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About Angel InvestorsforTransmedia Businesses Presented by: Jordan Green Melbourne Angels, President/Founder AAAI, Deputy Chairman/Co-Founder
A Little About Angel Investors An Angel is a person who invests his/her own money and time 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
Where’s the money? Funding Choices: Family, Friends & Fools $10,000’s Banks $10,000-100,000’s Strategic Investors $10,000-1,000,000’s Angel Investors $10,000-100,000’s Venture Capital $1,000,000’s Private Investors $10,000-1,000,000’s Private Equity $100,000-1,000,000’s IPO $1,000,000-10,000,000’s Where Angels Fit In 2008:20 New Deals<$60m 2009:10 New Deals<$25m 2010:10 New Deals<$25m Source: AVCAL Yearbooks Angels in Australia in 2009*
A Little About Angel Investors The Role of the Angel Investor Early stage funding Mentor and coach Business acumen and governance Network of professional advisors, other Angels and other capital Sector knowledge and connections to potential customers, suppliers, personnel and acquirers Design and facilitate exit EXIT
A Little About Angel Investors Investment Goals 10x or better return on investment 3-5 years to exit Imply Scalability of large markets, often foreign Strong alignment with entrepreneur Focus on value growth rather than dividends Angels are individuals – it depends!!
Deal Flow Personal & Personnel Screening Financial Competition Intellectual Property Evaluation VISIO CORPORATION Markets Business Model $ Terms Sheet Due Diligence $ $ Invest Manage Investment 3-6 months 2-8 weeks 1-6 years 3-6 months Exit Investment Process
Valuing Early Stage Opportunities ‘Value is in the eyes of the beholder’ Customers buy benefits Investors invest in the future Management is as important as design expertise Have a plan - certainty for customers & investors Capital Efficiency - Incremental vs. Big Bang Intellectual Capital is ultimately worth more than Intellectual Property Design expertise/reputation Industry knowledge/access Market knowledge/access Technology knowledge/access
Two Types of Business Value Growth Business [Value to Sell] Lifestyle Business [A Job for Life] Critically dependent on entrepreneur Low and slow to competitive advantage May take many years to stabilize and achieve scale ROI may be small given low potential valuations relative to time and risk Cash flow and/or customers are valuable to an acquirer Capital captive Business with sustainable value independent of entrepreneur Invest in IP to create competitive advantage Aggressive growth Assets or competencies or customers or cash flow are valuable to an acquirer Capital returns
How to Approach Opportunity Know yourself Is your business suitable for an investor? Is your business an appealing investment? Can you work with a business partner? Can you share control? For which investor is your investment opportunity best suited? Would you invest?
How to Approach Opportunity Be Prepared Plan a path forward Have the skills and tools to navigate the inevitable detours Know what to expect Know when to walk away Know yourself
Transmedia – the challenge! Average Angel investor is over 45 Technical background but, not current Business background but, not web Eyeballs not saleable value on their own Investor is not the user Transmedia is industry convergence, makes exit value & targets harder No transmedia success stories/track record
Transmedia – the opportunity!! Emerging markets Low barriers to business entry No dominant player(s) Value built across established industries Value in product not advertising Technically innovative Commercially agile Sparks the imagination – it’s exciting!!
A Little About Angel Investors 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.
Why join an Angel Group? Deal Flow Process, Discipline, Best Practices Risk mitigation Diversification by volume Diversification by scope Time Syndication Community Fun!!