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Incubes Presentation Accessing Capital From An Angel Investors 2012 08 08


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This is the presentation that I gave to the current cohort at Incubes at Intensive Day this Wednesday. It was a great discussion and opportunity to engage with this group of entrepreneurs

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Incubes Presentation Accessing Capital From An Angel Investors 2012 08 08

  1. 1. Accessing Capital From an Angel Investor Network Your First Professional Investment Who, What, When and How
  2. 2. Agenda• 90 Second Company Elevator Pitch• Who is an Angel Investor• Angel Network in Canada• NACO 2011 Survey• Angel Investing is a changing• Maple Leaf Angels• The Benefits for Entrepreneurs• Q&A
  3. 3. MLA
  4. 4. Who is an Angel Investor• A person prepared to invest money• A person who can add value to the company• An accredited investor as defined by OSC• A member of an angel network• The majority of angel investment in Canada is completed by individuals >75%• Estimate of Cdn Angel Investment is 916mm in approx 1500 companies
  5. 5. Angel Network’s in Canada• NACO – National Angel Capital Organization• 28 Angel Groups in Canada• They have collectively about 1500 investors• Three large groups accounted for 58%• The majority have fewer than 50 members• 50% of groups set up since 2008• Vast majority do volunteer due diligence• 13 Angel Groups in Ontario
  6. 6. National Survey of Canadian Angel Groups Investment Activity 2011• 134 Investments in 2011 (103 new and 31 follow on) totaling 82.4 million (60.5m new and 21.9m follow on) an increase from 2010 of 90 investments (80 new and 10 follow on)totaling 35.3m (34.2m new and 1.1m follow on)• 12% increase in business plans funded from those selected for detailed review• 80% - Ont, 7% Que, 10% BC, 3% Atlantic
  7. 7. • Co-investment occurred in 58% of investments and invested a further 29.4mm• The groups have a portfolio of 250 investments, three groups accounted for 55%• Most groups make between 1 & 5 investments per year• ICT (51%), Clean Tech (21%), Life Sciences (17%)• 74% of investee businesses had sales revenue in 2010
  8. 8. Angel Group Investment• 73% of companies invested had a valuation of between 1 & 3 million• 12 % of funding at seed stage
  9. 9. Angel Group Benefits• Qualified Opportunities• Opportunity referral• Increased Capital Diversification• Great Valuation and Favourable Terms• Networking• Portfolio company mentoring or engagement• Shared Due-Diligence• Advisory Board and BOD Roles
  10. 10. Traditional Angel Network is Changing• Currently Southern Ontario Angel Investment community is fragmented with 12 groups• Government programs ( IAF, MaRS, OCE, IBI)• Online - Angel List, The Funded, Gust• Y Combinator, Tech Stars, 500 Start-ups• Incubators & Accelerator funds• Crowd funding such as• Super Angels & Micro-VC’s
  11. 11. Maple Leaf Angels• Toronto based and in existence since 2007• MLA has invested in 17 companies since inception in 2007 for $7,000,000• Currently 38 members• MLA conducted a strategic renewal in Nov 2011 with a new business plan released in January 2012 and a new BOD elected March 2012
  12. 12. Entrepreneur Benefits• Large capital source• Broad pool of Knowledge & Contacts• Efficient Process• Capital Connections• In many provinces there is investor tax credit• Leverage sources of funding (AEF, IBI, OETF)
  13. 13. Equity Capital Life Cycle Concept and Introduction Growth Maturity Decline product development Sales Sales and profit Cash flow Profit TimeR&D Pre-Seed Start-Up Round 1 Round 2 & Seed ExitGrants/ Love Angel Angel VC $ VC $Money $ $ $
  14. 14. What Angels Look For• High anticipated growth rate• Experienced management team• Sustainable competitive advantage• Barriers to entry• Clear strategy for commercialization• Proof of concept• Business model anchored in Reality• Investor exit strategy
  15. 15. Five types of Angel Investors1. The Coach Angel Investor2. The Do’er Angel Investor3. The CEO of a Public Company Angel Investor4. The Spectator Angel Investor5. The Boss Angel Investor
  16. 16. Three factors that appear to impact investor outcome• Due diligence time: More hours of due diligence positively related to greater returns• Experience: An angel investors expertise in the industry of the venture being invested• Participation: Angel Investors that interacted with their portfolio companies at lest a couple of times per month mentoring, coaching, providing leads and monitoring performance experienced greater returns.
  17. 17. The Application Process• Start with• There is a full education section for entrepreneurs• You apply using• Selection Committee• Monthly Breakfasts• Due Diligence• Term Sheet
  18. 18. Target Investee Companies• Companies who are in seed and early stage, one for each meeting if the quality can be found• In technology, provided they are backed by a member who is willing to sponsor• Great management team, valuation, technology .......
  19. 19. Selection Criteria• The stage, quality of the management team, valuation and technology of companies are more important than the sector criteria• Quality is more important than quantity• The best of the best should only present and the number of companies presenting should be limited to one or two, introduced by someone who is willing to sponsor or lead the investment
  20. 20. Selection Criteria• Select the very best in seed and early stage• Seed investment amounts should be from $250k to $500K and early stage investments should be from $350k to $1,500K• Deal flow of members – both group investments and private or small group investments should be tracked and reported on, with clear communication on which investments went through MLA’s group due diligence
  21. 21. Future Topics1. Bootstrapping a Company & Exec Summary2. Forming an Advisory Board3. Preparing a Pitch for Investors4. Accessing Capital from a Angel Network5. Terms to expect from an Investors Term Sheet6. Pros of Cons of accessing Venture Capital too early & some of the pitfalls to avoid
  22. 22. Gerard Buckley, BBA, FICB, ICD.DPresident and CEOJaguar Capital Inc.(C) 416-884-9522(W)