Investments - General information
International Foundation for research and promotion of research activities in the field of life extension "Life" presents you a great opportunity to invest with a team of professionals, having the advantage for exceptional long-term growth, as well as to provide charitable assistance to the unique projects in the field of life extension and rejuvenation
The main exclusive features and advantages of the Foundation "International Foundation for Research and Promotion of Research Activities in the field of Life Extension "LIFE":
The main advantages of the Venture capital Fund (as investment entity):
- Aegis of public associations, public councils and expert groups, representing the leading scientists, doctors, financiers, experts of the world level;
- Functioning in cooperation with professional expert, analytical, informational and scientific entities operating in one holding – the consortium;
- Consideration of the unique field of investment projects – the renewal of life;
- Consideration of the widest possible field of investment projects;
- Investing in global projects;
- Use of the club system – the possibility to use the results of developments by investors and entities providing charitable assistance (more about this in detail in the first part of the section "About the Fund").
- The ability to extract significant dividends from investments (accumulation of capital funds);
- The possibility of investing in the world economy startups.
GENERAL INFORMATION. THE CONCEPT OF "VENTURE CAPITAL FUND"
Venture investment is one of the most effective methods of financing of innovative enterprises and projects. Venture capital funds usually invest in securities papers or shares of companies with high or relatively high risk expecting extremely high profits. International practice of the venture funds activities in the area of healthcare usually expects doubling the capital over the next five years, with that 70-80% of projects do not bring return, but the income from the remaining 20-30% pays back all losses and makes a profit. Basically, a venture Fund serves as an intermediary between the investor and the company innovator.
According to the world practice, the structure of the Fund includes:
- The management company usually joint-stock company;
- The Fund that collects funds from investors, typically the partnership;
- The anchor and other investors (individuals and legal entities).
The management company carries out the on-going work of the Fund, all decisions on the use of the Fund means adopts a collegial body, composed of key representatives of the investors and the management company. The Fun is not taxes till the end of its activities. Rounds of venture capital financing are stages of financing companies and projects by the Fund. Therewith it takes into account not only the stage of development of the company and/or project, but the amount of the investment and the number of the company's transactions with the Fund. Rounds allow to strictly control the investment funds, avoiding the loss of invested capital.
Studies show that from the point of view of registration of patents for inventions, one dollar of venture capital investment in research and development (Research and Development, R&D) is almost ten times more efficient that the dollar invested by a large industrial corporation. Venture capital investments account for less than 3% of corporate R&D spending, but lead to 15% of all innovation in the industry. Such well-known companies as Intel, Advanced MicroDevices, Apple,Sun Microsystems, Seagate Technologies, Cisco Systems, 3Com, Yahoo!, Amgen, Genentech and Biogen were funded by venture capital in the initial stages of its development
Venture capital is usually meant as funds venture capital-investment in rapidly growing, very risky and, as a rule, hi-tech companies, that need capital to finance the development and promotion of innovative products. Due to the model of its development such enterprises can't pay interest on their debt commitments (as suffer losses on the initial stages of development) and must attract external equity capital. The task of venture capitalists is to direct institutional and private capital to finance new enterprises, which is have extreme difficulties to obtain financing from other capital providers.
The functional responsibilities of the venture capitalists include:
- Research and generation of new investment opportunities;
- Attract capital for investment in enterprises;
- Evaluating investment opportunities and conducting due diligence of enterprises;
- Investment, selection of the optimal organizational and contractual forms for them;
- Investment management: monitoring, control and consulting, selection of top managers for them;
- Organization of a successful exit from the investment in the planned time frame.
Most venture funds are organized as "limited liability partnerships". Usually a "General" partner is a Corporation organized and operated as a venture capitalist.
Foreign investors are "limited" partners and do not have a direct impact on the Fund activities. Usually they transfer a part of the funds to venture funds immediately, and the other part is to be transferred when worthy projects of funding will be found
All the proceeds from the investment in enterprise, in the form of money or securities, are transferred to outside investors upon receipt. For their activities venture capitalists usually receive 2.5% of assets under management and 20% of Fund profits, and only after the foreign investors regain all of the initial investment amount. In the center of venture financing — the agreement between the investor and the entrepreneur about the value of the company.
