Angel 101 - The Fundamentals of Angel Investing. Is Angel Investing right for you. This is a presentation given by Gerard Buckley to a group of Angel Investors at Maple Leaf Angels a Toronto based angel group

1. Angel 101 –
The Fundamentals of Angel Investing
I s A n g e l I n v e s t i n g R i g h t f o r Yo u ?

2. Who Am I
I am Gerard Buckley
• Founder & CEO of Jaguar Capital an Advisory Practice for Growth
Companies in Financial Management, Financial Structuring & Governance
• Chairperson of Board of Directors, Maple Leaf Angels Corporation &
Investor in eight early stage companies
• Previously Entrepreneur in Residence with Incubes (An Internet Company
Accelerator)
• Member of SME Committee of The Ontario Securities Commission
• Investment Committee of MSV University, Halifax, NS
• 32 yr. Career with Scotia Capital as a Financial Risk Management Advisor
to Fortune 200 Companies: Rogers, Irving Group, Empire Co., Four
Seasons, Bruce Power, OPG, Province of Ontario, Ford, CAE etc.
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

3. Agenda
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What is Angel Investing?
Who are Angel Investors?
Why would someone be an Angel Investor?
What type of companies do Angels invest In?
Angel Network in Canada?
Who is Maple Leaf Angels and what are the
benefits of joining?
• Q&A
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

4. www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

5. What is Angel Investing
• Angel Investing is individuals investing their personal
money in the equity or debt of a Early or Growth Stage
Company
• Often referred to as Smart Money, it is where an
individual wishes to invest their time or experience as well
money in a start-up company.
• People wishing to give back their experience so others
may benefit which is often referred to as mentoring or
serving on a company Advisory Board or BOD.
• Angel Investing is Active Investing not Passive
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

6. Who is an Angel Investor
• A person prepared to invest their personal or
family 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 >85%
• Estimate of Cdn Angel Investment is 916mm in
approx 1500 companies (VC about 2b)
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

7. Profile of an Angel - Median
Years investing
Number of Investments
Total Exits
Years as a Entrepreneur
Number of ventures founded
Age
Percent of net worth
Education
9
10
2
14.5
2.7
57
10%
Masters Degree
Angel Resource Institute Source: Wiltbank Study 2007
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

8. Why Would Someone be an Angel
Investor
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Qualified Opportunities
Opportunity referral
Increased Capital Diversification
High Risk Asset Class …. Seeking High Returns
Favourable Valuation and Terms in comparison to VCs
Networking
Portfolio company mentoring or engagement
Shared Due-Diligence
Advisory Board and Board of Director Roles
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

9. What Type of Companies Do Angels
Invest In?
• Companies who are in seed and early stage.
• In technology, life sciences, ict, health care
devices, med tech, clean tech, power
solutions, fin tech, …..
• Solve a Problem, Secret Sauce or technology
....... USP, validated business model, Great
management team
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

10. Equity Capital Life Cycle
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

11. What Angels Look For
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High anticipated growth rate – Scalability
Experienced management team
Sustainable competitive advantage
Barriers to entry i.e. Exclusive IP
Clear strategy for commercialization
Proof of concept or enterprise level validation
Business model anchored in Reality
Investor exit strategy in 5 to 8 years
Investing in what you know – vertical expertise
Coach ability of the entrepreneur
Amount of dilutive capital required
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

12. Selection Criteria
• Seed investment should be from $250k to $500K and early
stage investments should be from $350k to $1,500K
• Valuation 1 to 3.5 million (Halo q1/13 median 2.5m)
• 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
• In Canada 7.3% of companies get funded (93% don’t)
• In Silicon Valley (1/300) business plans get funded
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

13. Investment Process
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Pre-screening – MLA Staff
Curbside Mentoring or Individual Member Mentoring
Present to Investment Review Committee
Present at members meeting
Due-diligence Committee is formed and led by a member
Term Sheet is negotiated & agreed between parties
Investment is papered by lawyer
Member is appointed to board
Quarterly company reporting
Outlined on MLA Website
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

