Angel 101 - The Fundamentals of Angel Investing
 

Angel 101 - The Fundamentals of Angel Investing

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Angel 101 - The Fundamentals of Angel Investing. Is Angel Investing right for you. This is a presentation given by Gerard Buckley to a group of Angel Investors at Maple Leaf Angels a Toronto based ...

Angel 101 - The Fundamentals of Angel Investing. Is Angel Investing right for you. This is a presentation given by Gerard Buckley to a group of Angel Investors at Maple Leaf Angels a Toronto based angel group

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Angel 101 - The Fundamentals of Angel Investing Presentation Transcript

  • 1. Angel 101 – The Fundamentals of Angel Investing I s A n g e l I n v e s t i n g R i g h t f o r Yo u ?
  • 2. Who Am I I am Gerard Buckley • Founder & CEO of Jaguar Capital an Advisory Practice for Growth Companies in Financial Management, Financial Structuring & Governance • Chairperson of Board of Directors, Maple Leaf Angels Corporation & Investor in eight early stage companies • Previously Entrepreneur in Residence with Incubes (An Internet Company Accelerator) • Member of SME Committee of The Ontario Securities Commission • Investment Committee of MSV University, Halifax, NS • 32 yr. Career with Scotia Capital as a Financial Risk Management Advisor to Fortune 200 Companies: Rogers, Irving Group, Empire Co., Four Seasons, Bruce Power, OPG, Province of Ontario, Ford, CAE etc. www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 3. Agenda • • • • • • What is Angel Investing? Who are Angel Investors? Why would someone be an Angel Investor? What type of companies do Angels invest In? Angel Network in Canada? Who is Maple Leaf Angels and what are the benefits of joining? • Q&A www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 4. www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 5. What is Angel Investing • Angel Investing is individuals investing their personal money in the equity or debt of a Early or Growth Stage Company • Often referred to as Smart Money, it is where an individual wishes to invest their time or experience as well money in a start-up company. • People wishing to give back their experience so others may benefit which is often referred to as mentoring or serving on a company Advisory Board or BOD. • Angel Investing is Active Investing not Passive www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 6. Who is an Angel Investor • A person prepared to invest their personal or family money • A person who can add value to the company • An accredited investor as defined by OSC • A member of an angel network • The majority of angel investment in Canada is completed by individuals >85% • Estimate of Cdn Angel Investment is 916mm in approx 1500 companies (VC about 2b) www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 7. Profile of an Angel - Median Years investing Number of Investments Total Exits Years as a Entrepreneur Number of ventures founded Age Percent of net worth Education 9 10 2 14.5 2.7 57 10% Masters Degree Angel Resource Institute Source: Wiltbank Study 2007 www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 8. Why Would Someone be an Angel Investor • • • • • • • • • Qualified Opportunities Opportunity referral Increased Capital Diversification High Risk Asset Class …. Seeking High Returns Favourable Valuation and Terms in comparison to VCs Networking Portfolio company mentoring or engagement Shared Due-Diligence Advisory Board and Board of Director Roles www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 9. What Type of Companies Do Angels Invest In? • Companies who are in seed and early stage. • In technology, life sciences, ict, health care devices, med tech, clean tech, power solutions, fin tech, ….. • Solve a Problem, Secret Sauce or technology ....... USP, validated business model, Great management team www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 10. Equity Capital Life Cycle www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 11. What Angels Look For • • • • • • • • • • • High anticipated growth rate – Scalability Experienced management team Sustainable competitive advantage Barriers to entry i.e. Exclusive IP Clear strategy for commercialization Proof of concept or enterprise level validation Business model anchored in Reality Investor exit strategy in 5 to 8 years Investing in what you know – vertical expertise Coach ability of the entrepreneur Amount of dilutive capital required www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 12. Selection Criteria • Seed investment should be from $250k to $500K and early stage investments should be from $350k to $1,500K • Valuation 1 to 3.5 million (Halo q1/13 median 2.5m) • The stage, quality of the management team, valuation and technology of companies are more important than the sector criteria • Quality is more important than quantity • In Canada 7.3% of companies get funded (93% don’t) • In Silicon Valley (1/300) business plans get funded www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 13. Investment Process 1. 