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EL ÁNGEL INVERSIONISTA Year 5, Vol. 2, March 2013

The Breakfast The projects presented were related to the tourism industry. Page 2

Eficine 226

Have you noticed how the Mexican film production has taken off? Page 3


The evolution of venture capital? Continued on Page 5

Cash flows value measurements,

important considerations Sessions with PWC. Page 8

Financial Vocabulary Page 13 Link: InvestoMex StartupBus. Page 13

Recommendations: Book and movie. Page 14

Calls for: IE Venture Day México. Page 15 “Swap México” de LGT Venture Philanthropy y Grupo Desus. Page 17 3er. Foro Latinoamericano de Inversión de Impacto. Page 18 RiskMathics Financial Inn. Page 19 MIT Technology Review. Page 20



The Breakfast by: Maria Fernanda RamĂ­rez Castillo Translated by: Abigail Oviedo

This time, the projects presented to a panel of about 60 potential investors were related to the tourism industry.


n January 29th we held the first breakfast of the year; the XXIX session of the Angel Ventures Mexico project presentations that took place at the Hotel Marquis on Reforma Street. This time, the projects presented to a panel of about 60 potential investors were related to the tourism industry.

The first project presented was Latin Hotel; a company that sells operational equipment for 5 and 4 star hotels and prestigious restaurants. It offers its customers both a complete portfolio of high quality products with the direct support of the factories, allowing its clients to have the guarantees that the market demands, as well as consultations during the election of their products in order to guide them to choose the goods that are more appropriate according to their profile. Latin Hotel was founded in 1990 to commercialize high quality operating equipment for the high hospitality industry, especially hotels and restaurants. During the 22 years in the business the company has built a portfolio of products supported by leading international suppliers in its field that are able to equip and get everything in order to operate a new hotel or restaurant. Currently it has a presence throughout the country, with offices and showrooms in Mexico City, Cancun and Guadalajara, it also has presence in Monterrey, Los Cabos and Puerto Vallarta and its products are purchased mainly in Europe and the U.S., which are efficiently transferred to Mexico, they are imported and delivered to the customers

address. Latin Hotel requires a capital of $ 2,000,000MXN which will be used for working capital, providing 35% of the shares of the company. The second company presented was; it is a travel agency that specializes in online hotel reservations throughout Mexico. This specialization allows them to offer competitive rates. Mexvav generates customer value through the differential between the price offered to the final consumer and the agreed rate with the hotels. The competitive advantage of this company, besides its specialty in hotels, is that it has strategic partners and alliances with major hotel chains in Mexico, aiming to agree on hosting rates and volumes. In this way the company focuses on offering competitive hosting rates. Mexvax requires a capital of $500,000 USD, which will be used for advertising, operating and maintenance costs and improvements to the website, this in exchange of the 10% of the company’s shares.




fiscal stimulus

Have you noticed how the Mexican film production has taken off? By: Nomara Parra, Marcelo Solis and Claudia Ludlow

This significant increase is due to? The answer is very simple, the increase is due to Article 226 of the Income Tax Law (LISR by its Spanish initials) better known as EFICINE, which was published in 2006 and since that time the Mexican film industry has taken off.



Probably if you are reading this article, it is because its title caught your attention, or maybe because you have noticed that within the last few year there has been an expansion of Mexican cinema, and you would like to know how this event is taking place. Figures do not lie. Here we show you a comparison of film production in Mexico in the period from 2001 to 2006 and 2007 to 2011.

money to finish the production, you should get private investors, like Angel Ventures. One of the basic rules to get the fiscal stimulus is that it has to be a Mexican film production, that means all the film expenses has to be in Mexico and the personnel involved must be Mexican, in both cases the representation must be at least 70% of the production in order to be considered a Mexican production. Some exceptions apply to international co-productions. As part of the process, the IMCINE, The Secretariat of Finance and Public Credit (SHCP by its Spanish initials) and The National Council for Culture and Arts (CONACULTA by its Spanish initials) will make administrative and technical reviews. Although it is true we still have a long way to go to be on a par with the most successful film production companies, this type of incentive represents a great step forward and a clear trend in the interest of motivate the industry of art and culture in Mexico. Additional to the one from EFICINE, various incentives have been established to support other artistic activities such as EFITEATRO, FOPROCINE, FIDECINE, IBERMEDIA, etc.

