Growing the Startup Ecosystem by growing stronger Entrepeneurs and stronger Angel Investors using the Angel Conference model

1. Building a local Ecosystem
by John Sechrest
@sechrest

3. Mapping the Clusters

4. Including non-tech Clusters

7. Life cycle of a business

8. Outside Investment Stages

9. Angel Conference Model
20-60 companies apply

20-40 investors join LLC

$5500 for each investor

10 weeks of due diligence

Workshops for Angels and Entrepreneurs

Large Final Event


10. How does Angel Investing work?

11. Company Pitches

12. Due Diligence Feedback

13. Detailed Event Program

14. Select an investment

15. Angel Investing Distribution of Returns
60
50
40
Percent of Exits
US: Overall Multiple: 2.6X
UK: Overall Multiple: 2.2X
30
20
10
<1X
1X to 5X
5X to 10X
Exit Multiple
10X to 30X
>30X

16. Distribution of Returns by Venture Investment
60
Hold: 3.0 yrs.
50
$80M
Percent of Total Exits
40
Hold: 3.3 yrs.
Overall Multiple: 2.6X
Avg. Holding Period: 3.5 years
30
$60M
20
$40M
10
$20M
Hold: 4.6 yrs.
Hold: 4.9 yrs.
Hold: 6.0 yrs.
0
< 1X
1X to 5X
Blue bars: % of exits in that Category
Green Bars: $’s returned in that Category
5X to 10X
Exit Multiples
10X to 30X
> 30X

17. Economic Impact of Angel Oregon Alumni
90
600
80
500
70
60
400
50
300
40
30
200
20
100
10
0
0
Revenue in (current portfolio): $84.6M
+47% from 2011
FTE’s in (current portfolio):
+16%
Rev/FTE
(current portfolio):
Raised $7.1M
535
$158K
+27%
$88M cumulative

18. As a reminder: Angel Investor Performance Project
More than half fail to return
capital
Wins take longer to exit than
losses
“Asset Class” return of approx
2.6X
10% of exits = 90% of cash
returned
www.AngelResourceInstitute.org

19. Estimated Multiple of AO as a Portfolio
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2006
2007
2008
Multiple by year, if portfolio were cut off after that year
Assumes even investment in every presenting company
Underspecified Terms/Dilution as an imaginary portfolio
2009
2010
2012
AIPP

20. 5 Types of Angel Groups





Angel Networks 98%
Managed Angel
Funds - Founders
Coop
Passive Angel Funds
– Side car funds
Active Angel Funds
– Oregon Angel Fund
Angel Conference

21. Cities with Angel Conferences

Portland ( Since 2003 )

Bend

Corvallis/Eugene ( Since 2009 )

The Gorge

Medford

Seattle ( Since 2012 )

22. WWW.SEATTLEANGEL.COM

23. Where are they now?
Tracking the Angel Oregon Alumni
Willamette University Angel Fund

24. Median Early Stage Pre-Money Valuation
$2.5M
$1.5M
Median
$3.7M
3rd Quartile
$6.6M
1st Quartile
$0.11M
*Including all rounds with angel groups before Series A
6/2/13
*

25. Robert E Wiltbank, Ph.D.
wiltbank@willamette.edu
www.Willamette.edu/~Wiltbank

26. Angel Investing Distribution of Returns
60
50
40
Percent of Exits
US: Overall Multiple: 2.6X
UK: Overall Multiple: 2.2X
30
20
10
<1X
1X to 5X
5X to 10X
Exit Multiple
10X to 30X
>30X

27. Distribution of Returns by Venture Investment
60
Hold: 3.0 yrs.
50
$80M
Percent of Total Exits
40
Hold: 3.3 yrs.
Overall Multiple: 2.6X
Avg. Holding Period: 3.5 years
30
$60M
20
$40M
10
$20M
Hold: 4.6 yrs.
Hold: 4.9 yrs.
Hold: 6.0 yrs.
0
< 1X
1X to 5X
Blue bars: % of exits in that Category
Green Bars: $’s returned in that Category
5X to 10X
Exit Multiples
10X to 30X
> 30X

28. 60
50
Percent of Exits
40
2X better multiple for
20+ due diligence
30
20
10
<1X
1X to 5X
5X to 10X
Exit Multiple
10X to 30X
>30X

29. 60
50
60% better multiple for deals
related to industry expertise
Percent of Exits
40
30
20
10
<1X
1X to 5X
5X to 10X
Exit Multiple
10X to 30X
>30X

30. Follow-On Investment from Same Angel Investor
60
50
30% of deals had follow on
investments.
Percent of Exits
40
3X better multiple in deals
where the investor did not make
a follow-on investment.
30
20
10
<1X
1X to 5X
5X to 10X
Exit Multiple
10X to 30X
>30X

31. Diminishing Marginal Returns to Raising Capital
6/2/13

32. Diminishing Returns to Invested Capital
Private Acquisition Size from ‘96 to ‘06
Only 15%> $50M
6/2/13

33. … But Trending Up at Year End
Median Angel Round Size Reaches Five Quarter High in Q4 2012
$M
$1.50
$1.25M
$950K
$950K
$900K
$850K
$1.00
$500K
$550K
$550K
$620K
$690K
$0.50
$0.00
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
*Angel rounds include angels & angel groups only
*

34. Median Early Stage Pre-Money Valuation Stays the Same in 2012
$2.5M
$1.5M
Median
$3.7M
3rd Quartile
$6.6M
1st Quartile
$0.11M
*Including all rounds with angel groups before Series A
*