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					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                           1
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




                                                                             2
Arab Business Angels Network
Some well known companies funded by Angel Investments:




                                                         3
Arab Business Angels Network
What is required to make successful Angel Investments?



  → Deal Generation – market awareness of investor’s 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.

                                                                             4
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




                                                                             5
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
                                    Year          US*        Europe**         MENA
                                    1999         ~100            66              ?
                                    2004         ~200           282              ?

  Source: *Angel Capital Association & Kauffman Foundation presentation 2004, **EBAN 2004,   6
Arab Business Angels Network
Examples of business angels networks in the US and Europe:




                                                             7
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


                                                                               8
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).
                                                                               9
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.
                                                                                                                                          10
ARAB BUSINESS ANGELS NETWORK




            www.aban-18.com    11
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

                                                                          12
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




                                                                              13
Arab Business Angels Network
ABAN’s 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 ABAN’S 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

                                                                                14
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




                                                                              15
Arab Business Angels Network
ABAN’s Initiatives to Date




            → Held in 2006 in conjunction with DIC & YAL
               ABAN’s founding partners and promoters



            → Up to US $1 million each to two winning plans
               Equity funding from DIC




                                                              16
Arab Business Angels Network
Rationale for the Arab Business Challenge



   PROMOTION OF ARAB                                           COMMERCIALIZATION OF
   ENTREPENEURSHIP                                             BUSINESS IDEAS

   A dynamic entrepreneurial environment is                    Encourage individuals to turn innovative
   essential in the push for innovation, and the               ideas into operating businesses by
   development of the economy as a whole                       providing a funding mechanism
                                                   Challenge


   PROMOTION OF ANGEL                                          INTRODUCING ABAN TO THE
   INVESTING IN THE REGION                                     ARAB REGION

   Demonstrating to the sizeable regional                      An introduction to Arab investors and
   investor community the scope for angel                      entrepreneurs about ABAN and its role
   investing in the region                                     and mission in the region




                                                                                                  17
Arab Business Angels Network
The Arab Business Challenge - Overview:

  The Challenge ran for nine months between January and September 2006:


                                                              Tunisia
                                          Morocco
                                                                                   Syria

   → PAN-REGIONAL:
                                                                         Lebanon
                                                                                            Iraq      Kuwait
                                                    Algeria
                                                                                                      Bahrain     Dubai
      Open to the entire MENA region                             Libya
                                                                         Egypt
                                                                                   Jordan
                                                                                                        Qatar     United Arab
                                                                                                                   Emirates
                                                                                           Saudi

   → HIGH PROFILE PARTNERS:                                                                Arabia              Oman



      Organized by leading institutions                                  Sudan
                                                                                              Yemen



   → PROMOTING ENTREPRENEURSHIP:
     Targeted young Arabs to submit business plans

   → PROMOTING ANGEL INVESTING:
     Simulated investor interest in seed-capital opportunities




                                                                                                                      18
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          McKinsey and Company
       ADVISORS

      CHALLENGE          PricewaterhouseCoopers
      ASSESSORS

                         American University of Dubai
     UNIVERSITY
                         Yarmouk University in Jordan
      PARTNERS
                         Lebanese American University
                                                            19
Arab Business Angels Network
Arab Business Challenge – Process and Phases:
         Pre-launch                   Phase I             Phase II          Phase III         Finals

                              Develop the                                                     Winners
        Mobilization                                 Refine the            Prepare full
                              idea                                                            announcement:
        phase                                        offering              business plan
                              Submissions                                                     5 Teams Qualify
                                                     200 Teams Qualify     20 Teams Qualify
                              Assessed                                                           2 Winners

               4 months             11 weeks                8 weeks             12 weeks          3 weeks
     09/2005              01/2006               04/2006               05/2006           08-2006             09/2006

 → 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
                                                                                                                      20
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)
                                                    Top 10 countries of residence for registered teams
                                            Top 10 countries of residence for registered teams
                   SYRIA         12


                 ALGERIA         13


                PALISTINE        14


               MOROCCO           15


                    U.S.A.       17


             SAUDI ARABIA              49


                LEBANON                     69


                 JORDAN                      77


                    U.A.E.                              120


                   EGYPT                                                                                                   468


                             0        50          100         150     200        250        300          350   400   450         500
                                                                                                                                       21
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
        → DIC’s 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


                                                                                22
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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