A professional investor (venture capitalist) is much more experienced in of negotiation and during one year involved in more negotiations than the managers of many companies in their life. Capital market investors have a stronger negotiating position.
- In general, Russian and global nanotechnology markets are growing quite rapidly;
- To the members of the emerging venture investment market in Russia in 1994-1996 actively joined International Finance Corporation, IFC, a member of the World Bank Group, whose efforts were focused on investment in the private sector in developing countries. Started Russian-the American investment program. Under the auspices of this program was created the Investment Fund USA-Russia, with a capital of 440 million dollars.
- It is estimated by Financial Times, by the autumn of 1997 in Russia there were 26 investment funds with a total capital of about 1.5 billion dollars.
ANALYSIS OF RUSSIAN AND GLOBAL VENTURE CAPITAL MARKET
Venture capital investments are one of the most important factors in the development of the global economy. A revolutionary change in communication channels, information flow, principles of doing business on a global scale and interaction with customers that took place during past decades would not have been possible without disruptive innovations. In its turn, innovations are the result of the efforts of entrepreneurs and the states n the field of forecasting of directions of scientific and technical progress and determining the best ways to achieve their goals (Alexander Ivlev, managing partner ,EY Russia). One of the most important tasks of the state and established Russia's development institutions for the last time; has been formation ofr the innovative economy based on the model of public-private partnerships. Special attention was paid to the creation in Russia of the venture investment industry, serving not only as a source of capital and business competences, but also as one of the key elements of the innovation ecosystem.
A few years ago, there was practically no segment of venture investment in Russia. But much has changed. The united efforts of the state and development institutions and representatives of the business community, science and education to create a national venture investment industry in Russia began to produce meaningful results. Of course, like any other young market, the Russian industry needs further development. However, one can assert that the market of venture investment in Russia is established and is becoming more attractive for investors, including foreign ones.
Until recently, the Russian venture market almost did not get into field of world's leading research agencies attention. But the situation is changing. The positive results achieved in the course of building a national venture investment industry in Russia are increasingly marked by the competent international organization. At the same time there is growing interest in analytical studies that reflect the dynamics of the Russian venture investment market and its potential.
The studies below do not take into account several indicators, such as transactions, amount of which is not disclosed or cannot be reliably estimated, investments of business angels, grants, targeted funding for R&D investments, investments carried out by companies, but not venture funds the venture funds which direct targeted investment in the real estate and development, i.e. investments in specific construction projects and objects (business centers, housing complexes, etc.). Thereby the statistics accounted investments in companies providing engineering and architectural services, producing building materials and performing construction work, Many of the indicators are given on the basis of the research database Dow Jones Venture Source and RBC
WORLD VENTURE MARKET FOR 2007-2013
Studies show that the situation in the leading markets (USA, European Union, Israel, China and India) in the period under review has not changed. A dramatic decline in attracting venture capital in 2009 demonstrated that the venture capital market was seriously affected by the global financial crisis of 2008. The decline in 2009 was replaced by growth in 2010-2011. It peaked in 2011, however, followed another drop in 2012-2013,.
For seven years (from 2007 to the third quarter of 2013) the largest volume of investments and the maximum number of transactions (86% and 88% respectively) was accounted for four sectors: information technology, healthcare, consumer services, business and financial services. The leading position of occupies IT sector, the share of which in average amounts to 28% of total investment and 32% of the number of transactions. In the IT sector, the highest activity is observed in the segment of software. In recent years, sectors of business, financial and consumer services more and more attract the attention of venture investors. In China, the largest number of venture deals in the last seven years has been in consumer services. In Israel a larger number of transactions were concluded in the sectors of IT and health. In the current period, the IT sector continued to lead in all markets except India, where it ranks second since 2008.
Following the IT sector by the number of large venture capital investments in the period under review is health. It accounts for 25% of total investments and 21% of the total number of transactions.
During last seven years, the average deal size for companies in the healthcare sector was 10.1 million dollars. It is the second highest indicator among all sectors. An interesting feature of the healthcare sector is that in comparison with other sectors it is accounted for the largest number of corporate venture investments in the product development stage (estimated as at the exit through an IPO or by M&A).
