6. With many in New England
North Country Granite State Maine Angels
eCoast Angels
CommonAngels
Mass Medical Angels Hub Angels
Clean Energy Venture Group Boston Harbor
Boynton Angels Angels
Launchpad
River Valley Walnut
Beacon Angels
Investors Circle
Bay Angels
Golden Seeds Cherrystone
CT Angel Guild
Angel Investor Forum
Landmark Angels Est. ~ 700 – 1,000 angels
6
7. What sectors/businesses do angel groups like?
• Information technology: semiconductors,
communications, HW, software, applications, digital
media, consumer web, ad tech, financial tech,
healthcare tech, mobile, ecommerce, video, games, ….
• Healthcare: Medical devices, life sciences,
therapeutics, diagnostics,….
• Other: Energy tech, material sciences, industrial/
manufacturing, ….
Some groups specialize
7
8. When should I think about angel financing for
my business?
“ready for rapid
Seed stage growth”
“working on a b- Looking for $2M +
plan”
Seed/Early stage
$25k - $200k
“beta/prototype”
need $200k to $2M +
“I have
an idea”
t
$5k -
m arke
$20k
ly go to Venture capital
on : ear
iti
Trans
Incubation
Angel groups
Sweet equity,
family, friends
Individual angels
8
9. How much do angel groups like to invest?
A single angel group capacity for a new financing tends to be
between $100k to $750k
Syndication is common
9
11. Practical tips: #1 manage the process like a sales
campaign
Build and manage a prospect pipeline of individual
angels and groups
Materials needed (for groups, probably good for
individuals as well)
Executive summary (.doc) ,
pitch deck (.ppt)
11
12. Practical tips: #2 what should go in a pitch deck
(www.earlystageadventures.com)
12
13. Practical tips: #3 initially meet with anyone you can
– network intensively. Build pipeline!
Begin even before you need money
“I’m bootstrapping my company for the next 6 months, but can I talk to
you about it and get your perspective?”
Start with your closest network and work out – particularly for individual
angels
“who else should I talk with?”
Look for angels who “will get it” and invested in your space before
When pitching
Take the feedback; don’t be discouraged
Will be some good advice (and bad)
Look for patterns in the advice, “Hmm why is everyone suggesting to me
to consider inbound marketing as a way to generate leads?”
May not invest, but how can they be helpful?
13
14. For most of us this will take time away from
running our business!
Nice to have a friendly super angel to underwrite us
But that is rare
Balance time fund raising vs likelihood of success in a
reasonable time frame
Don’t let your business head south
Mid course adjustments – same as in any aspect of business
Plan B
14
15. Practical tips: #4 use an experienced attorney!
You do for estate planning, real estate, etc. Early stage
financing is a specialized area
Should have local angel/VC contacts
Understands term sheets
Understands issues
Vesting, 83-B elections
Confidentiality agreements, stock agreements, IP, …
Some will work on reduced fee basis
15
16. Practical tips – #5 working with angel groups
Warm introductions help
For some, its absolutely necessary
Groups have different processes – ask!
some use online applications
pitching can be 15 min or 60 min
some very informal, others professionally managed,
others vote as fund
Some meet regularly; others less frequently
16
17. Practical tips – #5 working with angel groups (cont.)
Understand who is in group, what they like to invest in,
and what stage they prefer – ask!
Pre-seed “ideas” generally not a good fit
Look at what they have invested – does my business
fit?
Businesses that groups generally shy away from: small markets, capital
intensive, some consumer retail products, franchises, restaurants, low
gross margins, hard to scale, lack of differentiation, lack of competitive
barriers, no relevant experience in the group
Better to look for capital from F&F and angels who know you
17
18. CommonAngels process
GENERAL
PLANS
SCREENING
DILIGENCE & FUNDING
MEETING
~ 350/ year
~ 60/ year
~ 20/ year
~ 5 new investments/
year
Do we bring Follow up:
this before the • Diligence
Typical CA investment
membership?
• Term sheet
• $300k to $1M
• Syndication
• 12 to 20 members
Light Diligence
Active role
• Board seat
• Business assistance
• Next round
8 to 12 weeks
18
19. CommonAngels ideal investment profile
Seed/Series A Financing between $500K - $5M
Passionate entrepreneur with CEO capabilities
New areas of information technology
Typically around early go-to-market
Current expertise within the membership
Capital efficient
Typically around the route 128 area, but will consider NE and NYC
19
20. Examples of our current portfolio
Wireless
Digital Media
Internet/Business
Services
Software
Semiconductor/EDA
20
21. Practical tips: #6 convertible notes (debt) or
preferred stock (equity)?!
Depends on how much you are raising and from whom
Small amounts (eg < $300k) targeting individual angels
tend to be with a note. Quicker, cheaper, no lead
needed to set terms
Attorney can give you market terms for notes
But more sophisticated angels tend to prefer equity
So be flexible
Groups will likely prefer equity
21
22. Practical tips: #7 term sheet and valuation!
You want a term sheet to catalyze a round
Many angels sit on the fence until they know the terms. Keep them
informed and “warm”
Can use your own if doing a note. If equity, need a lead sophisticated
angel to negotiate terms
Angel groups: all comfortable doing term sheets
Angel group term sheets similar to VC term sheet
Aligns everyone's interest and helps on next round (assuming terms are
in market)
Typical pre money ~ $1M to $3M for “seed to early stage”
But its more complicated…option pool, dollars raised, dividends,
participation……..
22