2. 3. 4. 5. 6. 7. 8. 9. Pre-screening – MLA Staff Curbside Mentoring or Individual Member Mentoring Present to Investment Review Committee Present at members meeting Due-diligence Committee is formed and led by a member Term Sheet is negotiated & agreed between parties Investment is papered by lawyer Member is appointed to board Quarterly company reporting Outlined on MLA Website www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 14. Factors that appear to impact investor outcome • • • Due diligence time: More hours of due diligence positively related to greater returns (> 40 hours) Experience: An angel investor's expertise in the industry of the venture being invested Participation: Angel Investors that interacted with their portfolio companies at least a couple of times per month mentoring, coaching, providing leads and monitoring performance experienced greater returns. www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 15. Solo Angel Investing • Process is time-consuming – Deal sourcing – Reading plans (MLA sees 250 Business Plans a year) – Meeting with entrepreneurs • Due Diligence is difficult – Finding Vertical experience – May require using outside experts • Legal Support is Expensive • Most have Family Offices – Super Angels Angel Resource Institute www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 16. Angel Network’s in Canada • • • • • • • • • NACO – National Angel Capital Organization 32 Angel Groups in Canada They have collectively about 1000 to 1500 investors Three large groups accounted for 58% The majority have fewer than 50 members 75% of groups set up since 2007 Vast majority do volunteer due diligence 12 Angel Groups in Ontario Keiretsu Forum & Golden Horseshoe Venture Forum are Private For Profit Angel Groups www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 17. Canadian Angel Group Investment Activity 2012 • • • • • • • 139 Investments in 2012 totaling 40.5 million, an increase from 2011 of 134 investments and a decrease in investment from 82.4M Average investment is $314k down fr $614k 50% of angel groups made over 6 investments in 2012, an increase of 20% over 2011 82% - Ont & Que, 16% West, 2% Atlantic ICT (54%), Life Sciences (23%), Clean Tech (10%) Valuation – Median 1.55m, Mean 2.06m 55% of transactions involved a co-investor www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 18. Angel Resource Institute – Halo Report – Q2 - 2013 • Median Angel Round Size trends down to $590K from $680K • Early Stage Pre-Money Valuations remain stable at $2.5M • 72% of deals occur in angel groups’ home states • 74% of Angel Deals are Syndicated • Median Round Size $1.95M up from $1.4M when coinvested • Share of Deals by Sector - Internet 31.9%(-), Healthcare 20.9%(+), Mobile & Telecom 13.3%(-), Software (nonInternet/mobile) 4.5%(-) www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 19. Maple Leaf Angels Corporation • Toronto based and in existence since 2007 • MLA has invested in 22 companies since inception in 2007 for $9,600,000 • Registered with the OSC as a Exempt Market Dealer • Currently 40 members • Open and transparent – published funding process • Continual Entrepreneur support: Curb Side Mentoring, Volunteer Mentoring, Entrepreneur Workshops etc. www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 20. Maple Leaf Angels - Connects Our mandate is to connect experienced, accredited investors, and the brightest, most passionate entrepreneurs in an effective investment process. www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 21. Maple Leaf Angels – Membership Benefits • • • • • • • • Opportunity to engage with other members with investment insights & ideas Give back and make a difference for entrepreneurs through mentoring and coaching Access to collaborative investment opportunities through MLA’s presence within the startup ecosystem Your investment dollars go further through government matching programs You can take advantage of standardized initial screening processes and thereby benefit from a consistent approach to due diligence You can harness the power of syndication that comes about when multiple members invest together. Due diligence support You have access to a common term sheet that is negotiated by MLA members www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 22. The Entrepreneur Application Process • Start with www.mapleleafangels.com • There is a full education section for entrepreneurs • Companies apply using MLA’s Private Platform • Investment Review Committee • Monthly Member Investment Meetings • Due Diligence • Term Sheet www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  • 23. Contact Information Gerard Buckley, BBA, FICB, ICD.D President and CEO Jaguar Capital Inc. (C) 416-884-9522 (W) 416-646-6789 g.buckley@jaguarcapital.ca www.jaguarcapital.ca Twitter: @jaguarcapital Twitter: @gerardbuckley Slideshare: Jaguar Capital www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels