Financial Congress 2011 – 9 June 2011Make an Angel Love YouHow to pick upbusiness angel investors Miguel Ángel López Trujillo GoogleHumano.com EBAN - European Business Angel Network firstname.lastname@example.org email@example.com Twitter: @lopeztruji
My goalIncrease your chances of persuading an angel investor to invest in your company
Why me?I asked BAs for money (Loenviogratis.com)I invested as a BA in 1 company (Partizipa.com)I organized pitching events for angels (Crecermas.es)I interact with angels everyday (Eban.org)I have angel friends (e.g. Julian Costley*)*Most of the contents of this presentation are a courtesy of him.
You meet an angel:what should be your first goal? Get invested? NO! Get another meeting!!
What Makes Angels HOT1. Upfront proposition “I would like you Mr/Ms Investor to invest X for Y% of my business. The business will achieve Z financial performance over Q years. The proposition will become valuable to various potential buyers in P years, and I intend to sell to one of these acquirers in 5 to 7 years. Given comparable deals in the market, I anticipate that the business will sell for a price which equals 5X profit, and our forecasts show that we will achieve that in that time period.”
What Makes Angels HOT2. Single main idea“We can become the definitive support organisation for international staff locating in Spain”3. Evidence that the plan will workE.g. working already in another country?
What Makes Angels HOT4. Credible idea and revenue modelMarket need? Scale?5. Credible and committed teamProfessional teams, usually with big company experience followed by a breakaway to “do my own thing”Personal time & money invested
What Makes Angels HOT6. A business plan readyIt just need gas (money) to hit the road7. Enough funding for the projectIt is embarrassing (and reveals lack of planning) to go back to the angel for more
What Makes Angels HOT8. Enough shares in the company to give the Angel a voice„5% minimum9. An attractive valuation & investment returnDownside protection before upside gain
What Makes Angels HOTBonus!• A sector that the Angel knows• Close from where the Angel lives• And illogical reasons to make the Angel loves you! E.g. people whose opinions the Angel respects have said „yes‟.
What Makes Angels COLD1. Garbage! Good Angels are experienced business people. Don‟t say what won‟t match their real-world experience. “We can be fully operational 60 days after funding and cash generative in 9 months!!”
What Makes Angels COLD2. A naïve or negligent entrepreneurResearched the angel before approaching?Checked if the info sent in advance reached them?3. Unclear (or none) investment propositionsOrientate the angel with a simple Net Present Value or earning multiple calculation
What Makes Angels COLD4. ComplainsNever complain: angels take big risks!5. Impossible propositions“We’re looking for 4 angel investors with complementary (non-overlapping) industry skills and connections to put up EURO 50,000 each, and give up 2 days per month to support us in the next few critical months”
What Makes Angels COLD6. No backup data“The full business plan is nearly ready. We’ll send it when it is...”“We have top level financials but no detailed monthly P&L and cash flow data for ...”.7. No sales close or requests for reference„“Would you spend 2 hours with us refining our strategy – you seem to know a lot about this sector?”“Could you send our plan to other investor friends?”
What Makes Angels COLD8. People that give up easyIf „no‟ ask „why?‟. If proposition changes positively, then insist.9. Dreadful presentationsHorrible time administration, no story, no interaction with the audience, slides and images too complex and confusing, no conclusion, no calls for action, low voice, no passion...
How to pick upJulian CostleyInvest 25,000€ to 150,000€Give him supplementary options 1 option granted per 1 share purchased = 33% discount on all shares when company value doubles (after exercise price paid)Offer annual fees as chairman or non-exec About EURO 20,000 to 30,000 p.a.Active role in shareholder value growthInfluence in the timing of exit
...and remember!• Be fun, honest, nice, interesting, intelligent, knowledgeable, challenging, innovative and generally good to be around ...because...• Angels want to have fun too and want to be proud of the management and the companies they invest in!