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Angel/Early Seed
Investing
DISCLAIMER: PROPELWORKS, LLC., THELACATALYST, THEIR MEMBERS AND PRESENTERS (COLLECTIVELY THE TEAM), ARE NOT LICENSED INVESTMENT ADVISORS AND DO
NOT OFFER ANY INVESTMENT ADVICE AND/OR SERVICES DIRECTLY AND/OR INDIRECTLY. NOTHING IN THE PRESENTATIONS, DISCUSSIONS, OR PUBLISHED MATERIALS OF THE
TEAM SHOULD BE INTERPRETED AS A PROMOTION, SOLICITATION, OR INVESTMENT ADVICE. ANYONE DECIDING TO USE THE TEAM’S ON-LINE SITE(S), INFORMATION, EVENTS,
OR MATERIALS DOES SO AT THEIR OWN RISK AND AGREES NOT TO HOLD THE TEAM LIABLE FOR ANY LOSSES MONETARY OR OTHERWISE. BECOMING AN INVESTOR MAY
CARRY A SUBSTANTIAL AMOUNT OF RISK INCLUDING BUT NOT LIMITED TO TOTAL LOSS. IT IS THE RESPONSIBILITY OF THE LEGAL ENTITY AND/OR INDIVIDUAL MAKING AN
INVESTMENT DECISION TO VERIFY ALL INFORMATION AND DUE DILIGENCE NEEDED. THE TEAM DOES NOT PROMOTE AND/OR ENDORSE USE OF ANY THIRD PARTY SERVICES
AND/OR PRODUCTS THAT MAY BE IN ATTENDANCE AT THEIR EVENTS OR OTHERWISE ASSOCIATED OR APPEAR TO BE ASSOCIATED WITH THEM.
1
Angel Investing 101
2
Angel Investors and VCs
• Angels invest their own money, typically in early rounds under $1M
• The term “Angel” comes from early Broadway productions supported by wealthy
individuals. It was first used In 1978 by William Wetzel, founder of Center for
Venture Research, for startup investors
Angels Need to be Accredited Investors1,2
• Individuals must have income of $200K/yr ($300K/yr for couples), or minimum
Net Worth of $1M – Note: Equity Crowdfunding will be subject of a future event
• The SEC requires accreditation for private investments considered high risk to
protect the investors. There are estimated 12 million3 accredited investors in US
1. Income has to be sustained for the last 2 years and expected to continue going forward
2. Net worth is exclusive if the investor’s primary residence
3. http://www.crowdfundinsider.com/2014/12/60121-number-accredited-investors-deck/
Economic Trends (1965-2008)
Performance of Blue Chip Companies
3
• Performance of top
quartile blue chip
companies has
stagnated
• Bottom quartile
companies have
experienced rapid
deterioration in
performance
Source: Compustat, Deloitte analysis; Also reported in Compass Report 2015 (p. 9)
Top Quartile
Bottom Quartile
11.0%
-14.7%
ReturnonAssets(ROA)
Something Interesting is Happening!
Source: Tom Goodwin; Also reported in Compass Report 2015 (p. 12)
World’s largest
taxi company
owns no cars
World’s most popular
media owner, creates
no content
World’s most valuable
retailer, has no inventory
World’s largest
accommodations provider,
owns no real estate
4
Silicon Valley (2003-2013)
GDP from Innovation Industries Doubled vs 45% Growth in Overall Economy
Source: Moody’s Analytics Analysis: Collaborative Economics;
Also reported in Compass Report 2015 (p. 12)
Index1993=100
Innovation Industries
Rest of SI Valley Industries
Kodak Instagram
Borders Amazon
Hotel Chains Airbnb
Taxis Uber/Lyft
Recruiters LinkedIn
Newspapers Social media
Retail stores eCommerce
5
Startups Are Engine of Job Creation
6
Kaufman Report, “The Importance of Startups in Job Creation,” July 2010
https://www.fundivo.com/stats/angel-investment-statistics/
• Over the last four
decades, Startups
have been net job
creators
• On average, 3.6 jobs
are created per each
Angel investment
Economic Impact of Angels
Sources: https://www.fundivo.com/stats/angel-investment-statistics/
http://www.kauffman.org/blogs/policy-dialogue/2015/may/more-angels-fewer-angel-investments-in-2014
In 2014
• Total of $24B was
invested by over
316,000 Angels in
73,400 startups
• Angel investment
contributed to creation
of over 264,000 jobs,
i.e. average of 3.6 jobs
per Angel investment
7
Angel Returns
Source: Angel Research Institute (ARI) study at http://www.angelresourceinstitute.org/returns-to-angels
2016.aspx#sthash.8XlMPVnE.dpuf
8
• Several studies conducted
in 2007, 2009, 2016
• 91% of the exits in the
latest ARI study occurred
between 2010 – 2016
• The cash on cash multiple
is 2.2X - 2.6X
• The overall IRR Has been
in the 22%-27% range
You’re Newsworthy!
 We thank WestSideToday.com and Bixel Exchange for
their coverage of the April LA CAT event
We’re Listening to Your Feedback
 Planning to facilitate “Support Groups”
 Mini Bootcamps Coming – Stay Tuned!
LA CAT In the News… Coming Attractions
9
Sign up to
Host or to Join
a Support
Group!
Upcoming LA CAT Events
June 28th Angel Investing from Entrepreneur’s Perspective
July 28th Tell us what topics you’re interested in!

