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Terminology, Definitions & Glossary of BiD Network (2010)

BiD Definition List

BiD Network Foundation makes use of standardised terminology in its agreements and general terms and conditions. The definition of this terminology is described below.

GENERAL

Definition List

List with explanation of BiD Network’s terminology used in agreements and in General Terms and Conditions.

BiD Network, BiD Network Foundation

These are acceptable expressions for the organisation formally know as: Stichting Business in Development Network or Business in Development Network Foundation, founded on December 28th, 2006 and based in Amsterdam, the Netherlands.

Business Plan Classification or Business Plan Rating

Business propositions within the BiD Network community are qualified using dots. These dots are clearly visible in the heading of every business plan.

  • When a plan application has no dots, it has not been assessed, nor accepted, nor does it have a completed business plan attached.
  • When a plan application has one dot it was accepted in assessment stage 1.
  • When a plan application has two dots, the full business plan and financials have been accepted in assessment stage 2.
  • When a plan application has three dots it is accepted by the Approval Committee for matchmaking and therefore is a BiD Grade Plan, accepted in assessment stage 3.

When an application has had a background check it will be added to a Set of Plans that have reached this status.

BiD Challenge

The brand name of BiD Network Foundation used for national and international as well as sector business plan competitions. Also see article 5 of the General Terms and Conditions.

Bidnetwork.org and BiD online community

All people and organisations registered on the bidnetwork.org website (www.bidnetwork.org) and having an interest in promoting business and entrepreneurship in emerging markets. Also see article 2 of the General Terms and Conditions.

(Plan) Application

An application is a three-page business proposal by an entrepreneur filled out in a pre-fixed format on www.bidnetwork.org. It is a short overview of the business proposition, the skills and experience of the entrepreneur and the development impact of a plan. This page is connected to the entrepreneur and used to attach business plans and other documents and for matchmaking and assessment purposes.

Business plan

A Business plan is a complete business plan which consists of a textual part (the business proposition, the skills and experience of the entrepreneur and the development impact) and a financial template (financial projections of balance sheet, cash flow and a profit and loss statement for a 3 year period). Also see article 4 of the General Terms and Conditions.

Investor Matchmaking

All activities by BiD Network aimed at bringing together entrepreneurs and investors to get businesses financed. These activities include preparing
entrepreneurs and investors for an investment, assessing business plans, peer networking etc. The focus is on equity finance for SMEs. Also see article 8 of the General Terms and Conditions.

Emerging Markets

Developing Countries listed on the OECD DAC list with a favourable political and economic environment for business and foreign investments.

Started new companies

Number of companies that indicated to have started after the moment of submission on bidnetwork.org. Started = start-up company that started selling and/or employing. This KPI includes the number of self-starters.

Grown established companies

Number of companies that indicated to have grown after moment of submission on bidnetwork.org. Established business = company that has grown in sales volume or number of employees.

COMMUNICATION

Brand Guide

Documents, available on-line and on disk, containing guidelines for all promotional expressions, referring to the name, logo, activities or members of BiD Network. The guide also contains samples, templates, pictures and logo's for use with promotional expression. National partners are advised to consult the brand guide before printing or publishing any materials.

ASSESSMENT

Ongoing procedure

By origin BiD network achieved its goal by organising a yearly international business plan challenge. These BiD Challenges have a yearly cycle an prizes were awarded once every year locally and once every year internationally. This changed after the 2007 Challenge. Now business plans can be submitted at any time and they will be assessed and returned to the entrepreneur with feedback within 10 working days.

Assessment procedure

Standardised procedures and on-line support platform to assess business plan applications and business plans both locally and in Amsterdam and give structured feedback to the entrepreneurs. The assessment process consists of 3 stages: 1) application assessment; 2) business plan assessment; 3) ready for investment assessment. Each stage consists at least of an assessment phase and a review phase.

Assessment environment

Web based tools in bidnetwork.org assessing business plans and plan applications. This environment is used by assessors and reviewers.

Assessment criteria

The Assessment criteria are the criteria against which an application as well as a complete business plan are checked. These criteria have to be covered adequately in the application and fully in the complete business plan, to be accepted in the BiD Network Assessment. The criteria cover the business, entrepreneur, feasibility and development impact of a plan.

Pre-Assessor

A pre-assessor is someone with sufficient rights on bidnetwork.org to accept or reject an application based on the pre-assessment criteria.

Assessor

An assessor is usually a staff member of a BiD National or Sector Partner. An assessor recommends to accept or reject a plan. He/ she may also directly ask the entrepreneur to improve a plan. The assessors assessment is always followed by an assessment by a reviewer. In stage 3 of the assessment process, the assessor writes an opinion about the plan.

Reviewer

A reviewer is usually a staff member of BiD Network Foundation, generally based in the Netherlands. In the plan review the reviewer decides, according to the assessment criteria whether to agree or disagree with the recommendation by the assessor in the previous assessment phase and also provides feedback to the entrepreneur.

