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We are a non-profit and entirely private association and our only goal is to connect people who have business projects and companies that require financings, with private investors (usually not professional investors) who are looking for projects to invest in. We do not advise, do not recommend and do not seek for financings; we just try, in the most neutral and aseptic way,that the entrepreneurs and the managers who need funds for their projects have easier contacts with investors who are looking for good ideas and companies to invest in.

It is important to highlight that the entrepreneurs will not pay anything when this association receives and managestheir projects, even if their projects will receive actual financing from investors who are partners of our network.

Aaban is not a capital investment company, so it does not invest directly its capitals in any business project, nor decides about investments in the name of its associates. Every associate decides individually about eventual investments.

Of course this is a complex issue and there are not unanimous positions among the investors, but this not precludes that we have our general opinion as an association.

First of all, we should distinguish two different concepts that are usually confused when we talk about start-ups: valuation and value. If we do not have any objectivable element, it would be more accurate to speak about value than valuation, but we will indistinctly refer to both words to avoid to complicate this exposition.

If the business project is just an idea with only a minimal level of development and implementation, its value is very low (it could even have no value at all), unless it has any valuable element,such an experienced promoter team. We think that a good idea is essential, but it usually has a very low or no economic value. Despite of common belief, it is not difficult to find good ideas, but good implementations of these ideas.

If the project is based on an attractive idea and it is at least in one of the first implementation stages, it has a good team working on it, a technologically and operativelywell developed product, a relatively huge and scaleable potential market and a sustainable competitive position, but it has no customers yet, its valuation can be positioned between 200k and 600k, depending on the quality of these features. Investors usually do not accept valuations above 600k for start-ups that have no customers and no incomes yet (except for those companies that require a huge initial investment, for instance for R&D issues). The investors do not spend their time analysing thoseprojects/companies that do not meet these criteria, often causing a feeling of frustration to the project/company promoter/entrepreneur.

If the project or the company meets the aforementioned criteria and it has already begun to have customers and generate incomes, we can use more objective valuation techniques that, of course, will not be explained in detail here.

Of course, it is not easy to answer this question: every investor can have his/her own criteria, but all of them use to agree considering as key features for an investable project the presence of a good team, the entrepreneurs’ global vision,their implementation capacity (the capacity to carry out the business plan) and if they can demonstrate in any way that their business hypothesis could be reliable in the real market. The idea itself could have a low or no economic value, because, despite of common belief, it is not difficult to find good ideas, but good implementations of these ideas.

It is utterly important that the promoters have already achieved their first economic resources in their own environment (their own resources, family, friends…): if they are not willing to risk their own resources or they cannot convince people who are very close to them to support their project, they could hardly convince an investor.

Except for exceptional cases (usually when they deal with experienced and skilled promoters), the Business Angels demand that the project has at least an acceptable level of progress, because they hardly invest their resources in projects that are justsomething more than a good idea: the company must be already constitutedor it has to be constituted in a relatively short terms.

It is important to identify quite precisely the potential market for the project and who are the competitors that already have a similar or an alternate product. When an entrepreneur says that his/her product or service has no competitors, it usually has no market at all, or the entrepreneur has not worked enough on it. This is not an unquestionable truth, but it is fair in a large number of cases.

The investable projects have always a high degree of innovation (not necessarily technological innovation, a business project can be innovative and not use intense technology), can achieve relatively big markets, can be globalized and have a scaleable business model.

Of course, a very important element in the analysis of the investment is the valuation (the value of the shareholding) of the project/company made by the promoter himself. Too many times we have to analyse interesting, but overvalued projects that have no objectivable features.

Finally, it is fundamental that the project has a detailed business plan: even if the business plan itself has just a relative (and sometimes arguable) utility, it is utterly important that the investors verify that the entrepreneurs have deeply thought about all the elements needed to run a business project.

We make a pre-screening of the projects received, before they could be visible to our associated investors, to verify that they meet the general investment criteria of our network and that they have the minimum requirements to be evaluated. On average, just 1 out of 5 projects are considered suitable to be proposed to our investors. About the 80% of the projects submitted are rejected during this pre-screening stage.

If the project/company passes through the pre-screening stage, it remains visible to the associated investors for 150 days. After this period the project is removed from the active project table in our database. If an investor is interested in the project/company, our network facilitates the contacts between the investor and the entrepreneur and ends its services.

Approximately the 15% of visible projects finally received financial support from our investors.

Non-institutional private investors (the so-called Business Angels), family offices and investment companies can be partners of Aaban.

Their profiles are relatively heterogenous, but we have a large number of businessmen, entrepreneurs, active managers who have delegated some of their executive responsibilities, professionals, managers and former managers from SMEs and large companies. It is utterly important the presence of entrepreneurs who succeeded with their own business projects in the past and decide to support new projects.

If the company is already constituted (or it is about to be contituted), the Business Angels’ financing resources undertake a capital increase of the company. Therefore this funds are not a loan (borrowed resources), but a contribution of own resources that improves the project profile and reduces the promoter’s risk.

Sometimes the Business Angels can receive a part of the paid-up capital under preferential conditions in exchange for their involvement in the development of the business project.

It is difficult to say: in general their individual contributions use to be between 5,000€ and 150,000€ for every project.

But it is quite common that Business Angels decide to pool their finances, sometimes providing larger amounts of fundsbetween 20,000€ and400,000€ for a single project.

There is the opportunity of making structured co-investment deals with venture companies for bigger projects. In these cases the financing support can exceed 500,000€.

The investors’ annual membership fee is 250€. There is no minimum annual investment requirement to be a member of our network.

Promotersand entrepreneurshave no costs to pay, even if they obtain all the required financing thanks to our network.

The only financing sources of our association are the associates’ annual membership fees. We can have the economical support of entities,that will be clearly identified as sponsors, for some of our activities and events (launch events, investment forums, communications…).

We have expressely declined any subsidy or economic support from public administration, even if we want to keep close relationships with all those institutions and companies with public participation that have an important role in the enhancement of the entrepreneurship focused on innovation. We think that both the investors and the public administration are important parts of a performing entrepreunarial ecosystem.

It is important to highlight that our association does not receive any remuneration from the partners who make available their services through our network, nor from the entrepreneurs who submit their projects, even if it should be absolutely fair to do. Our goal is to close framework agreements that allow the projects to benefit from specified services at more favourable conditions than the standard market conditions. These services provided by our partners give the opportunity to obtain financing, advice or any other userful support to help the development of the business projects.

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