Andy Burton's preso to "Catch the eye of Angel" event

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    Andy Burton's preso to "Catch the eye of Angel" event - Presentation Transcript

    1. How to catch the eye of an angel …. Andrew Burton Managing Director, Viking Fund Director, Yorkshire Association of Business Angels PDF created with pdfFactory trial version www.pdffactory.com
    2. This is NOT about business plans PDF created with pdfFactory trial version www.pdffactory.com
    3. And NOT about presentations PDF created with pdfFactory trial version www.pdffactory.com
    4. It IS about.. Them and You PDF created with pdfFactory trial version www.pdffactory.com
    5. • Who are Business Angels? • What do Angels have to offer? • What do they look for? • How else can you catch their eye? • The deal • Exits PDF created with pdfFactory trial version www.pdffactory.com
    6. Who are Business Angels? • Mostly MEN (discuss?) • Usually self-made, with business experience • Invest own money, time & skill • Mostly aged 40 to 65 • Have own rules, likes and dislikes • Reputation among peers • All personalities, all tastes There is NO single “type” PDF created with pdfFactory trial version www.pdffactory.com
    7. Why do they do it? Investment Successful business (e.g. awards, etc) “Put something back” Fun! PDF created with pdfFactory trial version www.pdffactory.com
    8. How do they operate? • Strong informal networks • Formal ones – www.bbaa.co.uk • The lone wolf • Hunting packs • Grazing herds • Recognise: – Job seekers – Tyre-kickers – Virgins PDF created with pdfFactory trial version www.pdffactory.com
    9. UK Angel Statistics* • 1 in 6 investments are solo • 6 = average syndicate size • £42k = average investment • >50% into early-stage/pre-revenue • ¼ of investments relied on EIS • 8% = average stake • >20% in only 1 in 10 deals *BBAA (2009) PDF created with pdfFactory trial version www.pdffactory.com
    10. UK Angel Results • 9% give >10x return, average 6 years to a win • >50% fail, average 3 years to failure • Higher returns for – Entrepreneur angels, with board involvement • Fewer failures for – Industry expert angels, up front due diligence • Lower returns if – Following-on and heavily involved PDF created with pdfFactory trial version www.pdffactory.com
    11. How important are you? UK angels make 3 investments In 20 opportunities PDF created with pdfFactory trial version www.pdffactory.com
    12. What Angels offer • Of prime importance are contacts • Market and industry knowledge and strategy • Status and track record for credibility • Special expertise (e.g. finance, IP, technology) • Non-executive capacity for governance • Some make good mentors (listening skills) PDF created with pdfFactory trial version www.pdffactory.com
    13. The Journey What angels prefer…. … what you are likely to give them! PDF created with pdfFactory trial version www.pdffactory.com
    14. So, angels invest primarily in people PDF created with pdfFactory trial version www.pdffactory.com
    15. What should you have? Passion (sell it to them = influencing skills) Honesty (tell nothing but the truth) Openness (listen to and act on good advice) Will do (be reliable, efficient, returns calls) Chemistry (between the team, and with the angel) PDF created with pdfFactory trial version www.pdffactory.com
    16. Then, how do you stack up to the opportunity? • Your track record (done it before?) • Do you understand the market (can it be done?) • Are you competent (can you do it?) • Is it opportunity or ego (i.e. is it worth doing?) • Do you have ambition (do you really want it?) • Is there commitment (will you actually do it?) PDF created with pdfFactory trial version www.pdffactory.com
    17. Prepare to be scrutinised Directorships. Insolvencies. Credit checks. References. Relationships. Work history. Previous investors. Remember the jungle telegraph! PDF created with pdfFactory trial version www.pdffactory.com
    18. After the team, what do they look for next? • Evidence of demand • Business model • Value for money • Common sense PDF created with pdfFactory trial version www.pdffactory.com
    19. Some useful definitions – Fact • Verifiable, truthful, real • Past, present or future – Assumption • A pretence, undue claim – Forecast • To contrive, predict PDF created with pdfFactory trial version www.pdffactory.com
    20. What things are Angels suspicious of? • “We are (or it is) Unique” • Nearly all Revenue forecasts! • Everything > 6 months ahead • Year 3 %age market sales projections • Anything they can’t understand • Woolly IP statements • Large “imminent” deals PDF created with pdfFactory trial version www.pdffactory.com
    21. What things ARE likely to catch their eye? • Real, paying customers at early stage • A dose of realism – sensitivity, headroom, milestones • Gaps they can fill besides money • Other investor approval, chance to syndicate • Grants to reduce risk • Value – how does it compare? • Returns – are they likely, if so when? PDF created with pdfFactory trial version www.pdffactory.com
    22. How do they decide whether to invest? • size (e.g. they have a limit of £50,000 per deal) • stage – e.g. prototype, team, early sales • in their range (e.g. within £25k to £100k) • multiple (e.g. 50% p.a. compound until exit) • Location – is it convenient or them • sweat equity for advice/time/introduction • no tax relief can be a deal breaker PDF created with pdfFactory trial version www.pdffactory.com
    23. Getting commitment from Angels • Always follow up, be persistent and courteous • don’t read interest as intention • are they just collecting information • Ask questions early, take soundings from others • set realistic timescales PDF created with pdfFactory trial version www.pdffactory.com
    24. Structuring a deal • be clear how much you need, and what for • what percentage are you selling? • they’ll expect you to negotiate the big things • you’ll be locked in – it’s part of the deal • get advice on legals and don’t sweat the detail Remember, it’s their money! PDF created with pdfFactory trial version www.pdffactory.com
    25. Great documents make for a clean divorce................ ….they don’t guarantee a good marriage PDF created with pdfFactory trial version www.pdffactory.com
    26. If at first you don’t succeed… Don’t take rejection personally Ask why, treat as free advice, keep in contact PDF created with pdfFactory trial version www.pdffactory.com
    27. Where have all the exits gone? PDF created with pdfFactory trial version www.pdffactory.com
    28. Strive for the best, anticipate the worst What the plan says What is delivered PDF created with pdfFactory trial version www.pdffactory.com
    29. Don’t promise angels a return against the odds! Multiple at exit of %age of Exits cash invested <1x* 50% 1 – 5x 30% 5 – 10x 7% 10 – 30x 8% >30x 3% (* includes failures) PDF created with pdfFactory trial version www.pdffactory.com
    30. “The more I practice, the luckier I get” (Gary Player) PDF created with pdfFactory trial version www.pdffactory.com
    31. Contact Details Contact: Andrew Burton Contact: Barbara Greaves Viking Fund Yorkshire Association of Business Angels Metic House Hornbeam House Ripley Drive Hornbeam Park Normanton Harrogate West Yorkshire North Yorkshire WF6 1QT HG2 8QT Tel: 01924 227201 Tel: 01423 810149 Email: ab@vikingfund.co.uk Email: admin@yaba.org.uk www.vikingfund.co.uk www.yaba.org.uk PDF created with pdfFactory trial version www.pdffactory.com
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