Mexican Film Institute (IMCINE by its Spanish initials). 2011. Mexican Film Institute activity report 2011.Distrito Federal, Mexico


rticle 226 of the LISR provides a fiscal stimulus to companies that support the Mexican film production. Before we can explain Article 226 is convenient to define how this fiscal stimulus works.

The fiscal stimulus is not a direct exemption from the payment of taxes; it is a credit for the payment thereof. This is a mechanism that the government entities involved use to ensure that the films reach the cinemas and fallow the objective of the program. The treasury allows you to use the money for paying taxes to produce a movie. That money will be recognized as a tax credit, which will be repaid when the film is produced and hits theaters under the guidelines set by the program. The total amount of the incentive that will be distributed among the applicants cannot exceed $ $500 million MXN per year, which is the total amount to be assigned per year. As a tax payer the maximum amount permitted to assign to the production is $ 20 million MXN or 10% of the income tax of the company in the previous fiscal year (Whichever comes first). As film project the most I can get from this incentive is 20 million, if you need

Are you interested in learning more about EFICINE? Full information is available at IMCINE website: References Article 226, Ley del Impuesto sobre la renta, valid on January 24, 2013. IMCINE.2012. EFICINE 226. 02/05/13.Available at: http://www.imcine.


Crowdfunding: The Evolution of Venture Capital? Part 2 of 3 by: Fabián Aguilar

The Regulatory Framework The new way to invest and create a loyal customer base even before starting with the implementation of an idea is doing something fascinating. In this case we face a regulatory-nature problem: there is an open possibility that a crowd of people get actively involved in a project, thus becoming shareholders of the company. When we mention the term: equity crowdfunding we are already talking about a public issue of shares without resorting to financial intermediaries, and as a result we have an act that could damage many people, if it is not done properly and if it does not safeguards the interests of all the stakeholders. It is important to remark that not all countries agree to perform this act, or at least there is not a regulatory framework that allows a broker to be involved in the acts that take place between people and the projects to be funded: first of all, an investment cannot be done by taking the public as investor if it is not supported, verified and audited by a government body (either the Security Exchange Commission (SEC) in the United States, The financial superintendence in Colombia, or the National Banking and Securities in Mexico, among many others).Moreover, there is no regulation on the information that the companies and projects are required to provide, neither on the platforms involved in the process, and on the people who are taking the role of investors.

The first regulation: JOBS Act In the United States, the first attempt to regulate crowdfunding took the name of Jumpstart Our Businesses Startups Act. This law, signed by Barack Obama in April 2012, regulates, among other things, the way how the government gives validity and security to the acts related with the crowdfunding, particularly on the equity crowdfunding, and on the transparency and safety measures that has to be adopted for both funding platforms and businesses. Some of the point this law discuss are:

• The amount of capital collected: Enterprises, Companies or Firms cannot be financed by more than $1 million USD in 12 months with crowdfunding. • The amount of capital invested: Investors can invest up to $20,000 USD, or 5% of their annual income or total net value not exceeding $100,000 USD (whichever is the largest) for a period of one year. If income or net worth exceeds this amount, they may invest up to 10%, with a ceiling of $ 100,000 USD, over a period of one year. All transactions must be made with a broker or through an authorized website by the SEC. There is no limit on the number of companies that the investor can anchor. • Platforms: they must register as brokers or portals of funding with the SEC, and provide information to investors about the risks involved, data, reports of the companies founded, and any other information that the SEC may deem convenient. • Privacy and Transparency: The accounting and financial information should be presented and reviewed by an accountant in line with the requirements of the SEC, for companies with revenues between $ 100,000 and $ 500,000 USD a year, whereas, for the ones exceeding $500,000 USD must be audited. Besides, the portals and brokers must give explicit notice of amount of capital they expect to collect, the duration of the request and the amount of capital collected once the request is done. • Capital structure: Companies requiring funds must present the pre- and post- investment period of their capital structure. They should detail the rights and obligations they granted to the investors. The shares are not transferable unless they are a repurchase by the company, a mediator, or a family member (in case of investor’s death). Finally, the companies can have 2,000 investors after the investment, or 500 before it.