14. Factors that appear to impact investor
outcome
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Due diligence time: More hours of due diligence
positively related to greater returns (> 40 hours)
Experience: An angel investor's expertise in the
industry of the venture being invested
Participation: Angel Investors that interacted
with their portfolio companies at least a couple
of times per month mentoring, coaching,
providing leads and monitoring performance
experienced greater returns.
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

15. Solo Angel Investing
• Process is time-consuming
– Deal sourcing
– Reading plans (MLA sees 250 Business Plans a year)
– Meeting with entrepreneurs
• Due Diligence is difficult
– Finding Vertical experience
– May require using outside experts
• Legal Support is Expensive
• Most have Family Offices – Super Angels
Angel Resource Institute
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

16. Angel Network’s in Canada
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NACO – National Angel Capital Organization
32 Angel Groups in Canada
They have collectively about 1000 to 1500 investors
Three large groups accounted for 58%
The majority have fewer than 50 members
75% of groups set up since 2007
Vast majority do volunteer due diligence
12 Angel Groups in Ontario
Keiretsu Forum & Golden Horseshoe Venture Forum are
Private For Profit Angel Groups
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

17. Canadian Angel Group Investment
Activity 2012
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139 Investments in 2012 totaling 40.5 million, an
increase from 2011 of 134 investments and a decrease in
investment from 82.4M
Average investment is $314k down fr $614k
50% of angel groups made over 6 investments in 2012,
an increase of 20% over 2011
82% - Ont & Que, 16% West, 2% Atlantic
ICT (54%), Life Sciences (23%), Clean Tech (10%)
Valuation – Median 1.55m, Mean 2.06m
55% of transactions involved a co-investor
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

18. Angel Resource Institute – Halo Report – Q2 - 2013
• Median Angel Round Size trends down to $590K from
$680K
• Early Stage Pre-Money Valuations remain stable at $2.5M
• 72% of deals occur in angel groups’ home states
• 74% of Angel Deals are Syndicated
• Median Round Size $1.95M up from $1.4M when coinvested
• Share of Deals by Sector - Internet 31.9%(-), Healthcare
20.9%(+), Mobile & Telecom 13.3%(-), Software (nonInternet/mobile) 4.5%(-)
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

19. Maple Leaf Angels Corporation
• Toronto based and in existence since 2007
• MLA has invested in 22 companies since inception in 2007
for $9,600,000
• Registered with the OSC as a Exempt Market Dealer
• Currently 40 members
• Open and transparent – published funding process
• Continual Entrepreneur support: Curb Side Mentoring,
Volunteer Mentoring, Entrepreneur Workshops etc.
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

20. Maple Leaf Angels - Connects
Our mandate is to connect experienced, accredited investors, and the brightest,
most passionate entrepreneurs in an effective investment process.
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

21. Maple Leaf Angels – Membership
Benefits
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Opportunity to engage with other members with investment insights &
ideas
Give back and make a difference for entrepreneurs through mentoring
and coaching
Access to collaborative investment opportunities through MLA’s presence
within the startup ecosystem
Your investment dollars go further through government matching
programs
You can take advantage of standardized initial screening processes and
thereby benefit from a consistent approach to due diligence
You can harness the power of syndication that comes about when
multiple members invest together.
Due diligence support
You have access to a common term sheet that is negotiated by MLA
members
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

22. The Entrepreneur Application Process
• Start with www.mapleleafangels.com
• There is a full education section for
entrepreneurs
• Companies apply using MLA’s Private Platform
• Investment Review Committee
• Monthly Member Investment Meetings
• Due Diligence
• Term Sheet
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels

23. Contact Information
Gerard Buckley, BBA, FICB,
ICD.D
President and CEO
Jaguar Capital Inc.
(C) 416-884-9522
(W) 416-646-6789
g.buckley@jaguarcapital.ca
www.jaguarcapital.ca
Twitter: @jaguarcapital
Twitter: @gerardbuckley
Slideshare: Jaguar Capital
www.mapleleafangels.com
|
info@mapleleafangels.com |
416.646.6235 |
@mapleleafangels