Angels vs VC\'s Ishai Green Forum Mit Israel

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

  1. Angel VS. VC Ishay Green
      • Angel
      • VS.
      • Venture Capital
      • (And some tips about both…)
  2. Disclaimer
      • Entrepreneurship is a game of imagination – The following are my opinions
  3. TERMINOLOGY 1
  4. Terminology
      • Valuation
      • Shares
      • Dilution
  5. ANGEL VS. VC MONEY 2
  6. Angel VS. VC Money
      • VC’s are professionals who invest other people’s money
  7. Angel VS. VC Money
      • Angels are private people investing their hard earned money
  8. ANGEL VS. VC PROFIT EXPECTATIONS 3
  9. Profit Expectations
      • VC’s look for double digits profit multipliers
      • (10 Times)
  10. Profit Expectations
      • Angles would usually be happy in low end of a single digit
      • (3 Times)
  11. ANGEL VS. VC INVESTMENT RISKS 4
  12. Investment Risks
      • The Angel is risking their own money
  13. Investment Risks
      • The Angel is usually less knowledgeable than a VC in most aspects
  14. Investment Risks
      • The Angels tend to follow their gut feeling
      • (So you better be damn sure you know what you’re doing…)
  15. Investment Risks
      • The Angel knows where you live
  16. Investment Risks
      • The VC risk is divided through a larger portfolio
  17. ANGEL VS. VC EXCEPTED HOLDINGS 5
  18. Excepted Holdings
      • VC’s expect a minimum of 20%-25% share holdings
      • (They will ask for much more)
  19. Excepted Holdings
      • Angles are agnostic.
  20. TIMING 6
  21. Timing
      • Angels can afford investing in the scenarios of:
      • Seed
      • Down-round
      • * Angels will usually not execute their preemptive right
  22. Timing
      • VC will usually require a more mature company, and even a proof of concept before investing
  23. Timing
      • Angel money is faster
      • (For most Angels a meeting or two is sufficient to decide)
  24. Timing
      • “ Some VC’s will yes you to death”
      • - Adi Pundak-Mintz
  25. WHY DO ANGELS EXIST? 7
  26. Why do Angels Exist?
      • Potential for large multipliers on their investment outside of the stock markets
  27. Why do Angels Exist?
      • The investment is not liquid – When it is gone it is gone
  28. Why do Angels Exist?
      • The Google – Facebook – The Marker Effect
  29. Why do Angels Exist?
      • Tax Benefits
  30. Why do Angels Exist?
      • It’s Fashionable
      • & Cool
  31. VC TYPES – ENTREPRENEUR POV 8
  32. VC Types – Seed Funds
      • Invest small amount of money in early stage, with no promise for recurring investment
  33. 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
  34. VC Types – International
      • Enables you to tell everyone you now have direct access to Steve Jobs, Balmer and God
  35. VC Types – Famous
      • Proven winners - Index Ventures invested in
  36. VC Types – Top Tier
      • Sequoia
      • Draper Fisher Jurvetson
  37. ANGEL TYPES – ENTREPRENEUR POV 9
  38. Angel Types I
      • Rich Industry Expert / Entrepreneur
      • (Eduardo Shoval)
  39. Angel Types II
      • Super Angel
      • (Yossi Vardi / Paul Grahm)
  40. Angel Types III
      • Richie Rich
      • Oil / Real-estate /
      • Diamonds / Weapons
  41. Angel Types IV
      • The Gambler
  42. Angel Types V
      • Family
  43. BOARD OF DIRECTORS 10
  44. Board Of Directors
      • The board represents the share-holders (investors)
  45. Board Of Directors
      • The board devises tactics and strategies for the company
  46. Board Of Directors
      • The CEO is responsible for executing board decisions
  47. Board Of Directors
      • Entrepreneurs & CEO keep the board up-to-date
  48. Board Of Directors
      • An effective board:
      • Smart and self-conscience members
      • One member+ is an industry expert
  49. INVESTOR RIGHTS 11
  50. Investor Rights
      • Voting Rights Are Dangerous
      • (Try to avoid them)
  51. Investor Rights
      • Veto Rights Are Lethal (Unacceptable)
  52. ANGEL-MAINTENANCE TECHNIQUES 12
  53. Angel-Maintenance Techniques
      • Angel turns into Devil:
      • Conflict of Interest
      • Disappointment
      • Greenmail
      • Ignorant / Boarder Line Disorder
  54. Angel-Maintenance Techniques
      • Proxy Mechanism -
      • Protect the company from its investors
      • Protect the investors from themselves
      • Protect the individual investor from himself
  55. Angel-Maintenance Techniques
      • Define a board representative for the angels with past experience
  56. ANGEL VS. VC VALUATION 12
  57. 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. (*)
  58. 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
  59. 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.
  60. SUMMARY &
  61. Summary
      • There are not definite pros & cons
      • Angels are a great way to start
      • Do you believe in Angels?
  62. I do
  63. THANK YOU !#%

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