However, as the law is subject to the resolutions and directives that the SEC set this month, it is still not entirely implemented, so for the moment, the crowdfunding is limited only to the accredited investors and it is regulated by the appropriate laws on public offering and the stock market. Somehow, it is expected that the countries involved in regulating this financing method have a legal system very similar to the American, or at list it can be align with the regulatory framework that each country has in terms of public capital. The funding for rewards, donation and loan are generally regulated by local laws in terms of purchase and sale of goods, debt instruments, the disposal of assets, among others, and they do not require new legislation. That is the reason why the crowdfunding method is the first to be born, with the debt and equity crowdfunding part its development; the strong popularity and success that has collected over the years.

Crowdfunding in numbers

Crowdfunding vs. Venture Capital

According to a study by, until December 2012, it was estimated that there are approximately 536 firms involved as portals, platforms and/ or advisor, who are collecting $ 2.800 million USD worldwide. (Which is a relatively small amount compared, for example, with $ 15,000 million USD that raised the Venture Capital industry in 2010) [1] .This new sector has brought growth rates of 3 digits since 2009, and it is expected to continue due to the intervention of firms and organizations that helped to push the necessary regulatory framework, the employment generation, and to the attractive investment returns that are being seen in recent years. The success of crowdfunding has allowed to other projects could see the light without consulting Venture Capital firms or bank financing. Taking for example the successful platform Kickstarter, which has been anchoring 34.714 projects since it began operations in 2009, of these projects, 67% needed an investment range between $ 1,000 and $ 10,000 USD and only 399 took more than $ 100,000 USD to finance the project.

Many claim that crowdfunding is a unique platform for investment. One advantage of the Venture Capital is the facility to affirm the success of a project. As we previously discussed, the fact that several people anticipate the purchase of a product (or at least have an interest in it) generates a sense of belonging to the client which develop of a customer base. Adding the fact that many of these platforms offer communication and marketing strategies through social networks, we can assume that there is a “pilot test” for the project’s success in the market through the Internet. As for the Venture Capital, as there is no accurate way of knowing whether the project will be profitable or not (there is the risk involved in investing in startups), people invest money based on an econometric study, potential synergies with other investments made, financial and marketing feasibility or even the same experience and sensitivity of the investor (in the case of angel ventures), so the company’s success is only possible after a period of time. Another advantage is the diversification in sectors and industries. In crowdfunding no matter whether the project is a technological, food or even a company: the only condition is that there must be people who show interest in the project. Compared to the Venture Capital, many companies in this industry specialize in


sectors, so that not all entrepreneurs can seek capital in any firm. Even in some cases, firms do not want to invest in certain sectors because they consider it a high level of competitiveness, a very long-term return or requiring costly investments. Moreover, a key condition for investments in seed capital project is that it should have a strong impact on innovation and /or technology development.

only thing left is to wait for the company to generate by itself the necessary yield for the investors to recover their investment. You would expect that the same investors support the company, but remember that there are many, and the experience and knowhow ranging differ from one to another member. Now, The company can only expect they have an expertise in the industry or just someone who know enough to give advice.

Finally, the opening offered by the crowdfunding can give several people the opportunity to “test” the experience of being an investor. And this is very interesting, because in a future crowdfunding could become the first step to help people turn into certified investors. The profile and characteristics that a person needs to be investor depends, among other things, of the legislation in force in a country and the wealth of knowledge regarding to one or more markets and the financial sector where it develops, that is why the test of invest their income in Indiegogo or fundable projects is a good way to analyze the option of becoming an investor. On the other hand, the entrepreneurs get more involved in this sector through these platforms, gaining important experience and knowledge, which in the future they could use if they want, be funded by better Venture Capital firms.

