European Angel Investor Landscape Matthias Hilpert MH2 Capital Value add Support Market view Pre-Seed Seed Series A Business Angel Profile Sources Domains Questions Europe Germany Berlin

1. Business Angels, Pre- and Seed Rounds
Matthias Hilpert
Berlin
XPRENEURS
UnternehmerTUM
München
April 2020

2. 2MatthiasHilpert.com
want to raise money?
have raised love money?
have raised angel money?
have raised VC money?
Show your hand if you …

3. 3MatthiasHilpert.com
20+ years Operator turned full time Investor
 Worked in telecoms globally, running a EUR1bn P&L
 Generated EUR800mio enterprise value for Private Equity sponsors
 15 years investing in public and private markets & real estate
 Angel investing since 2008 - 19 investments and 4 exits
 One of the top 30 angels backed by the European Investment Fund (EIF)
 Seed stage subscriptions and marketplaces from EUR10K monthly revenue
 175cm, 83kg, 47 years, 1 wife, 3 kids, living in Berlin

4. 4MatthiasHilpert.com
“Angel investors are the most critical”
Paul Graham
Founder Y Combinator
The Hacker´s Guide to Investors

5. 5MatthiasHilpert.com
Segmenting angel investors
Hobby Angels
(90%)
 <30% time allocation
 <3 portfolio companies
 <2 deals in 12 months
 Small network in start-up and
investor ecosystems (<10)
 Average 10-25K tickets
 Dealflow 10 pa
Professional Angels
(10%)
 >50% time allocation
 >10 portfolio companies
 >2 deals in 12 months
 large network in start-up and
investor ecosystems (>100)
 Average 25-100K tickets
 Dealflow 50-500 pa
BAE 2015: 7.500 angels in Germany
Angel.co 2019: 998 angels in Germany
BAND Umfrage: 108 answers
EIF: 30 angels in Germany
European angels: matthiashilpert.com/ressources

6. 6MatthiasHilpert.com
Typical angel profiles…
C-Level Corporate Exec
 2+ deal
 <10% time spent,
 60+ years
 investment only
 focus on industry network
value
Exited Founder
 5+ deals
 <20% time spent
 30-40 years
 strong start-up experience
 relevant start-up community
& investor network
Professional Angel
 10+ deals,
 >50% time spent
 hands-on advice (pull only)
 40-60 years
 strong seniority
 relevant industry/functional
experience
 relevant start-up community
& investor network
First timers
 First deal
 Strong emotional bond (perhaps limited experience)
 Big ticket/valuation (perhaps wrong expectations)
 High involvement (perhaps too much push)
 Last resort money (perhaps with non-standard terms)

7. 7MatthiasHilpert.com
Segmenting institutional investors in Europe
Pre-/Seed funds
 10-50mio fund size
 First time funds
 2 partners + 2 investment
managers
 Minimum ticket 250K-1mio
 5-10 investments pa
 Dealflow 100-1.000 pa
Series A funds
 50-150mio fund size
 2nd or 3rd fund
 2-4 partners + 4 investment
managers
 Minimum ticket 1mio-1.5mio
 5-10 investments pa
 Dealflow 100-1.000 pa
European funds: matthiashilpert.com/ressources

8. 8MatthiasHilpert.com
Segmenting start-ups (by investor demand)
Warm
(15%)
 Good team
 Medium growth
(5-10% mom)
=> Broad investor discussions
(25-50 investors)
Hot
(5%)
 Best-in-class team
(eg successful serial founder)
 Unique technology
 High growth
(20-40% mom)
=> Only selected investor discussions
(5-10)
Cold
(80%)
 Mediocre team
 Low innovation/differentiation
 Low growth
=> Very broad investor discussions
(100+ investors)
Top tier VCs invest in only
0.01% of all startups
Germany:
557.000 new companies
29.000 tech/growth start-ups
141 Series Seed rounds
13 Series A rounds
KfW, KPMG, Dealroom

