How can you get investment from angel investors in New Zealand? This presentation covers the basics for how to prepare your business, how to approach investors, and what you can expect from the process
2. Standard disclaimer
I have a conflict of interest
I am not a lawyer
- get professional advice
Talk to as many people as you can
Take all advice with a grain of salt
... And two disprin!
3. Agenda
Before you start
Basic parameters
- Cash to raise
- Pre-money Valuation
- Tranches
- Equity or convertible debt?
Target selection
Contact!
Pitch events (eg Demo Day)
The morning after
Due Diligence & Negotiation
NZVIF (SCIF)
Settlement
4. Before you start
Do you really need investment?
Are you investment ready?
What are you selling?
Who is your target investor?
Why would they want to invest?
When do you need the money?
Is there a Plan B?
What’s the next round?
Get an advisor
5. The 7 attributes of
highly investable startups
Tight team, already pivoted
Active overseas
Doing something that’s hard
Know how to sell and distribute
Constantly learning and integrating
Have a lead investor on board
Crushing it in some way (traction)
6. Basic parameters: Cash to raise
Financial projections
Sensitivity analysis
Use of money
How much runway?
Should be < 3x pre-money valuation
7. Basic parameters:
Pre-Money Valuation
NZ Rules of thumb -
Pre-prototype: < $200K
Beta product: < $500K
Have significant NZ customers: < $1m
NZ & O/S customers, some scale: > $1m
Quote from last Lab: “Probably wont be investing unless
very attractively priced as I have too many other
options and not enough time to devote to this one”
Traction is king
9. Basic parameters:
Equity or Convertible Debt?
Equity is less onerous on founders
- Preferred or ordinary shares?
Conv Debt avoids valuation issues (ish)
Lots depends on the fine print
10. Target Selection
Institutions (Movac, Sparkbox, VCs, etc)
SuperAngels
Strategic investors
Angel clubs
Friends Family and Fools
Absolutely anyone else you can think of
Crowdfunding
Use LinkedIn
Make a prioritised list
11. Contact!
Develop informal relationships
Try to have an insider working for you
Approach via email, phone, in person
Investors are really busy
They may fob you off at first
Be persistent
Be prepared
– drop sheet, pitch deck, details
Be proactive and responsive
Always follow up, even if negative
12. Pitch events
Avoid going in without $ on the table
Do what you can to steal the show
Tyre-kickers outnumber real punters
Find the few passionate individuals
Get them to socialise with their friends
Follow up at the event, get contact info
Set a date for next steps
You will likely have to pitch at more
than one event
13. The morning after
Talk to the organiser
Schedule followup meeting(s)
Keep up contact – good news is great
Do what you can to get people talking
Don’t let it go cold
Don’t stop hustling
More roadshows / syndication
Can you get to critical mass?
14. Due Diligence (Start Now!)
Usually run by a team of investors
Financial
General corporate
Tax
Contracts
Product
IP
Litigation and compliance
Personnel (incl credit checks)
Valuation
Recommendation
16. NZVIF (SCIF)
Lead investor identified
Review term sheet
Eligibility certificate
Standard documents
Your lawyer tailors SASA/Constitution
Goes through SCIF partner’s lawyer
Then to NZVIF lawyer
Will match up to $250K per round, to a
max of $500K
Can take as little as 10 days
Managed by angel club rep
18. What next?
Traction
Seek investor commitment NOW
Plan out your terms & due diligence
Get help where you need it
DON’T BE SHY
Fortune favours the bold
