Thinking like an angel seedchange (1)
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Angels are high net worth individuals who invest in early-stage companies. They typically invest locally in technology, fintech, healthcare, and cleantech startups. To connect with angels, entrepreneurs must rely on their network, be persistent with outstanding communication skills, and introduce their company to many potential investors. When pitching angels, entrepreneurs should focus on explaining the problem their company solves, their solution, market size, business model, competition, team, and financial projections. Angels will assess founders, the industry, product, market fit, and traction when making investment decisions.
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Thinking like an angel seedchange (1)
- 1. 1 What are angels looking for? Angel Funding: Thinking Like an Angel
- 2. About Your Hosts 2 Deepak Gupta Managing Director Sirk Roh Chief Operating Officer
- 3. What’s an angel? • High net worth/Very high net worth • Live in tech hubs, typically invest locally • Well-educated • Part-time investor • Sees 50-250 startups/year • May be member of an angel group Well-off, either from tech/finance
- 4. What kind of companies do angels invest in? • Companies who are in seed or early stage • Diverse: In technology, clean tech, fin tech, healthcare • Looking for: Solve a problem, management team, IP, business model
- 5. How do entrepreneurs connect with angels? • Full time, 12 hours/day, 4-6 months • Rely on your network • Must have persistence and outstanding communications skills • Objectives o Get introductions to 100-250 investors o Meet 50-100 investors o Follow up with 25-75 investors o Conduct diligence process with 25-50 investors o Get checks from 8-15 investors
- 6. Questions angels ask Product What’s your business about? Why will people use your product? How do you make money? Market How big is your market? Who’s your competition? Distribution? Have you talked to customers? Product-market fit? Team How did the founders meet? Who is on (and not on) your team? Risks What is the biggest problem you need to solve now? Technology and IP Funding Justification/Use of Funds Milestones Financial projections Think ahead to Series A
- 7. Questions angels don’t ask • Do the founders like each other? • Do I trust you? • Can you sell? • Can you build a team? • Can we work together? • Is anyone else going to invest? • Why isn’t XYZ going to crush you?
- 8. Non-rational criteria Founders Do I identify with you? Industry University Experience Product Cool factor Resolving personal pain Market Personal experience Interest
- 10. Decision-making process… Elevator pitch Pitch deck Founder info Product Market Business model Competition Domain expertise Intelligence Communication skills Persistence Integrity Relationship Customer Market size Competition Prob/Solution Traction Product-Market fit Product overview Market Product
- 11. Decision-making process Tech Financials Deal Legal Tech team Use of funds Milestones Growth plan Amount Terms Investors Regulatory threat Formation Stock IP
- 12. Funding Pitch Guidelines • Tell a story • Problem • Solution • Market size • Business model • Competition • IP • Team • 10-12 slides maximum • One key point/slide: Backup data in appendix • Don’t read it from slides
- 13. Valuations What is the valuation of my startup? • Based on traction • Based on geographical comps • Entrepreneur ask vs investor tell?
- 14. Q&A and Thank You! 14 Deepak Gupta 415 Jackson Street San Francisco, CA 94111 www.seedchange.com deepak@seed-change.com 415.908.1016 @Deepaksgupta500 Sirk Roh www.earlygrowthfinancialservices.com sroh@earlygrowthfinancialservices.com 415.234.3437 @EarlyGrowthFS