About Angel Groups

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Description of angel investment process a la Candy Land.

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About Angel Groups

  1. 1. Understanding Angel Investor Groups How to Play the Game
  2. 2. The League
  3. 3. The Players Paul Neeb, First Angels Kalamazoo, Mich. Ken Kousky, Bluewater Angels Midland, Mich. Loïc Couraud, Capital Community Angels East Lansing, Mich.
  4. 4. The Game <ul><li>Deals & Business Plans </li></ul><ul><li>Filtering & Screening </li></ul><ul><li>Initial Selection </li></ul><ul><li>Validation & Due Diligence </li></ul><ul><li>Negotiation </li></ul><ul><li>Investment (1 st Cycle) </li></ul><ul><li>Monitoring & Nurturing </li></ul><ul><li>Follow-on Investment </li></ul><ul><li>Payoff </li></ul>
  5. 5. Get Deals, Business Plans Filtering Deals and Plans Interested in Investment Validate Business for Investment Negotiate Terms of Investment Investment (1 st Cycle) Monitor and Nurture Business Follow-on Investment Payoff
  6. 6. Get Deals Business Plans <ul><li>Online </li></ul><ul><ul><li>Angelsoft.net </li></ul></ul><ul><ul><li>Company web presence </li></ul></ul><ul><li>Events </li></ul><ul><ul><li>Universities </li></ul></ul><ul><ul><li>PR Campaigns </li></ul></ul><ul><li>References </li></ul><ul><ul><li>Member contacts </li></ul></ul><ul><ul><li>Entrepreneurial Support Organizations </li></ul></ul>,
  7. 7. Filtering Deals Plans <ul><li>Quick Initial Review </li></ul><ul><ul><li>5 minute look </li></ul></ul><ul><ul><li>Executive Summaries! </li></ul></ul><ul><li>Venture-backable? </li></ul><ul><ul><li>i.e. Fit for Angel investment model </li></ul></ul><ul><ul><li>Not lifestyle business </li></ul></ul><ul><li>Group’s preferences </li></ul><ul><ul><li>Industry Considerations </li></ul></ul><ul><ul><li>Regional Considerations </li></ul></ul>,
  8. 8. Filtering Deals Plans <ul><li>Business (50%) </li></ul><ul><ul><li>What product/service? </li></ul></ul><ul><ul><li>What benefits to target market? </li></ul></ul><ul><ul><li>What are competitors? </li></ul></ul><ul><ul><li>Marketing strategy? </li></ul></ul><ul><ul><li>Stage of development? </li></ul></ul><ul><ul><li>Scalability? </li></ul></ul><ul><ul><li>Barriers to entry? Long term competitive advantages? </li></ul></ul><ul><ul><li>Intellectual Property? </li></ul></ul><ul><li>Entrepreneur (50%) </li></ul><ul><ul><li>Phone meeting </li></ul></ul><ul><ul><li>Live meeting </li></ul></ul>,
  9. 9. Interest in Investment <ul><li>Members’ Meetings </li></ul><ul><ul><li>30 Minute Presentations by Entrepreneurs </li></ul></ul><ul><ul><li>Discuss with Members </li></ul></ul><ul><ul><li>Call for a Champion </li></ul></ul><ul><ul><li>Form Committee to Perform “Due Diligence” </li></ul></ul><ul><ul><ul><li>Definition: An audit or investigation of a potential investment.  </li></ul></ul></ul>
  10. 10. Validate Business for Investment <ul><li>Verify Business Plan </li></ul><ul><ul><li>Check Sources </li></ul></ul><ul><ul><li>Estimate Optimism of Predictions </li></ul></ul><ul><ul><li>Verify Conclusions </li></ul></ul><ul><li>Due Diligence Checklists </li></ul><ul><ul><li>Angelsoft.net </li></ul></ul><ul><ul><li>Angel Capital Association </li></ul></ul><ul><li>Risk Assessment </li></ul><ul><ul><li>Development Risk </li></ul></ul><ul><ul><li>Manufacturing Risk </li></ul></ul><ul><ul><li>Marketing Risk </li></ul></ul><ul><ul><li>Management Risk </li></ul></ul><ul><ul><li>Growth Risk </li></ul></ul><ul><li>100+ Hour Process </li></ul>
  11. 11. Negotiate Terms of Investment <ul><li>Funding Negotiation Converges with Final Due Diligence </li></ul><ul><li>Outside Legal Help Brought In </li></ul>
  12. 12. Funds Released <ul><li>Milestone-Based </li></ul><ul><li>Majority Control Required for Most Deals </li></ul>
  13. 13. Monitor and Nurture <ul><li>One Board-Seat Reserved for Angel Group Member </li></ul><ul><li>Use Network and Experience to Support Management </li></ul>
  14. 14. Follow On Investment <ul><li>Milestone-Based </li></ul><ul><li>Make Investment Attractive for Purchase or VC-Backing </li></ul>-
  15. 15. Payoff <ul><li>Sell Company to a Bigger Company </li></ul><ul><li>Recently Less Focus on IPOs </li></ul>
  16. 16. Candy Castle

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