Pre-assessment

Pre-assessment is the assessment of the plan applications against pre-assessment criteria. The pre assessment criteria are the following:

  • The business plans must be written in English, French or in Spanish;
  • The country of business must be a developing country;
  • The business has a financing requirement of between US$10,000 and US$1,000,000;
  • The business must aim to be a profitable business in the next three years;
  • The business can double its sales or direct employees within three years;
  • The business is not involved in any of the ‘Exclusion Criteria’; (for details see article 4 of the General Terms and Conditions).

(Plan) Application Assessment

(Plan) application assessment is the evaluation of an application. The application assessment consists of two steps: an application assessment by an assessor and; the (final) application assessment by a reviewer. During the application recommendation the assessor/ reviewer (affiliated to BiD Network, National or Sectoral Partners) gives an accept, improve or reject to an application. He/she assesses the plan according to the assessment criteria of the BiD Network and provides the plan with feedback.

Business Plan Assessment

The business plan assessment focuses on the evaluation of a complete business plan. The business plan assessment is done by the assessor and reviewer. The assessor recommends plans for acceptance or rejection or may ask the entrepreneur to improve the plan and provides feedback for the entrepreneur. The reviewer agrees or disagrees to the opinion of the assessor in the subsequent phase.

Opinion

An opinion is a text of approximately 200 words, filled out by the assessor, motivating the reason why a plan should be approved by the Approval Committee of BiD network. This sheet contains information on the proposed acceptance of the business plan as a ‘BiD grade’ plan and why the assessor believes the plan is fit for matchmaking.

Feedback

In every assessment stage combined feedback written by assessor and reviewer is sent to the entrepreneur. This feedback is structured through the assessment environment and filed for reference purposes.

COACHING

Coach

A coach supports an entrepreneur on a one-to-one basis. Most coaches work on a volunteer basis. There are two types of coaches, 'review coach' and 'implementation coach'. A coach is affiliated to a partner of the BiD Network or to a National partner and is accredited by the BiD Network. A coach has:

  • the ability to be a motivator, sparring partner or gateway to knowledge and expertise for the entrepreneur;
  • knowledge of business development, financial planning or marketing and sales;
  • proven affinity with development issues and developing countries;
  • a personal or professional interest in small business development (SME) in developing countries.

Coaches do not work for the entrepreneur, they only provides advice and support. They assist an entrepreneur with writing a complete business plan. The maximum period of activity is 90 days. In general a review coach contributes 20 hours to coaching the entrepreneur. A review coach must follow the on-line coach training on the BiD Network and can opt to follow an additional live training organised by a BiD National partner or the BiD in the Netherlands.

Review coach

Assists an entrepreneur with writing a complete business plan. The maximum period of activity is 90 days. In general a review coach contributes 20 hours to coaching the entrepreneur. A review coach must follow the on-line coach training on the BiD Network and can opt to follow an additional live training organised by a BiD National partner or the BiD Network in the Netherlands.

Implementation coach

An implementation coach assists an entrepreneur with the local implementation of their business plan. The coaching period and amount of hours contributed by the coach are to be determined by the coach and the entrepreneur. Until further notice implementation coaches are matched to entrepreneurs off line by the BiD Network or national partners.

Expert

Professionals that provide the BiD Network with second opinions during business plan assessment, making use of specific and/or in-depth expertise that the BiD Network staff do not have. They can also provide expertise to other coaches and have access to the coach matching environment. Experts are accredited by the BiD Network. An expert commits at least 6 hour per year on an ad hoc basis.

Coachable entrepreneurs

An entrepreneur whose application was accepted and meets the BiD Network assessment criteria and who has specifically indicated that he/she wants a coach to assist in writing a business plan.

Coach-matching environment

The pages on bidnetwork.org where review coaches and coachable entrepreneurs can find eachother. This environment is only accessible for accredited review coaches and coachable entrepreneurs. Review coaches and experts can also consult each other through the environment.

PARTNERSHIPS

National Partner

A National Partner (NP) is our main representative in a country or a region. NPs have exclusive regional rights. All deal flow, assessment information and progress reports within their region are shared with the NP's. Other providers can be appointed in the same region, but they have no exclusive rights.

Representation fee

A Lump sum fixed fee offered by BiD to a National Partner to exclusively represent BiD Network in a given territory. This fee may vary from year to year and from territory to territory depending on the local and global market situation.

Variable fee

A fee offered by BiD to National Partners and/or Sourcing Agents for every approved BiD Grade Plan and every business financed. This fee has a limit in amount, time and territory. This fee is payed only once, i.e. disregarding the number of parties involved.

Success fee

A success related fee payable by entrepreneurs to National Partners and Sourcing Agents for ‘helping’ the entrepreneur getting financed. This fee amounts up to 1 (one) % of the investment.

Finder’s fee

A success related fee payable by investors when they invest in a BiD Grade Plan. This fee usually amounts up to 2 (two) % of the investment.

Local Investor

An investor or financier who is established in the territory of the National Partner who has signed an investor agreement with BiD, and therefore, agrees to pay the National Partner a finder’s fee when they invest in a BiD Grade Plan from that territory.

Territory

Country or region in which a National Partner has exclusive representation rights.

