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Angels vs VC\'s Ishai Green Forum Mit Israel
 

Angels vs VC\'s Ishai Green Forum Mit Israel

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    Angels vs VC\'s Ishai Green Forum Mit Israel Angels vs VC\'s Ishai Green Forum Mit Israel Presentation Transcript

    • Angel VS. VC Ishay Green
        • Angel
        • VS.
        • Venture Capital
        • (And some tips about both…)
    • Disclaimer
        • Entrepreneurship is a game of imagination – The following are my opinions
    • TERMINOLOGY 1
    • Terminology
        • Valuation
        • Shares
        • Dilution
    • ANGEL VS. VC MONEY 2
    • Angel VS. VC Money
        • VC’s are professionals who invest other people’s money
    • Angel VS. VC Money
        • Angels are private people investing their hard earned money
    • ANGEL VS. VC PROFIT EXPECTATIONS 3
    • Profit Expectations
        • VC’s look for double digits profit multipliers
        • (10 Times)
    • Profit Expectations
        • Angles would usually be happy in low end of a single digit
        • (3 Times)
    • ANGEL VS. VC INVESTMENT RISKS 4
    • Investment Risks
        • The Angel is risking their own money
    • Investment Risks
        • The Angel is usually less knowledgeable than a VC in most aspects
    • Investment Risks
        • The Angels tend to follow their gut feeling
        • (So you better be damn sure you know what you’re doing…)
    • Investment Risks
        • The Angel knows where you live
    • Investment Risks
        • The VC risk is divided through a larger portfolio
    • ANGEL VS. VC EXCEPTED HOLDINGS 5
    • Excepted Holdings
        • VC’s expect a minimum of 20%-25% share holdings
        • (They will ask for much more)
    • Excepted Holdings
        • Angles are agnostic.
    • TIMING 6
    • Timing
        • Angels can afford investing in the scenarios of:
        • Seed
        • Down-round
        • * Angels will usually not execute their preemptive right
    • Timing
        • VC will usually require a more mature company, and even a proof of concept before investing
    • Timing
        • Angel money is faster
        • (For most Angels a meeting or two is sufficient to decide)
    • Timing
        • “ Some VC’s will yes you to death”
        • - Adi Pundak-Mintz
    • WHY DO ANGELS EXIST? 7
    • Why do Angels Exist?
        • Potential for large multipliers on their investment outside of the stock markets
    • Why do Angels Exist?
        • The investment is not liquid – When it is gone it is gone
    • Why do Angels Exist?
        • The Google – Facebook – The Marker Effect
    • Why do Angels Exist?
        • Tax Benefits
    • Why do Angels Exist?
        • It’s Fashionable
        • & Cool
    • VC TYPES – ENTREPRENEUR POV 8
    • VC Types – Seed Funds
        • Invest small amount of money in early stage, with no promise for recurring investment
    • VC Types – Israel Top Five
        • - Has more then $100M fund
        • - Known for its smart and beautiful partners*
        • * Yaron from Giza VC is a great example
    • VC Types – International
        • Enables you to tell everyone you now have direct access to Steve Jobs, Balmer and God
    • VC Types – Famous
        • Proven winners - Index Ventures invested in
    • VC Types – Top Tier
        • Sequoia
        • Draper Fisher Jurvetson
    • ANGEL TYPES – ENTREPRENEUR POV 9
    • Angel Types I
        • Rich Industry Expert / Entrepreneur
        • (Eduardo Shoval)
    • Angel Types II
        • Super Angel
        • (Yossi Vardi / Paul Grahm)
    • Angel Types III
        • Richie Rich
        • Oil / Real-estate /
        • Diamonds / Weapons
    • Angel Types IV
        • The Gambler
    • Angel Types V
        • Family
    • BOARD OF DIRECTORS 10
    • Board Of Directors
        • The board represents the share-holders (investors)
    • Board Of Directors
        • The board devises tactics and strategies for the company
    • Board Of Directors
        • The CEO is responsible for executing board decisions
    • Board Of Directors
        • Entrepreneurs & CEO keep the board up-to-date
    • Board Of Directors
        • An effective board:
        • Smart and self-conscience members
        • One member+ is an industry expert
    • INVESTOR RIGHTS 11
    • Investor Rights
        • Voting Rights Are Dangerous
        • (Try to avoid them)
    • Investor Rights
        • Veto Rights Are Lethal (Unacceptable)
    • ANGEL-MAINTENANCE TECHNIQUES 12
    • Angel-Maintenance Techniques
        • Angel turns into Devil:
        • Conflict of Interest
        • Disappointment
        • Greenmail
        • Ignorant / Boarder Line Disorder
    • Angel-Maintenance Techniques
        • Proxy Mechanism -
        • Protect the company from its investors
        • Protect the investors from themselves
        • Protect the individual investor from himself
    • Angel-Maintenance Techniques
        • Define a board representative for the angels with past experience
    • ANGEL VS. VC VALUATION 12
    • VC
        • VC allocates ~$10M total for an investment
        • The money is divided between rounds
        • The VC needs to maintain 25% holdings in the company – unless you go to huge valuations. (*)
    • Angel
        • The Tomer-Ishay Method™
          • Find a prominent lead investor and then negotiate
          • Talk to the rest of the investors only after valuation was set
          • Raising money in chunks
    • Angel
      • What should you tell the Angels before closing
        • Make sure they understand the business plan
        • Tell them they need to consider the money as gone.
        • Say that you do not take money from widows and orphans.
    • SUMMARY &
    • Summary
        • There are not definite pros & cons
        • Angels are a great way to start
        • Do you believe in Angels?
    • I do
    • THANK YOU !#%