What Angel Investors LookWhat!Angel!Investors!Look!
For in Fundable CompaniesFor!in!Fundable!Companies
Bill!Payne
BNZ!Univ...
dAgenda
New!Zealand!– Australian!Investment!Forum
• Summary!of!Capital!Food!Chain
• Non disclosure Agreements• Non"disclos...
Investigation Feasibility Development Introduction Growth Maturity
The!Capital!Lifecycle
Investigation Feasibility Develop...
d &Friends!&!
Family
Angels
Venture!
CapitalistsFamily
Typical!round:!!<US$100K Typical!round:! US$400K
Capitalists
Typica...
Self!Funding!(Bootstrapping)
F i d d F il IFriends!and!Family!Investors
P d fi i• Pre"seed!financing
– To!develop!product
– To!find!customers
• Unsophi...
Wh A Th A l ?Who!Are!These!Angels?
! Wealthy!individuals!– “accredited!investors”y
! “Been!there!and!done!that”!entreprene...
V t C it li tVenture!Capitalists
! General!partners
! Salaried!managers
! Minimal!investment,!huge!upside
! Limited!partne...
N di l A t (NDA )Nondisclosure!Agreements!(NDAs)
• Most angels and VCs will not sign• Most!angels!and!VCs!will!not!sign
– ...
Evaluating DealsEvaluating!Deals
What!do!investors!look!for?f
www.billpayne.com
A l R ti S tAngel!Rating!System
0"30%Management team 0"30%
0"25%
Management!team
Size!of!opportunity
0"15%
0"10%
Product!&...
F d bl M TFundable!Management!Teams
• CEO
– CEO!experience
– Coachable (very important)Coachable!(very!important)
– Vertic...
Si f th O t itSize!!of!the!Opportunity
l bl• Scalable!
– $20!million!(min.)!in!revenues!in!5!years
$– (VCs!look!for!>$100!...
C titi Ad t (IP)Competitive!Advantage!(IP)
• Patents
– Important, but difficult to defendImportant,!but!difficult!to!defen...
D l Fl St ti tiDeal!Flow!Statistics
• Prescreening
• Screening
! 1!in!4!to!Screening
! 1 in 3 to DDScreening
• Due!Diligen...
2009!NZ!Angel!Dealsg
• ~NZ$127!Million!since!2006
– 2009!" NZ$50!"" 2008!" NZ$29
– 2007!" NZ$27.4!"" 2006!– NZ$20.2
• Inve...
Questions??
For!enquiries:!!r.paul@theicehouse.co.nz
Copy!of!slide!deck:!!emmya557@gmail.compy y @g
www.billpayne.com
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What Angel Investors Look for in Fundable Companies, NZ and AUS

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This presentation includes Summary of Capital Food Chain, Non-disclosure Agreements, and how investors evaluate deals.

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What Angel Investors Look for in Fundable Companies, NZ and AUS

