1. 1
contact
mathias@kopp.net.auMathias Kopp
Co-founder, Committee Member &
Sydney Angels Side Car Fund Investment Committee Member
Mathias Kopp
Sydney Angels
2 May 2015
Angel Investing
University of Technology
Sydney

2. 2
An Angel is a person who invests his/her own money in an
unlisted growth company as a personal decision with the
objective of realising a capital return in the foreseeable future.
Financial Capital + Intellectual Capital
An Angel Group is a collection of individual Angel Investors
who combine under a common brand with defined rules of
membership and conduct to collectively identify, review,
select, evaluate, invest in
and exit from Angel investments.
What’s an angel and an angel aroup?

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What does an Australian angel look like?

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It doesn’t matter!
... Why?
 Real Angels are hands
on.
 Angels want to meet in
the flesh.
 Sometimes they buy
themselves a job.
Therefore
 Angels only invest
locally, usually within
50kms of where they
live
What’s an American angel look like?

5. Healthy Early
Stage
Venture
Capital
Ecosystem
Entrepreneurs
Later round
investments &
Exits - trade
sales, VC, PE,
banks & IPOs
Individual
Angels &
Angel
Groups
Government
policy -
innovation grants,
funding, R&D tax
incentives
Co-investment Funds
& Sidecar Funds
Innovation
culture, legal
system, IP
protection,
financial markets
5
Angels are an essential part of the startup ecosystem …

6. … and the funding continuum
Later StageExpansion Stage
Risk
‘3Fs’
Angel Investors
Venture Capital
Private Equity &
non-financial
corporations
Equity Markets
Banks
18,700 12,960 8,342 600
0-4 5-19 20-199 > 200
$200K $2M $20M $200M+Avg. Raising
# Raisings
# Employees
10x
5x
3x
2x
$50K $100K $1M $5M $100M$500K $10M $50M
Seed / Start-Up
Stage
Early Expansion
StageReturn
Risk
6

7. Exit Multiples
% of Total Exits
Overall Multiple: 2.6x or IRR: 27%
Ø Holding Period: 3.5 yrs3 yrs
51% of angel deals do not return the initial investment
3.3 yrs
4.6 yrs
4.9 yrs 6 yrs
7

8. DealDeal DealDeal DealDeal
DealDeal DealDeal
DealDeal DealDeal
DealDeal DealDeal
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DealDeal
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DealDeal
DealDeal
Sydney Angels Sidecar Fund ($10m)
(Early Stage Venture Capital Limited Partnership)
• An incorporated association whose
75 members are active angel investors.
• Managed by an elected Committee.
• On-line investment application process.
• Licensed manager of the $10m Sydney
Angels Sidecar Fund.
• Investment Committee approves
co-investments in deals syndicates of
Sydney Angels’ members want to
invest in.
• Early-stage deals in or near Sydney.
• Pre-revenue to pre-profit stages.
• Typically raising 1st round $100-600K.
Sydney Angels has rapidly grown to become Australia’s
largest angel association
8

9. Deal
Sourcing
1
Deal
Screening
Meeting
3
Screening Deal Selection
& Due Diligence
5
Entrepreneurs
Coaching
7
Syndicate
Lead
Appointed
9
Term Sheet
Drafted
11
Term Sheet
Drafted
13
Decision
Made By Side-
car Fund
Whether Deal
Eligible
15
Deal Managed
& Monitored
2 4 6 8 10 12 14 16
Members
Meeting
Syndicate
Formed & DD
Conducted
Syndicate &
Sidecar Fund
Seek Attractive
Exit
Pre-Selection
of 6 Deals
Deal
Presented
To Sidecar
Fund
Terms
Negotiated
Funding Round
Closed
Selection of
3 Best Deals
Syndication, Negotiation
& Investment
Management
& Exit
ENTER
EXIT
Its deal investment process is highly structured and
robust
1 month 1 month 2 – 3 months 3 – 5 years
9

10. Applications reviewed by Sydney Angels’
Management Committee.
Invited to pitch at next
Deal Screening Meeting (6 per year).
Invited to pitch at next
Members’ Meeting (6 per year).
Founders apply online. Involves
completing standardised application form
and answering all key questions.
192
58
19
6
DealDeal DealDeal
DealDeal DealDeal
DealDeal
DealDeal
DealDeal
DealDeal
DealDeal
DealDeal
DealDeal DealDeal
DealDeal DealDeal
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DealDeal
DealDeal
DealDeal
DealDeal
DealDeal
DealDeal DealDeal
DealDeal DealDeal
DealDeal
DealDeal
DealDeal DealDeal
DealDeal DealDeal
DealDeal
DealDeal
DealDeal DealDeal
Invested by syndicates of Sydney Angels’
members (after due diligence).
Sidecar Fund co-invests in eligible deals.
Sydney Angel’s investment ratio now outperforms
venture capital firms in Australia …
10

11. … and is a significant catalyst for co-investments

12. The Sydney Angels investment portfolio is heavily
skewed towards technology-based start-ups
Industry
Internet/ Mobile 69%
Software 10%
Retail 6%
Other 16%
Selected: 69% Internet/ Mob.
Valuation Sought
< $ 1.0m 23%
$1m - $2.5m 52%
$2.5 - $5.0m 20%
>$5.0m 6%
Selected: 52% - $1m - $2.5m
Capital Sought
$100k - $300k 31%
$300k - $500k 15%
$500k - $1m 42%
>$1m 13%
Selected: 42% - $500k - $1m
Revenue Stage
Pre revenue 68%
$0-$500k 26%
$500k - $1m 4%
$1m - $3m 3%
Selected: 68% - pre revenue
12

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To be successful business plan and pitch need to
cover ten aspects
1. Problem in the market
2. Your solution & product/service
description
3. Market, trends, dynamics & size
4. Potential customers
5. Competitors & competitive advantage
6. Business & revenue model
7. Team – more than just the founder
8. Financials – financial model
9. Capital requirements
10. Valuation & shareholding

14. Generally, the pitch is a rare opportunity to create a
lasting impression
Pitch by Founder(s)
• Passionate.
• Founder is likeable.
• Radiates confidence and
demonstrates expertise.
• Never stumped during Q&A, domain
expertise evident, across all the
numbers.
• Involves key team members.
• Listens to suggestions and is
coachable.
• Is prepared to compromise.
Quality of Deal
• Convincing management team, has
worked together and can execute
plan.
• Market opportunity big enough.
• Scalable business model.
• Customers and problem/need
identified, ideally proven.
• Solution much better than others, and
not easily imitated.
• Valuation and path to exit offer
attractive returns for investors.
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Appendix

16. 2009
2011
2010
2012
2013
2014
To date Sydney Angel members have made close to 40
investments to date