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Angel Investing
Personal Background <ul><li>25 years AT&T Bell Labs experience </li></ul><ul><li>Successful in stock market </li></ul><ul>...
Angel Investments <ul><li>Xlibris.com  Dygest.com  DoodleDeals.com </li></ul><ul><li>Kodingen.com SiteSimon.com ERANYC.com...
What is Angel Investing ? <ul><li>Source of funds for early stage companies </li></ul><ul><li>Typically first “professiona...
Angel Profile <ul><li>Usually private </li></ul><ul><li>Ability to accumulate capital </li></ul><ul><ul><li>Retired profes...
What do Angels Want ? <ul><li>A pleasant experience </li></ul><ul><ul><li>Excitement of growing a company </li></ul></ul><...
Exit Strategies (descending order) <ul><li>Chapter 11 / Disbanding </li></ul><ul><li>Life style (put option) </li></ul><ul...
How to Find Angels ?
How to Find Angels ? <ul><li>Networking </li></ul><ul><ul><li>Venture groups </li></ul></ul><ul><ul><li>Venture fairs </li...
What do Angels Want to See ? <ul><li>Short focussed business plan </li></ul><ul><li>Quality management / people </li></ul>...
Negotiating with Angels <ul><li>Must be win / win </li></ul><ul><li>Process is asymmetrical </li></ul><ul><ul><li>Valuatio...
Financial Returns <ul><li>Ten times investment in 3 to 5 years </li></ul><ul><li>50% per year </li></ul><ul><li>Lifestyle ...
Company Culture <ul><li>Speed, speed, speed </li></ul><ul><li>Outsource everything </li></ul><ul><li>Leverage / margins </...
Angels VS VCs Low High Risk 2X – 4X 10X Multiples 30% 50% IRR Expansion Early Stage Complete Partial Management $2 – 5 mil...
Evaluation Process <ul><li>Clear, concise, compelling, coherent one page executive summary </li></ul><ul><li>Very large po...
Negatives <ul><li>Feature proliferation (unique) </li></ul><ul><li>“Problem solution” approach </li></ul><ul><li>“Can’t ex...
Exploding Angel Market <ul><li>Starting a company close to zero </li></ul><ul><li>Validating a company close to zero </li>...
Thank You <ul><li>John Ason </li></ul><ul><li>www.JohnAson.com </li></ul><ul><li>[email_address] </li></ul>
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Angel Investing

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Transcript of "Angel Investing"

  1. 1. Angel Investing
  2. 2. Personal Background <ul><li>25 years AT&T Bell Labs experience </li></ul><ul><li>Successful in stock market </li></ul><ul><li>Angel investor last 15 years </li></ul>
  3. 3. Angel Investments <ul><li>Xlibris.com Dygest.com DoodleDeals.com </li></ul><ul><li>Kodingen.com SiteSimon.com ERANYC.com </li></ul><ul><li>Centrak.com OffTrackPlanet.com Ology.com </li></ul><ul><li>Diapers.com HotList.com SocialFeet.com </li></ul><ul><li>CallunaVineyards.com Pogby.com Spling.com </li></ul><ul><li>CarbomNanoProbes LiveLook.com Bikini.com FulcrumGallery.com Geometrix SpatialLabs AdPilot Hooja MotionMathGames.com </li></ul><ul><li>MakeUsAnOffer PhlatBall.com IvyExec.com </li></ul>
  4. 4. What is Angel Investing ? <ul><li>Source of funds for early stage companies </li></ul><ul><li>Typically first “professional” level </li></ul><ul><li>Typically $100,000 to $500,000 </li></ul><ul><li>Experience / assistance provided </li></ul>
  5. 5. Angel Profile <ul><li>Usually private </li></ul><ul><li>Ability to accumulate capital </li></ul><ul><ul><li>Retired professionals </li></ul></ul><ul><ul><li>Entrepreneurs </li></ul></ul><ul><li>Financial return secondary concern </li></ul>
  6. 6. What do Angels Want ? <ul><li>A pleasant experience </li></ul><ul><ul><li>Excitement of growing a company </li></ul></ul><ul><ul><li>Financial return </li></ul></ul><ul><li>An environment to contribute / participate </li></ul><ul><ul><li>Management / oversight </li></ul></ul><ul><ul><li>Contacts </li></ul></ul><ul><li>An exit strategy </li></ul>
  7. 7. Exit Strategies (descending order) <ul><li>Chapter 11 / Disbanding </li></ul><ul><li>Life style (put option) </li></ul><ul><li>Buyout / Merger </li></ul><ul><li>Venture Capital round </li></ul><ul><li>IPO </li></ul>
  8. 8. How to Find Angels ?
  9. 9. How to Find Angels ? <ul><li>Networking </li></ul><ul><ul><li>Venture groups </li></ul></ul><ul><ul><li>Venture fairs </li></ul></ul><ul><ul><li>Internet </li></ul></ul><ul><ul><li>University lectures </li></ul></ul><ul><li>Intermediaries </li></ul>
  10. 10. What do Angels Want to See ? <ul><li>Short focussed business plan </li></ul><ul><li>Quality management / people </li></ul><ul><li>Reasonable valuation (20-30% equity) </li></ul><ul><li>Market validation </li></ul>
  11. 11. Negotiating with Angels <ul><li>Must be win / win </li></ul><ul><li>Process is asymmetrical </li></ul><ul><ul><li>Valuations fuzzy </li></ul></ul><ul><ul><li>Angel contribution fuzzy </li></ul></ul><ul><ul><li>Angels timeframe is casual / slow </li></ul></ul><ul><ul><li>Angels do not HAVE to invest </li></ul></ul><ul><ul><li>Angels can walk away at anytime </li></ul></ul>
  12. 12. Financial Returns <ul><li>Ten times investment in 3 to 5 years </li></ul><ul><li>50% per year </li></ul><ul><li>Lifestyle companies do not qualify </li></ul>
  13. 13. Company Culture <ul><li>Speed, speed, speed </li></ul><ul><li>Outsource everything </li></ul><ul><li>Leverage / margins </li></ul><ul><li>Compete / cooperate </li></ul><ul><li>Open non-secretive </li></ul>
  14. 14. Angels VS VCs Low High Risk 2X – 4X 10X Multiples 30% 50% IRR Expansion Early Stage Complete Partial Management $2 – 5 million None Revenues Other people’s Own Money
  15. 15. Evaluation Process <ul><li>Clear, concise, compelling, coherent one page executive summary </li></ul><ul><li>Very large potential (10X) </li></ul><ul><li>Intellectually stimulating </li></ul><ul><li>Marketing/sales skills </li></ul><ul><li>Fundamental keystone patent </li></ul><ul><li>Execution capabilities </li></ul>
  16. 16. Negatives <ul><li>Feature proliferation (unique) </li></ul><ul><li>“Problem solution” approach </li></ul><ul><li>“Can’t explain must see” </li></ul><ul><li>“Enabling” approach </li></ul><ul><li>Product not company focus </li></ul>
  17. 17. Exploding Angel Market <ul><li>Starting a company close to zero </li></ul><ul><li>Validating a company close to zero </li></ul><ul><li>Emergence of accelerators </li></ul><ul><li>Emergence of Super Angels (Micro VCs) </li></ul><ul><li>Emergence of AngelList </li></ul><ul><li>Emergence of graphical investor decks </li></ul>Dramatic increase in speed of angel investing
  18. 18. Thank You <ul><li>John Ason </li></ul><ul><li>www.JohnAson.com </li></ul><ul><li>[email_address] </li></ul>
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