  1. 1. What Angel Investors LookWhat!Angel!Investors!Look! For in Fundable CompaniesFor!in!Fundable!Companies Bill!Payne BNZ!University!of!Auckland!Business!School! Entrepreneur!in!Residence
  2. 2. dAgenda New!Zealand!– Australian!Investment!Forum • Summary!of!Capital!Food!Chain • Non disclosure Agreements• Non"disclosure!Agreements • How!investors!evaluate!deals
  3. 3. Investigation Feasibility Development Introduction Growth Maturity The!Capital!Lifecycle Investigation Feasibility Development Introduction Growth Maturity Proof!of! concept Pre"Seed Seed!& Start"up Early First,!Second,!etc... ROFIT Friends!&!Family Angel!Investors IPO,!Banks Venture!CapitalSelf PR g , TIME VALUE!OF!DEATH TIME
  4. 4. d &Friends!&! Family Angels Venture! CapitalistsFamily Typical!round:!!<US$100K Typical!round:! US$400K Capitalists Typical!round:!!US$7M Each!investor:!US$2"10,000 Annual!Total:!!!!US$60B Each!investor:!!US$35,000 Annual!Total:!!!!US$20B Each!investor:!!US$3M Annual!total:!!!!US$20B Unsophisticated Investing!in!a!friend,!family Passive Accredited,!savvy Investing!time!and!money Active Limited!partnership Institutional!money General Partners activePassive 1"2!lifetime!investments! Equity,!debt,!gift? Active Investing!in!entrepreneur Portfolio!of!angel!deals General!Partners!active Invest!in!company Large!portfolio
  5. 5. Self!Funding!(Bootstrapping)
  6. 6. F i d d F il IFriends!and!Family!Investors P d fi i• Pre"seed!financing – To!develop!product – To!find!customers • Unsophisticated• Unsophisticated – Equity?!!Debt?!!Gift? i i h b f i– Limit!the!number!of!investors www.billpayne.com
  7. 7. Wh A Th A l ?Who!Are!These!Angels? ! Wealthy!individuals!– “accredited!investors”y ! “Been!there!and!done!that”!entrepreneurs ! “Mad!money” ! Generally!$25K"$250K!per!deal!per!angel ! Several!angel!investments ! Range!of!involvements ! Lead!investor!– Chairman!of!the!Board I t / d i! Investor/advisor ! Passive!investor www.billpayne.com
  8. 8. V t C it li tVenture!Capitalists ! General!partners ! Salaried!managers ! Minimal!investment,!huge!upside ! Limited!partners ! Corporations,!pension!funds,! wealthy!individuals ! Totally!passive!involvement ! 800!venture!capital!funds!# ! Size: $5 million to >$10 billionSize:!!$5!million!to!>$10!billion www.billpayne.com
  9. 9. N di l A t (NDA )Nondisclosure!Agreements!(NDAs) • Most angels and VCs will not sign• Most!angels!and!VCs!will!not!sign – See!too!many!deals I t it i k t ti i b i– Integrity!is!key!to!continuing!business – Not!motivated!to!steal!technology • May!sign!NDA… – During!due!diligence,!not!earlier – Covering!a!very!narrow!set!of!issues • Business Plan " no proprietary informationBusiness!Plan! no!proprietary!information www.billpayne.com
  10. 10. Evaluating DealsEvaluating!Deals What!do!investors!look!for?f www.billpayne.com
  11. 11. A l R ti S tAngel!Rating!System 0"30%Management team 0"30% 0"25% Management!team Size!of!opportunity 0"15% 0"10% Product!&!technology Sales!channels 0"10% 0 5% Competitive!advantage Si f thi d 0!" 5% 0!" 5% Size!of!this!round Need!for!more!funding www.billpayne.com
  12. 12. F d bl M TFundable!Management!Teams • CEO – CEO!experience – Coachable (very important)Coachable!(very!important) – Vertical!experience Leadership– Leadership • Team – Balance!and!complete – Experience working togetherExperience!working!together www.billpayne.com
  13. 13. Si f th O t itSize!!of!the!Opportunity l bl• Scalable! – $20!million!(min.)!in!revenues!in!5!years $– (VCs!look!for!>$100!million) • High!gross!marginsg g g • Large!niche!market U f i i i d• Unfair!competitive!advantage • Ready!for!customers www.billpayne.com
  14. 14. C titi Ad t (IP)Competitive!Advantage!(IP) • Patents – Important, but difficult to defendImportant,!but!difficult!to!defend • Trademarks/copyrights T d S t• Trade!Secrets • Very!important!at!exit
  15. 15. D l Fl St ti tiDeal!Flow!Statistics • Prescreening • Screening ! 1!in!4!to!Screening ! 1 in 3 to DDScreening • Due!Diligence ! 1!in!3!to!DD ! 1!in!3!to!Inv.!Meeting • Investment ! 1!in!2!raise!money !• OVERALL ! 1!in!72!who!apply!receive! investment www.billpayne.com
  16. 16. 2009!NZ!Angel!Dealsg • ~NZ$127!Million!since!2006 – 2009!" NZ$50!"" 2008!" NZ$29 – 2007!" NZ$27.4!"" 2006!– NZ$20.2 • Investment!vs Stage!of!Development!– 09 – Seed!and!Start"up!=!78% – Expansion!!!!!!!!!!!!!!!=!22% • New!Deals!vs Follow"on!Funding!" 09 – 40%!first"time!investments – 60%!follow"on!investments
  17. 17. Questions?? For!enquiries:!!r.paul@theicehouse.co.nz Copy!of!slide!deck:!!emmya557@gmail.compy y @g www.billpayne.com

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