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360º               Angel             InvestingPaulo Andrez      Business Angel      President of Cascais Business Angel Cl...
Part I                     The Entrepreneur©Paulo AndrezAthens workshop23rd February 2012
Start Ups Valley of Death                Cash flow                            Start-up                                    ...
©Paulo AndrezAthens workshop23rd February 2012
©Paulo AndrezAthens workshop23rd February 2012
Michelson                     Diagnostics©Paulo AndrezAthens workshop23rd February 2012
Imagine that you have 100.000 euros in a safe bank,     and you have 4% of interest rate for your deposit.             Hi,...
But if the World Bank guarantees you that if            Zephyr’s new venture doesn’t pay you the 5%, they             will...
Business Venture Mutual                                                              Family, Fools & Friends and State   A...
Get out of Comfort Zone                                             Reduction of                                          ...
©Paulo AndrezAthens workshop23rd February 2012
©Paulo AndrezAthens workshop23rd February 2012
Panic/Adventure                                                        ZoneIf an entrepreneur does not want to            ...
©Paulo AndrezAthens workshop23rd February 2012
©Paulo AndrezAthens workshop23rd February 2012
©Paulo AndrezAthens workshop23rd February 2012
©Paulo AndrezAthens workshop23rd February 2012
Sometimes, we overcome obstacles that we thought©Paulo Andrez                          impossible !Athens workshop23rd Feb...
Raising Money©Paulo AndrezAthens workshop23rd February 2012
How does the Business Plan look in                        terms of Risk Mitigation ?                     % Risks          ...
Revenues                  There are good                             almost zero                  revenues                ...
But if you want to sell the Cow…                                  ?        •    Who will be the buyers of your “Cow” ?    ...
The majority will not survive the Valley of Death...                     ...but those that will survive will pay back the ...
Hi ! My name is Peter and I   Hi again. You already know           am raising money for my          me. I am the famous   ...
Equity Gap           Capital Needs                                                            IPO                         ...
Differences from Angel Investors and Venture Capitalists©Paulo AndrezAthens workshop23rd February 2012
Angel market size is bigger than the VC market©Paulo AndrezAthens workshop23rd February 2012
Business      Seed         Federations               angel                                     Individual    Associate    ...
Business Angels in Portugal         » Invicta Angels – Assoc. de Business Angels do Porto         » Assoc. de Investidores...
Angel Market size                                                       Visible Market (5%-10%)                           ...
My idea worthies millions…©Paulo AndrezAthens workshop23rd February 2012
How to solve the conflict of pre-evaluation ?                                      Options Based type of investment% of eq...
Meeting with Investors                                                I am the      I want a salary of 15.000             ...
Meeting with Investors                                             With their       I would like to have a salary         ...
I am very clever !     If this start up fails, I do not loose   I share risks with investors !     anything….Ah! Ah!©Paulo...
Zephyr and Peter made a Road-Show talking with Investors©Paulo AndrezAthens workshop23rd February 2012
©Paulo AndrezAthens workshop23rd February 2012
Zephyr´s conclusion                                           I have to     The government grants,                        ...
Pedro’s conclusion            Peter´s conclusion                                              The investors       Even the...
X                           Entrepreneur’s time management            20%                                      Time spent ...
Good Entrepreneur + Good Mitigation + Good Business Angel                                                 =©Paulo AndrezAt...
YES, I CAN !                       pandrez@fnaba.org©Paulo AndrezAthens workshop23rd February 2012
Exercise©Paulo AndrezAthens workshop23rd February 2012
My name is Felipe. I have a                      great project for you to                              invest !©Paulo Andr...
Frame and paints cost     Investment proposal  1.000 €  Time of Felipe to paint  it - 4.000 €  So, total cost of the  pain...
Felipe needs 1.000€.       New investment proposal  In case the painting is  not sold, the shop that  will sell the frame ...
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Angel_investing_workshop_Athens_23_February_2012

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Presentation by Paulo Andrez, EBAN Vice President, at the Hellenic Angels launch event, which took place in Athens, Entrepreneur Week Greece, February 23rd 2012

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Angel_investing_workshop_Athens_23_February_2012

  1. 1. 360º Angel InvestingPaulo Andrez Business Angel President of Cascais Business Angel Club (PT) FNABA Board member (PT) EBAN Vice-President (EU)©Paulo AndrezAthens 23rd February, 2012Athens, workshop23rd February 2012
  2. 2. Part I The Entrepreneur©Paulo AndrezAthens workshop23rd February 2012
  3. 3. Start Ups Valley of Death Cash flow Start-up time©Paulo AndrezAthens workshop23rd February 2012
  4. 4. ©Paulo AndrezAthens workshop23rd February 2012
  5. 5. ©Paulo AndrezAthens workshop23rd February 2012
  6. 6. Michelson Diagnostics©Paulo AndrezAthens workshop23rd February 2012
  7. 7. Imagine that you have 100.000 euros in a safe bank, and you have 4% of interest rate for your deposit. Hi, My name is Zephyr, and I want you to invest in my new fantastic Start Up ! I guarantee you 5% annually. Would you invest in a start up with no clients, no proven business plan…if the most you can get as return, would be 5% annually ?©Paulo AndrezAthens workshop23rd February 2012
  8. 8. But if the World Bank guarantees you that if Zephyr’s new venture doesn’t pay you the 5%, they will pay it immediately to you, would you invest ?©Paulo AndrezAthens workshop23rd February 2012
  9. 9. Business Venture Mutual Family, Fools & Friends and State Angels Capital Guarantee Bank 100,00% 100% Probability of an entrepreneur to raise money from investors or 80,00% from banks 60,00% A L 40,00% GO 20,00% 0,00% 0% Mitigated Risks 100% Risks: Market, Team, Legal, Financial e Operational©Paulo AndrezAthens workshop23rd February 2012
  10. 10. Get out of Comfort Zone Reduction of 50%-90% of Investors risk the initial Total Risk project Entrepreneur risk of the Project Final Risk of the Project Initial Project project after risk mitigation©Paulo AndrezAthens workshop23rd February 2012
  11. 11. ©Paulo AndrezAthens workshop23rd February 2012
  12. 12. ©Paulo AndrezAthens workshop23rd February 2012
  13. 13. Panic/Adventure ZoneIf an entrepreneur does not want to Learning & Discovery leave his/her ZoneComfort Zone, he/she shouldn’t start Comfort a new company ! Zone©Paulo Andrez “A ship in harbour is safe - but that is not what ships are for.”Athens workshop John A. Shedd, Salt from My Attic23rd February 2012
  14. 14. ©Paulo AndrezAthens workshop23rd February 2012
  15. 15. ©Paulo AndrezAthens workshop23rd February 2012
  16. 16. ©Paulo AndrezAthens workshop23rd February 2012
  17. 17. ©Paulo AndrezAthens workshop23rd February 2012
  18. 18. Sometimes, we overcome obstacles that we thought©Paulo Andrez impossible !Athens workshop23rd February 2012
  19. 19. Raising Money©Paulo AndrezAthens workshop23rd February 2012
  20. 20. How does the Business Plan look in terms of Risk Mitigation ? % Risks % Risks Mitigated Mitigated Risks Risks Non Mitig. Non Mitig. Risks Risks % Risks % Risks Mitigated Mitigated Risks Risks Non Mitig. Non Mitig. Risks Risks©Paulo AndrezAthens workshop23rd February 2012
  21. 21. Revenues There are good almost zero revenues Veal Cow Cow Milk Veal turns into Cow Cow produces Milk Buckets©Paulo AndrezAthens workshop23rd February 2012
  22. 22. But if you want to sell the Cow… ? • Who will be the buyers of your “Cow” ? • Will the buyers need the “Cow” in 4-6 years ? • Are there competing “Cows” growing in the marketplace ? • What will be the price of the “Cow” in 4-6 years ? • Are there many potential buyers or just few buyers ? Is it dependent on one ? buyer ?©Paulo AndrezAthens workshop23rd February 2012
  23. 23. The majority will not survive the Valley of Death... ...but those that will survive will pay back the investors !©Paulo AndrezAthens workshop23rd February 2012
  24. 24. Hi ! My name is Peter and I Hi again. You already know am raising money for my me. I am the famous new company... Zephyr! I just need your money !©Paulo AndrezAthens workshop23rd February 2012
  25. 25. Equity Gap Capital Needs IPO Venture Higher Capital Risk Funds Early stage and seed venture funds Angels help fill the Business ‘Equity Gap’ Angels Friends, Family & Lower Founders Risk Time 0 Seed Start-up Early Growth Sustained Growth©Paulo AndrezAthens workshop23rd February 2012
  26. 26. Differences from Angel Investors and Venture Capitalists©Paulo AndrezAthens workshop23rd February 2012
  27. 27. Angel market size is bigger than the VC market©Paulo AndrezAthens workshop23rd February 2012
  28. 28. Business Seed Federations angel Individual Associate funds of networks networks members angels In Europe, it is estimated the existence of 75.000 Early Stage Investors... ...that invest 4 Billion Euros per year in start ups.©Paulo AndrezAthens workshop23rd February 2012
  29. 29. Business Angels in Portugal » Invicta Angels – Assoc. de Business Angels do Porto » Assoc. de Investidores de CRisco da Covilhã » Clube de Cascais – Assoc. de Investidores de Cascais » Business Angels Club – Assoc. Portuguesa de Investidores em Start-Ups » Assoc. de Business Angels do Algarve » Vima Angels (Guimarães) » Clube de Business Angels do Alentejo » Centro Business Angels » OPEN Business Angels » Assoc. Business Angels Santarém 54 BAs Investment Vehicles are currently active with 42 million Euros available in Portugal©Paulo AndrezAthens workshop23rd February 2012
  30. 30. Angel Market size Visible Market (5%-10%) Rest of Visible Market (20%-30%) Invisible Market (60%-75%) Sources : EBAN, ACA, OECD©Paulo Andrez Note: Visible Market is data related with BANs, Angel GroupsAthens workshop23rd February 2012
  31. 31. My idea worthies millions…©Paulo AndrezAthens workshop23rd February 2012
  32. 32. How to solve the conflict of pre-evaluation ? Options Based type of investment% of equity in the company % achieved of the goal % achieved of the goal ©Paulo Andrez Athens workshop 23rd February 2012
  33. 33. Meeting with Investors I am the I want a salary of 15.000 BEST! euros+ car + unlimited I can’t tell much about my credit card + 25% of the project because you can profits of the company steal the idea and the project ! I didn’t test the idea because I want to have the majority the potential clients could of the equity to control the steal the idea and the company ! I thought in 90% project ! of the shares ! The total investment is I have all the skills to manage There is no 500.000 euros, and I will this company, so I do not need competition. put 5.000 euros… anybody in the Board ! This technology©Paulo Andrez is unique.Athens workshop23rd February 2012
  34. 34. Meeting with Investors With their I would like to have a salary (BA+VC) of 1.500 euros (until the company help we can pay more) and performance will have I am sure that with your success ! bonus to be agreed with you. In my knowledge, the company actual job I earn 3 times more, but will be stronger ! in spite of that I will quit because I believe in this project. In the beginning I may I talked with several potential have a minority stake but clients, as in Annex I and I in future I would like to changed my initial project ! have “call options” ! I do not have skills in area A I divided the 500.000 euros The competition and B, and it will be investment in 3 phases, and exists and I necessary to hire people I am ready to invest 100.000 identified the euros that I borrowed from Pros and Cons of with those skills.©Paulo AndrezAthens workshop and bank. my family each competitor.23rd February 2012
  35. 35. I am very clever ! If this start up fails, I do not loose I share risks with investors ! anything….Ah! Ah!©Paulo AndrezAthens workshop23rd February 2012
  36. 36. Zephyr and Peter made a Road-Show talking with Investors©Paulo AndrezAthens workshop23rd February 2012
  37. 37. ©Paulo AndrezAthens workshop23rd February 2012
  38. 38. Zephyr´s conclusion I have to The government grants, emigrate! co-investments funds , There are no Business venture capital…is just Angels and Venture for government’s friends. Capitalists in Europe ! The politicians speak a lot The Risk Investors do not but do nothing ! want Risk …. These investors made me loose time and money. They In Europe we are 20 years will regret not to have behind the US in terms of invested ! BA and VC !©Paulo AndrezAthens workshop23rd February 2012
  39. 39. Pedro’s conclusion Peter´s conclusion The investors Even the bank wants to lend with me , will have success ! money to the project! The mutual guarantee scheme In fact the investors, and Business Angels were mentioned several important important for the bank’s points I was not aware of ! decision. I got 2 Business Angels The official programs of from a Greek BAN ! entrepreneurship support are very important! It is good to live in Europe and The negotiations with VC took to be able to have a dream more time than expected but that got reality ! had an happy end !©Paulo AndrezAthens workshop23rd February 2012
  40. 40. X Entrepreneur’s time management 20% Time spent getting investors Time spent improving 80% the project 20% 80%©Paulo AndrezAthens workshop23rd February 2012
  41. 41. Good Entrepreneur + Good Mitigation + Good Business Angel =©Paulo AndrezAthens workshop Anything is Possible23rd February 2012
  42. 42. YES, I CAN ! pandrez@fnaba.org©Paulo AndrezAthens workshop23rd February 2012
  43. 43. Exercise©Paulo AndrezAthens workshop23rd February 2012
  44. 44. My name is Felipe. I have a great project for you to invest !©Paulo AndrezAthens workshop23rd February 2012
  45. 45. Frame and paints cost Investment proposal 1.000 € Time of Felipe to paint it - 4.000 € So, total cost of the painting 5.000 € Felipe thinks he will sell the painting for 15.000 € He wants an investor to buy 50% of the painting for 5.000 €©Paulo AndrezAthens workshop23rd February 2012
  46. 46. Felipe needs 1.000€. New investment proposal In case the painting is not sold, the shop that will sell the frame will receive it and pay back the 1.000€. The first 1.000€ of the sale of the painting are for the investor From that point 90% is for Felipe and 10% is for investor©Paulo AndrezAthens workshop23rd February 2012

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