Understanding Angel Investor Groups How to Play the Game

The League

The Players Paul Neeb, First Angels Kalamazoo, Mich. Ken Kousky, Bluewater Angels Midland, Mich. Loïc Couraud, Capital Community Angels East Lansing, Mich.

The Game Deals & Business Plans Filtering & Screening Initial Selection Validation & Due Diligence Negotiation Investment (1 st Cycle) Monitoring & Nurturing Follow-on Investment Payoff

Deals & Business Plans

Filtering & Screening

Initial Selection

Validation & Due Diligence

Negotiation

Investment (1 st Cycle)

Monitoring & Nurturing

Follow-on Investment

Payoff

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

Get Deals Business Plans Online Angelsoft.net Company web presence Events Universities PR Campaigns References Member contacts Entrepreneurial Support Organizations ,

Online

Angelsoft.net

Company web presence

Events

Universities

PR Campaigns

References

Member contacts

Entrepreneurial Support Organizations

Filtering Deals Plans Quick Initial Review 5 minute look Executive Summaries! Venture-backable? i.e. Fit for Angel investment model Not lifestyle business Group’s preferences Industry Considerations Regional Considerations ,

Quick Initial Review

5 minute look

Executive Summaries!

Venture-backable?

i.e. Fit for Angel investment model

Not lifestyle business

Group’s preferences

Industry Considerations

Regional Considerations

Filtering Deals Plans Business (50%) What product/service? What benefits to target market? What are competitors? Marketing strategy? Stage of development? Scalability? Barriers to entry? Long term competitive advantages? Intellectual Property? Entrepreneur (50%) Phone meeting Live meeting ,

Business (50%)

What product/service?

What benefits to target market?

What are competitors?

Marketing strategy?

Stage of development?

Scalability?

Barriers to entry? Long term competitive advantages?

Intellectual Property?

Entrepreneur (50%)

Phone meeting

Live meeting

Interest in Investment Members’ Meetings 30 Minute Presentations by Entrepreneurs Discuss with Members Call for a Champion Form Committee to Perform “Due Diligence” Definition: An audit or investigation of a potential investment.

Members’ Meetings

30 Minute Presentations by Entrepreneurs

Discuss with Members

Call for a Champion

Form Committee to Perform “Due Diligence”

Definition: An audit or investigation of a potential investment.

Validate Business for Investment Verify Business Plan Check Sources Estimate Optimism of Predictions Verify Conclusions Due Diligence Checklists Angelsoft.net Angel Capital Association Risk Assessment Development Risk Manufacturing Risk Marketing Risk Management Risk Growth Risk 100+ Hour Process

Verify Business Plan

Check Sources

Estimate Optimism of Predictions

Verify Conclusions

Due Diligence Checklists

Angelsoft.net

Angel Capital Association

Risk Assessment

Development Risk

Manufacturing Risk

Marketing Risk

Management Risk

Growth Risk

100+ Hour Process

Negotiate Terms of Investment Funding Negotiation Converges with Final Due Diligence Outside Legal Help Brought In

Funding Negotiation Converges with Final Due Diligence

Outside Legal Help Brought In

Funds Released Milestone-Based Majority Control Required for Most Deals

Milestone-Based

Majority Control Required for Most Deals

Monitor and Nurture One Board-Seat Reserved for Angel Group Member Use Network and Experience to Support Management

One Board-Seat Reserved for Angel Group Member

Use Network and Experience to Support Management

Follow On Investment Milestone-Based Make Investment Attractive for Purchase or VC-Backing -

Milestone-Based

Make Investment Attractive for Purchase or VC-Backing

Payoff Sell Company to a Bigger Company Recently Less Focus on IPOs

Sell Company to a Bigger Company

Recently Less Focus on IPOs

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