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Angel investing (la cat 5 24-16)

  • 1. Angel/Early Seed Investing DISCLAIMER: PROPELWORKS, LLC., THELACATALYST, THEIR MEMBERS AND PRESENTERS (COLLECTIVELY THE TEAM), ARE NOT LICENSED INVESTMENT ADVISORS AND DO NOT OFFER ANY INVESTMENT ADVICE AND/OR SERVICES DIRECTLY AND/OR INDIRECTLY. NOTHING IN THE PRESENTATIONS, DISCUSSIONS, OR PUBLISHED MATERIALS OF THE TEAM SHOULD BE INTERPRETED AS A PROMOTION, SOLICITATION, OR INVESTMENT ADVICE. ANYONE DECIDING TO USE THE TEAM’S ON-LINE SITE(S), INFORMATION, EVENTS, OR MATERIALS DOES SO AT THEIR OWN RISK AND AGREES NOT TO HOLD THE TEAM LIABLE FOR ANY LOSSES MONETARY OR OTHERWISE. BECOMING AN INVESTOR MAY CARRY A SUBSTANTIAL AMOUNT OF RISK INCLUDING BUT NOT LIMITED TO TOTAL LOSS. IT IS THE RESPONSIBILITY OF THE LEGAL ENTITY AND/OR INDIVIDUAL MAKING AN INVESTMENT DECISION TO VERIFY ALL INFORMATION AND DUE DILIGENCE NEEDED. THE TEAM DOES NOT PROMOTE AND/OR ENDORSE USE OF ANY THIRD PARTY SERVICES AND/OR PRODUCTS THAT MAY BE IN ATTENDANCE AT THEIR EVENTS OR OTHERWISE ASSOCIATED OR APPEAR TO BE ASSOCIATED WITH THEM. 1
  • 2. Angel Investing 101 2 Angel Investors and VCs • Angels invest their own money, typically in early rounds under $1M • The term “Angel” comes from early Broadway productions supported by wealthy individuals. It was first used In 1978 by William Wetzel, founder of Center for Venture Research, for startup investors Angels Need to be Accredited Investors1,2 • Individuals must have income of $200K/yr ($300K/yr for couples), or minimum Net Worth of $1M – Note: Equity Crowdfunding will be subject of a future event • The SEC requires accreditation for private investments considered high risk to protect the investors. There are estimated 12 million3 accredited investors in US 1. Income has to be sustained for the last 2 years and expected to continue going forward 2. Net worth is exclusive if the investor’s primary residence 3. http://www.crowdfundinsider.com/2014/12/60121-number-accredited-investors-deck/
  • 3. Economic Trends (1965-2008) Performance of Blue Chip Companies 3 • Performance of top quartile blue chip companies has stagnated • Bottom quartile companies have experienced rapid deterioration in performance Source: Compustat, Deloitte analysis; Also reported in Compass Report 2015 (p. 9) Top Quartile Bottom Quartile 11.0% -14.7% ReturnonAssets(ROA)
  • 4. Something Interesting is Happening! Source: Tom Goodwin; Also reported in Compass Report 2015 (p. 12) World’s largest taxi company owns no cars World’s most popular media owner, creates no content World’s most valuable retailer, has no inventory World’s largest accommodations provider, owns no real estate 4
  • 5. Silicon Valley (2003-2013) GDP from Innovation Industries Doubled vs 45% Growth in Overall Economy Source: Moody’s Analytics Analysis: Collaborative Economics; Also reported in Compass Report 2015 (p. 12) Index1993=100 Innovation Industries Rest of SI Valley Industries Kodak Instagram Borders Amazon Hotel Chains Airbnb Taxis Uber/Lyft Recruiters LinkedIn Newspapers Social media Retail stores eCommerce 5
  • 6. Startups Are Engine of Job Creation 6 Kaufman Report, “The Importance of Startups in Job Creation,” July 2010 https://www.fundivo.com/stats/angel-investment-statistics/ • Over the last four decades, Startups have been net job creators • On average, 3.6 jobs are created per each Angel investment
  • 7. Economic Impact of Angels Sources: https://www.fundivo.com/stats/angel-investment-statistics/ http://www.kauffman.org/blogs/policy-dialogue/2015/may/more-angels-fewer-angel-investments-in-2014 In 2014 • Total of $24B was invested by over 316,000 Angels in 73,400 startups • Angel investment contributed to creation of over 264,000 jobs, i.e. average of 3.6 jobs per Angel investment 7
  • 8. Angel Returns Source: Angel Research Institute (ARI) study at http://www.angelresourceinstitute.org/returns-to-angels 2016.aspx#sthash.8XlMPVnE.dpuf 8 • Several studies conducted in 2007, 2009, 2016 • 91% of the exits in the latest ARI study occurred between 2010 – 2016 • The cash on cash multiple is 2.2X - 2.6X • The overall IRR Has been in the 22%-27% range
  • 9. You’re Newsworthy!  We thank WestSideToday.com and Bixel Exchange for their coverage of the April LA CAT event We’re Listening to Your Feedback  Planning to facilitate “Support Groups”  Mini Bootcamps Coming – Stay Tuned! LA CAT In the News… Coming Attractions 9 Sign up to Host or to Join a Support Group! Upcoming LA CAT Events June 28th Angel Investing from Entrepreneur’s Perspective July 28th Tell us what topics you’re interested in!