Redefining the way to invest is making its way into Venture Capital territory. Crowdfunder, one of the first specifically platforms for equity crowdfunding, is making a strong impression in the United States. Located in Los Angeles, and after completing the first round of capital for $ 400 thousand USD, the platform was launched in beta (it is being revised by the guidelines of the SEC).The platform is prepared to provide collective funding to anyone’s startups in exchange for shares. Currently they just do it with accredited investors and companies, until the JOBS Act. ratify. The platform advises entrepreneurs on several topics, from preparing documents, to the right pitch to use in front of the investors. According to TechCrunch, in May 2012, Crowdfunder had about 2,000 companies seeking more than $ 17 million USD in funds for financing. Given the strong demand for capital, Crowdfunder made a tour throughout the United States, where companies competed for funding through a panel of expert investors. His success has allowed them to open a Mexican subsidiary, and they are disusing the idea to build strategic alliances with Nacional Financiera, Mexican.VC, Startup Weekend, Angel Ventures Mexico, among others...

Although crowdfunding is a form of financing, there are various characteristics that make it a good contender to other forms of financing, such as private seed capital or angel ventures. Firstly, crowdfunding is a platform is a semi-public financing. This implies that to reach a certain amount, it necessarily requires the efforts of many people to invest the required amount of money. This brings several disadvantages: first, it is more difficult to reach the target while the larger amount collected, because they need more people and / or cash flows generated by each of them, and secondly, there is the issue of the consultancy for entrepreneurs: depending on the platform you choose, counseling options are limited (although there are several platforms that are trying to change this). On top of that most of the platforms handle an all or nothing policy; the entrepreneur does not get the money if the amount collected is not the one he requested. In this sense, the seed capital financing is a way a little more likely to get a relatively large amount of money, because the investors have a higher purchasing power than people who use crowdfunding without obviously put aside the strong base of knowledge, advice and consultancy that these firms offered. Another weakness of Crowdsourcing in comparison with Venture Capital is the follow-up work. What happens after the project received the capital it needs by crowdsourcing. The company is committed to deliver the prizes, products, actions, etc., but since that moment there is no more monitoring from the platform. The




Cash flows value measurementes

important cosiderations By: Erika Quiroz & Abraham Maldonado Translated by: Abigail Oviedo


he cash flow projections are an important element not only for the financial decisions of the companies, but also because they serve as a basis for determining the use values and fair values which are required in different accounting principles, therefore, it is essential that the variables used in the determination of the cash flows be appropriate, since a simple mistake in the projection can impact the determined value, even more than the inadequate use of a discount rate. The need for cash flow projection is presented in cases like: Impairment analysis on the assets. To determine the asset recovery under IAS 36 or FRS C-15 as part of the impairment assessment, it is necessary to determine the use value of assets contained in cash generating units (CGU) or through its ability to generate future cash flows. A CGU is defined as the smallest group of assets that generates cash inflows and whose cash flow is independent of the cash flows generated by other assets. Besides the flow projection for an explicit period (usually five years), it is necessary to estimate a terminal value for assets with indefinite useful lives. The identification of the CGU is the first step in an impairment analysis. It is noteworthy to mention that the regulations require a test every year (IAS 36), or at the end of each period (NIF C-15) for assets showing any indication of impairment. It is mandatory for goodwill and intangible assets of definite life. Determination of fair values. The determination of fair values will be under the IFRS (USA) and NIF (Mexico) when using the selective income approach which requires the use of discounted cash flows derived from the cash generating capacity of the asset or assets, or the business in question. the present value determination

The cash flows should be projected the same number of years of the useful life of the assets, and they might consider residual value of any different group of asset with different useful lives. In this article, we mention some important aspects of employment projections for value measurements, as well as the most common mistakes that can be found.

of the expected future cash flows requires the use of a discount rate, which should consider all the risks associated with the cash flows. The integration of the future operating net cash flows is obtained as follows: Net income Less cost of sales equal Gross profit Less operating expenses Equals operating income plus depreciation and amortization Less capital investment changes in working capital Operating net cash flows * You should consider taxes on the valuation of a going concern business.

