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Susan Preston - The Rest of the Story (or at least parts of it) - TacomaAngel Network
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Susan Preston - The Rest of the Story (or at least parts of it) - TacomaAngel Network

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Presentation given March 13, 2007 to the TacomaAngel Network's members. Susan has not only been a start-up CEO, the former founder of an angel organization and author of several books on Angel …

Presentation given March 13, 2007 to the TacomaAngel Network's members. Susan has not only been a start-up CEO, the former founder of an angel organization and author of several books on Angel Investing, she is also Entrepreneur in Residence at the Ewing Marion Kaufman Foundation, which sponsors the Angel Capital Association with membership throughout the US and Canada. She is additionally counsel with Davis, Wright, Tremaine to numerous early stage companies and investors.

Published in: Economy & Finance, Business

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  • 1. The Rest of the Story (or at least parts of it) Tacoma Angel Network March 13, 2007 Susan Preston Director of Attorney Training and Professional Development Davis Wright Tremaine
  • 2. Attributes of Investable Companies
    • Clear path to profitability
    • Solid management
    • Realistic business concept and plan
    • Scalable business
    • Competitive edge/Technical superiority
    • Market need and anticipated acceptance
    • Realistic financial projections
    • Realistic valuation
    • Clear, well-articulated exit strategy
    • Bottom line: Opportunity for financial return
  • 3. Investable Companies
    • How does an investor make this determination?
      • Passion of entrepreneur (presentation)
      • Team track record – individually and together Entrepreneur’s ability to succinctly articulate vision and mission
      • Entrepreneur seeks advice of trusted, experienced, honest advisors
      • Coachable entrepreneur
  • 4. Investable Companies
    • How does an investor make determination?
      • Competitors researched and understood
      • Clear market differentiator
      • Value proposition for customer clearly evident
      • Market access strategy clear and realistic
      • Comprehensive summary of risks (and plans to cope/address)
      • Profit potential – good margins
      • Marketability of company – M&A exit
        • Type, timing and realistic purchasers
  • 5. Due Diligence
    • Checklists are insurance policies
    • Should have materials prepared for any and all investors
      • Are others investing? Can you work with them to lessen the burden on company?
    • If entrepreneur won’t take time to do due diligence, is this aligned with your post-investment expectations?
  • 6. Investing Money and Capabilities
    • Angels, venture capital, corporations typically receive:
      • Preferred stock
      • Convertible debt with warrants or additional stock
      • Invest with milestones
    • Find your added value: You can be proactive in developing business through (“win together”):
      • Company building experience
      • Company functionality experience
      • Industry experience
      • Contacts for partners, customers and follow-on financing
  • 7. On-Going Relationship
    • Set by:
      • Pre-investment interaction
      • Terms of investment
      • Entrepreneur’s behavior and attitude during due diligence
    • Therefore, up-front understanding of expectations by both parties essential:
      • Ask the difficult questions:
        • What level of interaction does entrepreneur want/expect?
        • What do you expect from your investor?
        • Will you expect the founder to eventually step-aside?
    • Don’t enter an incompatible relationship
  • 8. On-Going Relationship
    • What entrepreneur should provide you:
      • Communicate, communicate, communicate
      • Quarterly reports
      • Not hiding bad news
      • Allowing reasonable visitation and meeting times
      • Investor relations as a culture of company
      • Asking for assistance, mentoring, advise – if appropriate and understood up-front
  • 9. Summation
    • No absolute rules, just great guidelines
    • Be prepared to lose entire investment
    • Never sell yourself short on due diligence
    • Set post-investment expectations upfront
    • Invest with professional terms
    • Communicate