Sourcing agent

Service provider who sources BiD Grade plans. They are assigned specifically to source plans. They are not a BiD representative and have no exclusive regional rights. When a sourcing agent operates in the territory of a National Partner, variable fees and success fees will be shared.

Funding Agent

Investor network, investor group or intermediary, who actively involves their investors to invest in BiD Grade Plans.

Investor services provider

Service provider accredited by BiD. They offer special services for investors for due diligence, contracting, representation, monitoring and mentoring.

Sector Challenge

Is an international business plan competition for a specific industry or theme, in which entrepreneurs, investors, customers and suppliers meet on a national and/or international level.

Partnership Agreement

Is an agreement between BiD Network and a partner, agent or service provider dealing with deliverables, terms and conditions, rights and responsibilities, communication and payments. The partnership agreement overrides all other documents, guidelines, contracts and terms and conditions. A partnership agreement includes a workplan containing at least:

  • objectives;
  • approach to reaching these objectives;
  • a financial budget for that year;
  • allocation of resources (personnel);
  • communications;
  • a planning of events and results.

The work plan must be acceptable to the BiD Network Foundation.

Senior Advisor

BiD Network employee responsible for developing and rolling out of advisory services in a given area and the direct contact to the National Partners in a given area.

MATCHMAKING

Approval Committee

The Approval committee is the last phase of the Assessment procedure and the goal of this Committee is to decide if a plan can be considered ‘BiD Grade’, if this is the case the plan can be presented to matchmaking. The members of the Approval Committee are members of the board of directors of BiD Network.

BiD Grade Plan

Is a plan that has been approved by the BiD Approval Committee. The BiD Approval committee approves plans that might be appealing to BiD investors. This decision will be taken according to the Approval Committee’s expertise and knowledge of the investor’s preferences. The said Committee will also bear in mind the percentage of business plans financed in [territory], being the said percentage no less than 25% of business plans. Prior to the Approval Committee an Account Manager prepares an opinion on the business plan to recommend it for approval by the Approval Committee. A BiD Grade plan should consist of the following:

  • Written and financial business plan that is approved for stage 2 of the assessment process and has all relevant assessment feedback provided incorporated
  • Company registration documents, articles of association, certificates and all other needed licenses
  • Annual reports or audited financial statements of the past 2 years for established businesses (if available)
  • Most important agreements/commitments/MOUs/letters of intent with: banks, shareholders, suppliers, buyers, key staff/management members and other stakeholders
  • CV of the entrepreneur
  • A copy of a valid passport of the entrepreneur
  • 3 minute video pitch uploaded to youtube (recommended but not obligatory)

Basic Verification

Before investors enter into exclusive negotiations over approved business plans (BiD Grade Plans), a Background Check has to be performed. This background check is carried out by the National Partner or sourced out to a service provider and contains the following elements:

  • Verified identity of the entrepreneur(s);
  • Obtain and verify registration of the company;
  • Obtain and verify latest statement of accounts;
  • Verify ownership of major assets and debts;
  • Check for criminal records;
  • Check for bankruptcy and extensive tax debt;
  • Check for credit history if available;
  • Report on visit of premises and interview with the entrepreneur(s)

Equity Finance

A form of finance whereby an investor finances a company in return for shares in the company. An investor expects to receive a dividend per share when the company makes a profit. The investor also expects to sell his shares for a higher price than he bought them at some point in the future. This sale of shares is called “Exit”. There are variations on Equity and debt. Examples of equity are subordinated loans or convertible loans.

Royalty Based Finance

A form of risk bearing finance that avoids exit problems for entrepreneur and investor, based on equity with a fixed buyback price, royalty payments and subordinated loans.

Investor

An investor can be a private individual, group of individuals, company, fund or institution willing and able to invest part of their resources in. Also see article 7 of the General Terms and Conditions.

Entrepreneur

An entrepreneur is a natural person who initiates and manages a new or existing business. An entrepreneur is always (partly) owner of the business. Also see article 3 of the General Terms and Conditions.

Expression of Interest

Simple on-line form (found via www.bidnetwork.org/eoi) in which any investor can express their preferences for investments. And investor can file more than one expression if necessary. An expression of interest is free of charge and does not result in additional obligations. It is used for finding the most suitable investor for a specific business plan.

Level 2 Investor Agreement

A Level 2 Investor has signed an "investor agreement" and met with the matchmaking team. These investors have access to BiD Grade Plans and all according (confidential) information.

Local Investor and Local Investor Agreement

An Investor is considered ‘local’ when the investor is officially represented in National Partner’s territory. A Local Level 2 Investor agreement is an agreement between BiD Network and a Local Investor. BiD Network can transfer some or all rights and obligations to the National Partner, either temporarily or permanently.

Investor service level agreement (SLA)

The Investor Service Level Agreement covers the services that an investor may expect from BiD or its National Partner with regards to fact finding, support in negotiations, local laws and customs.

Term Sheet

This Term Sheet contains all details of the prospective investment and terms for due diligence.

Business Financed

A Business is considered Financed when the need for finance has been fulfilled. Business can be financed either by BiD (prize money), through BiD (active role in matchmaking) or via BiD (no active role, only support and network).

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