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Warm Pre-Seed Seed 1 Seed 2** Series A**
Stage Idea, MVP Early PMF Established PMF Strong PMF
Monthly Revenue 0 5-10K 50K 100K
Round size* 50-200K 500K-1mio 1-2mio 4-15mio+
Valuations* 1-2mio 2-4mio 4-10mio 20-100mio
Investors
Grants, F&F
Accelerators & Angels
Angels &
VCs (<25mio)
Angels &
VCs (<50mio)
VCs
(>150mio)
Tickets*
Angels 10K
Accelerators 50K
Angels 10-50K
VCs 200-500K
Angels 25-100K
VCs 500K-1mio
VCs 2-5mio
Reason to invest Love & Play 30x potential 20x potential 10x potential
Instrument Convertible Notes
CN &
Equity
Equity Equity
When do angels and pre-/seed funds play?
* Numbers are indications from Berlin, they may be smaller in other European countries and larger in London
** Seed 2 are more common in the last years and Series A rounds have been growing significantly in size

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Hot Pre-Seed Seed
Stage Idea, MVP Established PMF
Monthly Revenue 0 50K
Round size 1-2mio 3-5mio+
Valuations 4-10mio 8-30mio
Investors
Angels &
VCs (<50mio)
VCs
(>150mio)
Tickets
Angels 25-100K
VCs 500K-1mio
VCs 2-5mio
Reason to invest 20x potential 10x potential
Instrument Equity Equity
What happens if a start-up is hot (0.01% or 3 x pa)?

11. 11MatthiasHilpert.com
Potential compositions for pre-/seed rounds
200K
 Friend & family + angels
 4x50K or 8x25K
 Convertible Note
 1 lead angel or founders
documentation
 Potentially several closings
 No notary and transaction
cost
700K
 Seed VC + angels
 500K + 4x50K
 Equity
 VC as lead to set terms
 Single closing day
 Notary and 5-10K
transaction cost
1.5mio
 Series A VC + angels
 1mio + 1x300K + 4x50K
 Equity
 VC as lead to set terms
 Single closing day
 Notary and 5-10K
transaction cost

12. 12MatthiasHilpert.com
What can angels offer (vs institutional investors)?
 Operating and investment expertise
 Investing own money
 Capability to tolerate high risk
 Personal and emotional bond
 Likely to take “entrepreneur´s perspective”

13. 13MatthiasHilpert.com
What to look for in angels vs institutional
investors?
Angels
 personal chemistry
 # of deals in the last 12 months
 % time spent on angel investing
 operator & investor experience
 industry, seniority & years of
experience (network type & size)
Funds
 fund size and strategy
 key individuals
 personal chemistry
 lead or follow
 portfolio experience
 industry experience
 follow on investors

14. 14MatthiasHilpert.com
“…in God we trust, all others bring references!”

15. 15MatthiasHilpert.com
Where to find an angel or pre-/seed investor…
 Start locally in DACH
 Other start-up teams (comes with immediate reference)
 Start-up management teams with successful exits are likely to become
angels themselves
 Local first tier Accelerators, eg Xpreneurs, Techstars
 Angel networks, eg EIF, btov etc.
 Early stage Angels and VC regularly refer each other
 Directories: Angel.co, LinkedIn, Dealroom …
 Investor lists: matthiashilpert.com/resources

16. 16MatthiasHilpert.com
…and what questions should they be able to help
you answer?
 Is my product a pain killer or a nice to
have?
 How would you segment my customers?
Should I focus on 1, 2 or 3 segments?
 What is my initial target market, city A or
country B or region C?
 Can you help me to get a meeting with a
decision maker at Customer A?
 How would you build the organisation?
What´s the best split of work?
 Would you hire first a senior role or a
junior role?
 What do you think of candidate X?
 Which marketing channels should I focus
on: SEO, PR, SEM, Print, Radio or TV?
 How should I structure my sales funnel?
 What should my tech stack & architecture
look like?
 How much money should I raise from
whom?
 Can you make an intro to investor X?
 Do I need more than 1 term sheet?
 What are good and bad terms?
 I hate my co-founder, what should I do?
 Is this ever going to work?
 …and more!

17. 17MatthiasHilpert.com
What are your questions?

18. Come and visit Berlin!
matthiashilpert.com