Assets with definite useful life Forecasting The cash flows should be projected the same number of years of the remaining useful life of the asset, and they might consider residual value of any different group of asset with different useful lives. In the accounting standards related to impairment assessments, it is recommended that the projections be subject to the business plan for the first five years, for the subsequent periods, they should considered zero growth or decreases. While estimating more years in the forecasting growth, It is intended that the risk of inaccurate projections will be also higher. This risk involves the possibility that long-term


projections do not capture the business cycle, the relationship with its industry and the economic environment in which it operates. Assets with definite useful life of a going concern business Cash flows forecasting Besides the flow projection for a specific period (usually five years), it is necessary to estimate a terminal value for indefinitelived assets or going concern valuations, which can be obtained by: • Perpetuity, i.e., based on a standardized flow and considering a constant growth rate that reflects the continuity of the business in a long period of time. • Multiple output value, based on a multiple applied to cash flows, which its production is supported with market data. Terminal value, perpetuity. The key issues to consider are: 1. Errors in the terminal value calculation that can significantly distort the valuation. When the useful life of an asset or an enterprise is indefinite, sometimes terminal value could represent up to 80% or more of the value of the asset or the enterprise, from there, the importance of a proper determination. The follow graph is present as an example of the importance of this point: Table: Discounted cash flows in the valuation of a going concern enterprise. The use of projected cash flows in recent years has become very important, the proof; they have been take into account by the different accounting standards, mainly the international ones. 2. The enterprise must be in a development stage. This Implies that the long-term margins and profitability expected must remain relatively constant, and that the growth rate should be consistent with the current operation and the environment in which it operates. 3. A perpetuity cash flow should have a reasonable growth, not exceeding the market one, because an absurdity of a company can take place in a development stage with a further growth than the economy and the industry.


In terms of growth, it is important to avoid: • Include non-recurring events unrelated to the operation. • Discrepancies between capital investment and depreciation. It is expected that investment in asset replacement be at least able to keep the current ability. Depreciation will depend on the projected Cape since it is assumed that the amount of this is reinvested in productive assets to maintain the productive capacity at the same level; if depreciation is higher than the capital expenditure, it would imply a decrease of the installed capacity, which would be difficult to keep operating at its optimal level. • sales higher than the installed capacity, excluding the necessary cash outflows for capital investments required for expansion that support these volumes. • Working Capital requirements (cash management by operating cycle) is not consistent with the projected growth rates and industry. • unrealistic growth rates, for example, they are higher than inflation and / or the industry in which the company operates. Flows in perpetuity may or may not growth; however we must be careful to ensure a reasonable growth, since the perpetuity covers an indefinite period. An entity with a perpetual growth higher than the market will assume a huge company at some point. Terminal value by output multiples. The key issues to consider are: 1. Use the correct multiple. Consideration should be given to one which reflects the value of the company in accordance with its operating performance; sometimes it takes a weighted average of two or more multiples. 2. Calculate the multiple in a consistent manner. Atypical elements should be excluded from the application of a multiple base. 3. Use an adequate peer according to comparable companies in the industry and refine through an analysis of performance and profitability.




Descarga gratuita en App Store, búscala como PwC México Consulta nuestro blog: Síguenos en Facebook, Twitter y YouTube: @PwC Mexico PwCMx Mariano Escobedo 573, Col. Rincón del






T ecn ol ogí a de P w C a tu a l ca n ce Saber F iscal y Docto F iscal aplicaciones para iPad L a práctica de I mpuestos y Servicios L egales de PwC M éxico ha desarrollado dos aplicaciones para iPad: Saber F iscal´ 12 y Docto F iscal.