In the current market conditions institutional investors are attracted by correctly positioning the transaction. Over the past few years 82% of institutional investors invested in equities before conducting or during the IPO. Such investors typically prefer companies that come to the market prepared, with the correct rating, have qualified staff and a good investment history.
Investors still prefer to invest in companies in the later stages of development. The value of investments in businesses at the stage of obtaining revenue decreased slightly. Innovation remains the driving force in the field of venture capital investments..
A number of studies of state support measures show that the successful programs, initiatives and benefits have much in common.
Key criteria for successful programs (the main criteria selected):
- Focus on the industry needs;
- A sufficient number of potential participants;
- Predetermined objectives;
- Uniform and transparent process of the selection of participants;
- A reasonable level of bureaucracy;
- Reasonable rules and regulations;
- Allocation of sufficient budget;
- Understanding of the long-term prospects;
- The mechanism of active feedback from the market;
- Monitoring and program support at the state level.
Investments in knowledge-intensive sectors of the economy contribute to the increase of overall investment, promoting innovation and economic growth.
The global trends are applicable to the Russian market :
- Global monetary policy principles increase the availability of funds for Russian companies aiming at global market;
- The American market attracts Russian players due to its size, experience and a strong business environment;
- Certain macroeconomic factors make the Russian market a unique;
- The Russian state plays a significant role by providing the infrastructure, creating the necessary business environment and ensuring the existence of the venture capital market in General.
According to the magazine Fortune quite recently, in 2000, 95% of major global companies including Airbus, IBM, Nestle, Shell and Coca-Cola were located with their headquarters in developed countries By 2025, more than half of corporations with a turnover of more than $ 1 billion will be located in developing countries. Much more likely, the same significance will have changes within these developing markets. .During last thirty years the global urban population increases by 65 million people annually, which is equal to seven such cities as Chicago. In the period from 2010 to 2025 almost 50% of global GDP will come from 440 cities in developing countries, about 95% of which are in the West, many have not even heard of and would not show them on the map. Mumbai, Dubai and Shanghai are known to all. But few know of Hsinchu in Northern Taiwan or Brazil Santa Catharina halfway between São Paulo and Uruguayan border. Until recently (before the explosion in the warehouse of chemicals 12 August 2015) almost nobody has heard of Tianjin, located 120 km South-East of Beijing. By estimate of McKinsey, in 2010 the GDP of the city amounted to about 130 billion dollars, at the level of Stockholm, and by 2025, GDP in Tianjin can reach 625 billion, i.e. the whole GDP of Sweden.
As a rule population ageing was characteristic for developed countries. However, the demographic deficit is now spreading to China and soon will spread to Latin America. Thirty years ago only a small portion of the world's population lived in countries with fertility below the level necessary for simple reproduction - 2.1 children. In 2013, 60% of the world population does not provide the necessary fertility. This is a radical change. The European Commission suggests that by 2060, Germany's population will shrink by 25%, while the number of people of working age will fall to 36 million from 54 million in 2010. The workforce in China has reached its peak in 2012.
In Thailand, the fertility rate fell from 5 children per family in 1970-e years, to 1.4 currently.
The reduction in workforce will be forced to shift the focus of economic growth on labor productivity and perhaps to reconsider the potential of the global economy. Concern about the increasing number of older people will have a serious pressure on public finances.
As seen from the above analysis, based on information of their own and independent analysts, representatives of the largest companies of Russia and foreign countries, the current global trends in orientation of branch (sectorial) capital investment venture capital funds are focused primarily on the segment of IT technologies and consumer goods, although healthcare in general is a strong enough key positions.
However, it should be noted that of course a powerful argument in favor of investments in healthcare and in particular in the renewal of life, has a number of significant priorities: stability of demand (in both the long and short-term prognosis, regardless of financial market trends) and stability due to the unconditional date
Moreover, in the world and in Russia in particular this sector without exaggeration is enormous. Scientific base, experience, unconventional approaches, all this gives the opportunity to make significant progress in solving the industry issues and challenges, as well as the increase of invested capital, increasing life expectancy and savings health and rejuvenation, on the basis of the implemented tools and methods, both for investors and for humanity in general.