussed.

Investor considerations were mentioned.

i) Return

- Pre-money and Post-money Valuation (Peer Analysis, Discounted Cash Flow)

- Exit Timing

- Additional Funding Rounds

- Exit Options

ii) Risk

- Solution / Business Model (Entry Barrier / Uniqueness, Scalability, etc.)

- Market (Acceptance, Size, Competition, etc.)

- Execution Risk (Management, Corporation Structure, etc.)

The following diagram showed what information needed by investor.

Points to be considered

The third part was Investment – Buy-side – overview of Corporate Venture Fund (CVF) investment. The history was mentioned that Financial Secretary announced on 25 Feb 2015 that “HKSTP will earmark HK$50 million to set up a corporate venture fund for co-investment with private funds, in start-ups which are located in the Science Park or have participated in its incubation programmes.” Then CVF was formally launched in July 2015.

The CVF Due Diligence and Closing Process was described.

The market-based investment criteria had “Business Model”, “Founder Team Assessment”, “Financing Plan”, “Potential Return” and “Capabilities of Co-investors”. Then closing process and post-closing monitoring were discussed.

The CVF achievements were briefed and benefits to start-up summarized as follows:

- Money to reach funding requirements

- Assists in attracting potential investor

- Assistance from CVF team in identifying and accessing resources and networks, both within HKSTP and externally

- Board advice from CVF as board observers

- Reputational benefits of having HKSTP as a shareholder