E stas aplicaciones prácticas, sencillas y

A pl i ca ci on es gr a tu i ta s Próximamente estas aplicaciones estarán disponibles también para equipos PlayB ook de B lackB erry y tabletas con sistema operativo Android.

D i fú n del a s en tr e tu s con ta ctos .

S a ber F i s ca l

Correlaciones interactivas entre varias disposiciones y leyes. Consulta de palabras que previamente se hayan seleccionado en diversas leyes. Permite escribir notas, resaltar textos y marcar artículos como favoritos. E nvío de consultas a través de correo electrónico. Alarmas para tareas. Conexión con nuestras redes sociales socios. Consulta directa hacia nuestro sitio web.

MP C : 021209_B R _ A nuncioAP P_ AE R

D octo F i s ca l

Descarga de la ley que desee en el iPad como libro electrónico. Correlaciones interactivas dentro del mismo libro.

frases. Permite resaltar textos. Descarga e instalación.

Ingres a a A pple S tore E ncuentra las aplicaciones por s u


Financial Vocabulary Income dividend A dividend distributed to shareholders that comes from the dividends or interest on the stocks or bonds represented in the mutual fund. By law, the shareholders can choose if they take the cash or reinvested in more shares of the fund. The shareholders must pay taxes on all income dividends they received in the year, unless the fund is held in a tax-deferred account such as an IRA or a Keogh plan. Fat cat A wealthy person who has become lazy and to live of the dividends and interest from his investments. The fat cats also tend to be specially treated by brokers and other financial professionals, because they have a lot of money in their accounts, thus high fees and commissions can be generated. Sleeping beauty Potential target for takeover, which has not been approached by an acquirer. This company usually has some attractive features like a large amount of cash or an undervalued property, etc.





Book Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur By: Brad Feld and Amy Batchelor Estimated Price: $ 26.95 dlls. For sale at Amazon

“Real life insights on what it takes to make it in a relationship with an entrepreneur” Entrepreneurs are always on the go, looking for the next “startup” challenge. And while they lead very intensely rewarding lives, time is always short and relationships are often long-distance and stressed because of extended periods apart. Coping with these, and other obstacles, are critical if an entrepreneur and their partner intend on staying together--and staying happy. In Startup Life, Brad Feld--a Boulder, Coloradobased entrepreneur turned-venture capitalist--shares his own personal experiences with his wife Amy, offering a series of rich insights into successfully leading a balanced life as a human being who wants to play as hard as he works and who wants to be as fulfilled in life and in work. With this book, Feld distills his twenty years of experience in this field to address how the village of startup people can put aside their workaholic ways and lead rewarding lives in all respects..

Movie “Too Big to Fail” Film director: Curtis Hanson Country: United States Genre: Drama, Financial Crisis 2011

Based on the best-selling book by Andrew Ross Sorkin, “Too Big to Fail” offers an intimate look at the time of financial crisis of 2008 and the powerful men and women who decided the fate of the world economy in a matter of a few weeks. Focusing on Treasury Secretary Henry Paulson, the film goes behind closed doors to examine the symbiotic relationship between Wall Street and Washington. With only a few weeks before the country sinks into the most devastating financial crisis since the Great Depression, the power brokers of both parties struggle to get the economy back from the brink of disaster.


IE Venture Day México




Call for SWAP





Foro Latinoamericano de Inversión de Impacto


RiskMathics Financial Innovation

Gobierno Corporativo

Pricing Companies and Mergers and Acquisitions

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Los programos están dirigidos a: PyMES Empresarios y Emprendedores Fondos de Capital Privado Incubadoras y Aceleradoras de Negocios Consultores y Asesores Inversionistas Privados e Institucionales Consejeros Banca de Inversión

RiskMathics ofrece Becas de Fondo Perdido del 30% a los Miembros de la Comunidad AVM y del 50% a sus Emprendedores.

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