Training session at NY City Entrepreneur Week 2009, by Avenue Ventures/Connectors Groups and Solidea Capital.

1. DETERMINING VALUATION &
SECRETS TO A SUCCESSFUL ANGEL INVESTOR PITCH:
MAKE OR BREAK ISSUES FOR EVERY EMERGING
COMPANY
F A C I L I T A T E D B Y :
J E E V A N P A D I Y A R – T H E C O N N E C T O R S G R O U P
G A R Y W H I T E H I L L – T H E C O N N E C T O R S G R O U P
Course 3

2. Agenda
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◊ The Secrets to a Successful Angel Investor Pitch
• Lesson 1 - Its not really a secret – here are the rules
◊ Activity – The reverse pitch
◊ Overview of Pragmatic Valuation Techniques
• Standard DCF Conventions
• Accepted conventions

3. Putting the Pieces Together
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*How to transform your
idea into a reality*
*What pieces are you
missing in your
enterprise?*
*Do you think you are
better than you are?*
*How to have your cake
and share it too*
*How to truly address
what an investor needs to
hear*
*Understanding the
investor timeline and
when to approach*
*Diffusing the ticking
time bombs of
legalese*
1 2

4. Angel Investor Presentation: Overview
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 Realize Upfront: You are not ready
◊ 80% do not have a clue as to what an angel seeks in a presentation to
make an informed decision
 Angels are a unique breed of investor
◊ They are a business partner, not a family member or friend
◊ Angels are Important
• They are the ones signing on the dotted line
• They empathize with where you’re coming from
• They bring strategic resources to bear
◊ Pitch settings??? Try to Give a pitch on your turf

5. Angel Investor Presentation: Overview
(Continued)
5
 Goal: Develop the skills of a top tier presenter
◊ The Top 10%
• Peak the interest of an angel through a clear, concise, and articulate
presentation
• Act like a salesperson
◊ Convey an Empirical Value Proposition and Addressable Market
• Challenge every bottleneck and loophole in your strategy
• Become due diligence experts
• Act as negotiators of investment terms
 Ten minute pitch followed by ten minutes of Q&A

6. Angel Presentation: Do’s and Don’ts
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 It’s a war as soon as you walk in the room
◊ In preparation:
• Step back and put yourself in the audience’s shoes
• Visualize your presentation at least fifteen times
• Present other stakeholders in the venture at least twenty times
• Focus on: tone, posture, facts/stats/etc. to add or take out
◊ Make sure to:
• Exude humbleness, dedication, and confidence
• Relax and stay loose

7. The Steamroll Effect
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2. Visualize
How To Present
Your Venture
3. Constructive
Feedback
4. A Honed
Presentation
5. Confidence
6. An Engaging
Presentation
1. Constant
Preparation
7. Conviction

8. Angel Presentation: Do’s and Don’ts
(Continued)
8
 The room is comprised of experts across many fields
◊ Only one or two angels are in your vertical
◊ Tirelessly prepare to go from:
◊ Must encompass: patience, reflection and honesty
1 MPH 50 MPH
- Market Opportunity
- Value Proposition
- Features & Benefits
- Intellectual Property
- Competitive Advantage
100 MPH
- SWOT
- Exit Strategy

9. 9
 Secondary Goal
◊ “Not only can I (as an angel) relay the basics (macro) to my
friend about this venture, but also the small and extremely
important points (micro) that differentiate this venture from
others in the space.”
 Key Recommendations
◊ Passion throughout delivery
◊ Focus on addressable market size and consumer benefits
◊ Differentiate from your competition clearly (barriers, features,
benefits, ease of use, strategic partnerships, etc)
◊ 10/10/30 Rule = Use 10 slides, 10 minutes and 30pt font
Angel Presentation: Do’s and Don’ts
(Continued)

10. 10
 Additional Recommendations
◊ It’s ok to be nervous - you should be
◊ Do not use slang, jargon, or terms only experts in the space
would know
◊ Do not include ancillary information that doesn’t add value
◊ Remember: Every second counts
Angel Presentation: Do’s and Don’ts
(Continued)

11. Activity
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T H E R E V E R S E P I T C H

12. Valuations
 More of an art than a science.
 Combine multiple Methods
◊ Ownership Dynamics - How much do we want to own?
◊ Market Dynamics – What does market say about the
offering?
• Modified DCF to get a ball park
• Value of Patents, contracts, Management Team
• Gut Check/ Fine tune with comparables – Raise Comps, Exit
Comps
◊ Competitive Deal Dynamics – How many people are
interested
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13. Discounted Cash Flow
 Standard DCF
• Terminal Year EBITDA
• Industry multiple to get Market Cap
• Weighted Average Cost of Capital as discount rate
• Use discount rate to calculate current value of asset
 WACC
• WACC is a blend of the cost of equity and the after-tax cost of debt.
 Cost of equity = IRR expected by investors to maintain share price
 Cost of Debt = interest paid less tax savings from tax deductible interest
payments
 Weighted based on proportion of debt and equity company holds
◊ Debt to value and equity to value as modifiers
 This DOES NOT work for Startups!
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14. Methods
 Modified DCF- Assumptions
 5th year as terminal year EBIT- rationale =
 Price to earnings multiple is of 3x – 5x on terminal year earnings
 Discount on Market cap- takes into account risk
◊ Following discounts to start with and then drop down 5-10% in each subsequent round
 Required rate of return chart (show IRR as a function of multiples)
 Dilution in subsequent rounds is considered for early investors.
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Stage DCF %
Pre-revenue startup 95%
Revenue startup / Not yet profitable 80%
Profitable company / Seeking expansion capital 75%
Company close to exit event 50%

15. Methods 2
 Post Money valuation determined from investment
sought and post dilution ownership percentage of
investors
 Pre-money by subtracting money raised from post
money
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16. Reality Check
Methods of Analyzing Company Comparables
 Raise Comps
◊ Compare to companies in similar spaces who have
raised money and how much they have raised
 Sale comps
◊ Compare terminal year market cap to known exits in similar
industries
◊ Take weighted average of modifier of terminal year market cap
to actual sale value of company
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17. T H A N K Y O U
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Questions