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What Angel Investors Look for in Fundable Companies, NZ and AUS

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This presentation includes Summary of Capital Food Chain, Non-disclosure Agreements, and how investors evaluate deals.

This presentation includes Summary of Capital Food Chain, Non-disclosure Agreements, and how investors evaluate deals.

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  • This is a private investment company that provides financing to Small-cap, publicly traded companies. Our mission is to add value by providing not only financial resources and industry knowledge, but hands-on M&A strategy and implementation. Acting as principal, we maintain successful long term relationships with our portfolio companies. Our expertise lies only partly in creating flexible financial structures. More importantly, our ingenuity and financial resources enable a company to grow both internally and externally via acquisitions. We're a hard working, creative, highly experienced and successful team that can take a company to the next level. Contact us to see how we can help make your business grow financially.

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  • 1. What!Angel!Investors!Look! What Angel Investors Look For!in!Fundable!Companies For in Fundable Companies Bill!Payne BNZ!University!of!Auckland!Business!School! Entrepreneur!in!Residence
  • 2. Agenda d New!Zealand!– Australian!Investment!Forum • Summary!of!Capital!Food!Chain • Non disclosure Agreements Non"disclosure!Agreements • How!investors!evaluate!deals
  • 3. The!Capital!Lifecycle Investigation Feasibility Development Introduction Growth Maturity Proof!of! Pre"Seed Seed!& Early First,!Second,!etc... concept Start"up Self Friends!&!Family ROFIT Venture!Capital Angel!Investors g IPO,!Banks , PR VALUE!OF!DEATH TIME
  • 4. Friends!&! d & Venture! Angels Family Capitalists Typical!round:!!<US$100K Typical!round:! US$400K Typical!round:!!US$7M Each!investor:!US$2"10,000 Each!investor:!!US$35,000 Each!investor:!!US$3M Annual!Total:!!!!US$60B Annual!Total:!!!!US$20B Annual!total:!!!!US$20B Unsophisticated Accredited,!savvy Limited!partnership Investing!in!a!friend,!family Investing!time!and!money Institutional!money Passive Active General!Partners!active General Partners active 1"2!lifetime!investments! Investing!in!entrepreneur Invest!in!company Equity,!debt,!gift? Portfolio!of!angel!deals Large!portfolio
  • 5. Self!Funding!(Bootstrapping)
  • 6. Friends!and!Family!Investors Fi d d F il I • P Pre"seed!financing d fi i – To!develop!product – To!find!customers • Unsophisticated – Equity?!!Debt?!!Gift? – Limit!the!number!of!investors i i h b fi www.billpayne.com
  • 7. Who!Are!These!Angels? Wh A Th A l? ! Wealthy!individuals!– “accredited!investors” y ! “Been!there!and!done!that”!entrepreneurs ! “Mad!money” ! Generally!$25K"$250K!per!deal!per!angel ! Several!angel!investments ! Range!of!involvements ! Lead!investor!– Chairman!of!the!Board ! I Investor/advisor t / d i ! Passive!investor www.billpayne.com
  • 8. Venture!Capitalists V t C it li t ! General!partners ! Salaried!managers ! Minimal!investment,!huge!upside ! Limited!partners ! Corporations,!pension!funds,! wealthy!individuals ! Totally!passive!involvement ! 800!venture!capital!funds!# ! Size: $5 million to >$10 billion Size:!!$5!million!to!>$10!billion www.billpayne.com
  • 9. Nondisclosure!Agreements!(NDAs) N di l A t (NDA ) • Most angels and VCs will not sign Most!angels!and!VCs!will!not!sign – See!too!many!deals – I t it i k t Integrity!is!key!to!continuing!business ti i b i – Not!motivated!to!steal!technology • May!sign!NDA… – During!due!diligence,!not!earlier – Covering!a!very!narrow!set!of!issues • Business Plan " no proprietary information Business!Plan! no!proprietary!information www.billpayne.com
  • 10. Evaluating!Deals Evaluating Deals What!do!investors!look!for? f www.billpayne.com
  • 11. Angel!Rating!System A l R ti S t Management!team Management team 0"30% Size!of!opportunity 0"25% Product!&!technology 0"15% Sales!channels 0"10% Competitive!advantage 0"10% Size!of!this!round Si f thi d 0!" 0 5% Need!for!more!funding 0!" 5% www.billpayne.com
  • 12. Fundable!Management!Teams F d bl M T • CEO – CEO!experience – Coachable (very important) Coachable!(very!important) – Vertical!experience – Leadership • Team – Balance!and!complete – Experience working together Experience!working!together www.billpayne.com
  • 13. Size!!of!the!Opportunity Si f th O t it • Scalable! l bl – $20!million!(min.)!in!revenues!in!5!years – (VCs!look!for!>$100!million) $ • High!gross!margins g g g • Large!niche!market • U f i Unfair!competitive!advantage ii d • Ready!for!customers www.billpayne.com
  • 14. Competitive!Advantage!(IP) C titi Ad t (IP) • Patents – Important, but difficult to defend Important,!but!difficult!to!defend • Trademarks/copyrights • T d S Trade!Secrets t • Very!important!at!exit
  • 15. Deal!Flow!Statistics D l Fl St ti ti • Prescreening ! 1!in!4!to!Screening • Screening ! 1 in 3 to DD 1!in!3!to!DD • Due!Diligence ! 1!in!3!to!Inv.!Meeting • Investment ! 1!in!2!raise!money • OVERALL ! 1!in!72!who!apply!receive! investment www.billpayne.com
  • 16. 2009!NZ!Angel!Deals g • ~NZ$127!Million!since!2006 – 2009!" NZ$50!"" 2008!" NZ$29 – 2007!" NZ$27.4!"" 2006!– NZ$20.2 • Investment!vs Stage!of!Development!– 09 – Seed!and!Start"up!=!78% – Expansion!!!!!!!!!!!!!!!=!22% • New!Deals!vs Follow"on!Funding!" 09 – 40%!first"time!investments – 60%!follow"on!investments
  • 17. Questions?? For!enquiries:!!r.paul@theicehouse.co.nz Copy!of!slide!deck:!!emmya557@gmail.com py y @g www.billpayne.com