People The people in the deal, including the entrepreneur, team members, investors, advisors, and any significant stakeholders. Business opportunity The potential business opportunity, which includes the business model, the size (which implies the potential returns), the customers, and the window within which it can be seized. Context The macro-situation, which includes external factors, such as: technology development, customer desires, the state of the economy, industry trends, etc. Deal The structure of the deal, its terms and pricing.
Objective How to attract angel investors Characters of angel investors Type of angel investors
Angel Finance Estimates suggest angels provide more capital than VCs Small business association estimates that 250,000 angels commit $20bn each year to over 30,000 private companies Fenn and Liang 1998: 2/3 of high tech IPOs backed by angels, 1/3 by VCs (some overlap) Invest smaller amounts/less follow up investments than VCs Although there are network of angels/informal networks that “syndicate”• No systematic data for angel investments
Angel Finance (cont.) Advantages: Provides expertise and advise? Invests own capital and is not intermediary Finance “just for fun” Disadvantages: Limited capital
Start-up/Early Stage Eco-SystemSource: Jonathan Cooper, Poteza Fund slide: 5
Business Angel 1011. Who are business angels Business angels Diaspora business angels Angel Investment Criteria Other business angels People1. What types of Investments Low end: $10K individual Investments High end: $1M+ syndicated investment Context1. Benefits of Business Angels Invest their own money Contribute more than money (advice, (Business) Opportunity Deal introductions, etc.) Flexible Source: Harvard Business School
Angel Financing vs.VC FinancingInvestors have fewer control rightsContracts appear less contingentFunding less tied to future relationships
Angel ContractsAndrew Wong (2002): “Angel Finance: The Other Venture Capital” • Firm <1 year old when getting angel financing • Do not rely on as much control mechanisms as VC: Seldom receives board seats Not much staging Common equity, without anti-dilution or contingent equity claims • But allows entrepreneur to hold larger stake • Close geographical proximity (informal substitute to control?)
ConsiderationsWhy do firms not get VC financing? Negative NPV Hold-up problems VCs organization Contractibility
Duncan Bannatyne For impressing in an interview/pitch Be concise and do not spend 4 minutes presenting a presentation if you can do it in 1 minute. For running your own business Stay focused and work hard. For surviving the recession Do not spend a penny unless absolutely necessary, focus on cash flow rather than profit. For getting your product to market Use what ever PR sources are available to you. For winning investment Present yourself to as many investors as you can. If you are turned down ask why and use the advise when preparing your next pitch. For making millions Read my autobiography "Anyone Can Do It".
For impressing in an interview/pitch Dress smartly (a tie is not always necessary) Research the subject/business as much as possible Answer questions with honesty and precision For running your own business Work in a subject area that you loveTheo Paphitis Understand the detail – if you are new there are many sites like Businesslink and smarta.com that are full of useful tips and advice Write down your business plan For surviving the recession Work sharper and smarter e.g. small, tight teams Watch your overheads Dont forget to invest in people i.e. keep training For getting your product to market Get true feedback from those other than friends (as they will always be kind) Agree target audiences and ways you are going to tackle them Invest in great design and strong promotion For winning investment Have a business plan Demonstrate your achievements to date, ideally financial ones Get testimonials and support from respected third parties For making millions Look for business opportunities with scale i.e. ones that have potential to grow Make your first £100,000, knowing the rest will be far easier Always keep your feet on the ground
For impressing in an interview/pitchBe clear, concise, and honest. Address the most important business issues upfront. Do not waffle, do not make things up. Your pitch or interview doesnt have to be perfect, just credible.Doing your homework on the person you are presenting too and Deborah Meaden explaining why you/your business is the perfect fit will also impress. For running your own businessKnow what is important to your business and where and how the profit is generated and spend your time on that. For surviving the recessionThink about how your customer is feeling and behaving in the current climate and flex your model to make sure it is relevant and appealing. For winning investmentChoose your target investor wisely, tell them why they should invest and what returns they will achieve in a clear, concise, and credible way.Explain what you require from them and what you will offer in return. Simple, but not easy! For making millionsBeing a millionaire is not a career. It is something that happens because you do something of value that enough people want to pay for.For you to become a millionaire you simply need to provide a product or service to a large enough market, at a viable price - thats it!
For impressing in an interview/pitch Be truthful, spell out your achievements but dont make up qualifications and previous jobs. If you are honest you will establish a reputation for reliability with your boss andPeter Jones colleagues. For running your own business Be results orientated, this will help you to be more motivated, and leave you with a sense of achievement when you reach your goals. Think carefully about what you want, and then focus on how to get there. Youd be amazed at how many people dont do this. For surviving the recession Protect your job by making your boss aware of how committed you are For getting your product to market Create a strong brand identity For winning investment Passion and commitment are vital ingredients of a winning pitch For making millions Always be confident, believe in what you are doing and dont waver. You wont persuade other people to believe in you if you dont believe in yourself.
For impressing in an interview/pitch James Caan Dress appropriately - simple but true Be concise and focused Make sure the pitch is of mutual benefit and that you can clearly describe that Know your numbers For running your own business In one phrase - the devil is in the detail For surviving the recession With change comes opportunity - seize it when you see it For getting your product to market Get it OUT THERE - be seen to be sold Dont take no for an answer Communicate face to face and over the phone - dont hide behind a computer For winning investment Know your numbers, your market, your product, your competition For making millions Unfortunately there is no secret recipe - great businesses are 5% concept, 95% execution- so believe me, there is no substitute for hard work, Im sorry to say.