Angel One receives an average of 300 applications each year, so how do you stand out from the crowd? In her presentation, Karen will cover the key components of a pitch, as well as how to scale your venture, manage your finances and structure an investment deal.
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Angel Investing Workshop
1. What Angel Investors
Look For
Karen Grant
Executive Director & Angel Investor
Angel One Investor Network
Tuesday, May 12, 2015
2. So You Have An Idea
S Industry Canada reports:
S 30% of small businesses
won’t survive longer
than 2 years
S Only 50% make it to 5
years
S In December 2012,
Canada had 610,178
businesses employing 1-4
people
S In a typical year
S 80,000 are born
S 60,000 business die
S 7,000 are bankrupt
(c) 2015, Angel One Investor Network2
3. Tips to Beat the Odds*
S Declare how big you want to be in 24 months
S Choose who you intend to serve
S Determine how you intend to compete
S Focus on the critical few, not the possible many
S Make decisions quickly: if someone is not working out, make the
change
S Plan on the run
(c) 2015, Angel One Investor Network3* Roy Osing, author, “Be Different or Be Dead”
4. Tips to Beat the Odds*
Don’t get
MESMERIZED
by your long term potential
(c) 2015, Angel One Investor Network4* Roy Osing, author, “Be Different or Be Dead”
5. Motivation of Angels
S Community Good
S Diversification
S High Growth
S Mostly . . . Angels want to make money
5 (c) 2015, Angel One Investor Network
6. Our Approach
S We received on average 300 applications per year
S People (create team of ‘A’ players)
S Product (unique and defendable)
S Market (large, multinational, wants the product)
S Customer validation key
(c) 2015, Angel One Investor Network6
7. What we do
S Angel One was the top Angel group in Canada by # of deals in
2012 and 2013
7 (c) 2015, Angel One Investor Network
Year Total Invested Avg. Ind.
Investm’t
# of
Investm’ts
Active
Investors
2011 $1,220,000 $94,000 1 13
2012 $5,400,000 $62,791 18 86
2013 $5,280.000 $76,522 20 69
2014 $4,100,000 $73,214 16 59
Totals $16,000,000 $73,413 55
8. Where We Invest
S We will look at deals in areas that involve significant intellectual
property and/or high growth
(c) 2015, Angel One Investor Network8
Sector Invested Share
ICT $9,237,314 54%
Communications & Media $4,516,600 27%
Clean Tech $2,110,150 12%
Life Science $800,000 5%
Industrial $150,000 1%
Other $172,000 1%
9. Results To Date
S 58 investments, over $16 million into 39 companies
S One failure
S Three Exits:
S Sept 30, 2013 - Granite Networks, 9 month hold, 27% ROI
S Nov 18, 2013 -Vana Workforce, 11 month hold, 82% ROI
S March 20, 2015 – SurfEasy, 16 month hold, 87% ROI
(c) 2015, Angel One Investor Network9
10. Tell Us Your Story
S Angels need key information, but . . . don’t be boring
S Tell a story about your customer or your business or your
product that is compelling
S Be honest about your stage, your competitive position, your
ability to deliver
(c) 2015, Angel One Investor Network10
11. Key Components of A Pitch
S What problem do you solve?
S Why will someone pay you to solve the problem?
S How big is the problem?
S When/how will you make money?
S Who is on your team?
S What do you need from the angels?
(c) 2015, Angel One Investor Network11
12. Know Your Business
S You must show that you understand your business
S Experience matters
S Depth matters
S Prior success matters
S You probably can’t do it all but you should try
(c) 2015, Angel One Investor Network12
13. Discussing Product
S Three categories of product
S Products with IP Products with Brand
S Everything else
S Intellectual Property when granted provides comfort to investors.
S IP with customers has more value.
S ‘Applied’ for has limited value.
S Brand identity dramatically reduces risk
(c) 2015, Angel One Investor Network13
14. Operations
S Just a product is not enough
S How will you: sell, support, defend
S What is your cost of customer acquisition
S Does your product/service have key dependencies
S How long will a customer stay?
S Can you find employees?
(c) 2015, Angel One Investor Network14
15. Scaling Your Venture
S Do you understand how to grow?
S Production
S Distribution
S Human Resources
S Support
(c) 2015, Angel One Investor Network15
16. Financial Metrics
S Highlight historical ACTUAL sales and expenses
S Project revenue/expenses you can justify
S Explain how customers pay you
S Explain how investors profit
S Project time and funding required to cash flow positive
(c) 2015, Angel One Investor Network16
17. Deal Structure
S What Instrument:
S Equity
S Preferred Shares
S Convertible Debt
S How much are you raising?
S Pre-money valuation?
S Other investment/investors ?
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18. Be Simple
S Don’t make it complicated
S Separate product/technology from business
S Customer validation reduces risk
S Leave complex items for due diligence but …
S Be direct with answers
(c) 2015, Angel One Investor Network18
19. Be Honest
S Most angels have significant experience
S Straight talk will win friends
S If it sounds too good to be true . . .
(c) 2015, Angel One Investor Network19