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Angel Investing to Island Tech 2009
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Angel Investing to Island Tech 2009

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David Shore gave this presentation to the Island Tech 2009 conference on the topic of Angel Investing. Rick Rasmussen co-presented on the mechanics of developing an angel group (with a different slide …

David Shore gave this presentation to the Island Tech 2009 conference on the topic of Angel Investing. Rick Rasmussen co-presented on the mechanics of developing an angel group (with a different slide deck).

Published in Business , Economy & Finance
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  • Confidential - Here’s how our phases relate to financing and revenue - We have completed the design phase including the business logic and a comprehensive technical feasibility. - We are raising $3 million to build out an Alpha version that can generate revenue, host stored value accounts, showcase inter-device transactions, provide scalable content acquisition, offer third party affiliate tools and hook into popular social networks A Series A financing will follow for the launch and scaling phase

Transcript

  • 1.  
  • 2. Stirling Team
    • Hugh Notman , partner
    • 30 yrs securities and corporate finance; PwC Corporate Finance, Association for Corporate Growth, 3 boards
    • Peter Scott , partner
    • 32 yrs corporate finance; 17 years TD Bank; 5 years president TD Capital; PwC Sr VP of Corporate Finance
    • David Shore , partner
    • 18 yrs corporate finance; CIBC Investment Banking; 3 meaningful startups; 2 public boards
    • George Dorin , Sr VP
    • 30 yrs corporate finance; CA with CF designation (Corporate Finance), Sr VP, Wolrige Mahon; Sr Accountant, KPMG; PwC; RBC
    • Mike Hou , associate
    • BA, with distinction; studying for CFA
  • 3. About Stirling Mercantile Divestitures M&A Advisory Expansion Capital Fairness Opinions Early-Stage Finance FAIRNESS OPINIONS Director comfort & legal protection from independent, expert valuation EXPANSION CAPITAL Multiple industry experience Seasoned corporate financiers EARLY-STAGE FINANCING Full-service approach throughout process Aligned interests likely to secure funding DIVESTITURES Corporate financier involvement can improve price, simplify process . M&A ADVISORY Sage advice in times of need or growth opportunity
  • 4. 10 Years of Transactions
  • 5. Early-stage Financing
  • 6.  
  • 7. www.stirlingmercantile.com
  • 8. Diverse Portfolio - Successful Exits 7 Technology IRR 342% 23x Cash 5x Cash 3x Cash Life Science
  • 9. Perspectives Advisor Investor Exit Transactions Founder
  • 10. Funding Road Map Confidential F, F & E Seed, Angel Series A Series B Year 1 2 3 4 5 Early Adopters Crossing the Chasm Mainstream Growth Develop Scale Expand Phases Funding Roadmap . Investor Exit Revenue today Launch
  • 11. Objectives
  • 12. Murphy’s Law
  • 13. High Valuation Trap
    • Problem:
    • Follow-on investors value lower than last
    • Forced to “cram down” last investors or no deal
    • Solution:
    • Understand downstream valuations
    .
  • 14. Valuation
    • Consider the post $ cap table for the next round
    • And subsequent rounds to the exit
  • 15. Term Sheet Structures
    • Common shares
    • Preferred shares
    • Convertible debt
    • Hint: this will all be thrown out with the next investment, keep it simple
    .
  • 16. Investment Types
    • Common shares
    • Pros
      • Quick and inexpensive agreement
      • Alignment with entrepreneurs
    • Cons
      • No protection
    • Suggest
      • Include some rights often given to Prefs
    .
  • 17. Investment Types
    • Preferred shares
    • Pros
      • Downside protection from rights
    • Cons
      • Time consuming and expensive agreement that will be replaced
    .
  • 18. Investment Types
    • Convertible Debt
    • Pros
      • Downside protection from debt and rights
      • Quick and inexpensive agreement
      • Flexibility on valuation – discount to next round or warrants
    • Cons
      • Typical discount of 20% to 30% is not high enough reward
    .
  • 19. Suggested Rights
    • Follow/tag/drag along
      • Follow – right to sell if management sells
        • Also called tag along or co-sale rights
      • Drag – if majority want to sell, 100% sell
    • ROFR of financings, right to participate
    • Restrictions on changing rights, issuing debentures or stock, or completing mergers or acquisitions
    .
  • 20. Final thoughts
    • Make a decision quickly, don’t drag out entrepreneurs
    • When “No”, try to offer advice
    • Focus on your domain expertise
    • Invest in people . Don’t try to cover all downside risks with deal terms.
    .