Get advice from Launchpad Venture Group, Golden Seeds, Hub Angels, Pipeline Angels & Portfolia!

1. thecapitalnetwork.org - @TCNUpdate
Angel Funding Part 2- Due Diligence:
Navigating People, Processes & Promises
Jess McLear
Angel Investor
Launchpad Venture
Group
@LaunchpadVG
Lisa Frusztajer
Angel Investor
Portfolia Enterprise Fund
& Pipeline Angels
David Verrill
Angel Investor & Managing
Director
Hub Angels
@HubAngels
Sheila Narayan
Angel Investor
Golden Seeds
@GoldenSeeds@Portfolia1
@PipelineAngels

2. @TCNUpdate
1. Prescreening &
Screening
Referral is the key to
entering the process
2. Pitching
10-20 min
presentations +
Q&A
4. Term Sheet
Negotiation & Deal
Completion
This is setting a market
price NOT a valuation
6. Support & Monitor
the Investment
e.g. Corporate &
Advisory Boards
What’s the process?
3. Due Diligence
Varies between
groups & deal
leads
7. Exit
e.g. IPO, M&A,
Dividends/Royalties or
Shutdown
5. Syndication &
Funding
With other local groups
or individual Angels/VCs

3. @TCNUpdate
Components of Due Diligence
● Management Team
● Market Opportunity
● Go To Market Strategy
● Customers/Prospects
● Intellectual Property
● Competition and Barriers to Entry
● Technology Assessment
● Business Model Assessment
● Financial Analysis
● Potential Exits
@TCNUpdate

4. @TCNUpdate
The point of due diligence is to:
● Give the deal an appropriate (due) level of scrutiny so that the group
as a whole can make intelligent investment decisions. As a part of the
process, it develops an interested cadre of potential investors.
● Form the team with industry knowledgeable members
● Assess the company so less involved members and syndication
members can decide
● Some groups start with a two hour “Deep Dive” which is either an
on-ramp into an exhaustive process, or results in a no-go decision
Why Do Due Diligence?

5. @TCNUpdate
● Align the investment goals and funds used with the highest
risk aspects of that company
● Identify most achievable funding strategy
● Set up metrics to use to watch the company progress
● Identify what type of human capital can be used and when to
help the company
● CEO & Deal Lead plan to be able to answer questions and
advocate for the company with potential syndication partners
Goal: Funders, CEO and Team Agree

6. @TCNUpdate
Group Differences
What are the differences in Due Diligence
procedures between groups ?
Individual Angels
@TCNUpdate

7. @TCNUpdate
Stories from the Vault
When we said YES
When we said NO
When Due Diligence Wasn’t Diligent Enough...
@TCNUpdate

8. @TCNUpdate
DO set up, organize and populate a data room, e.g., in Dropbox.
Your prospective investors will be asking for your pitch deck,
team resumes, copies of patents and patent apps, customer,
competitor and market info, financial projections, and other
supporting materials. Developing, archiving and updating this information
will help you stay on track.
DO give a great deal of thought to the biggest risks facing your
company and how you are going to mitigate them. Early stage
investors are comfortable with risk, but they want to see that you understand
them and have plans to address and reduce them
DO listen to and respond professionally and honestly to
skepticism and criticism. Assess the validity of the input you receive and
revise your plans accordingly.
DO project confidence and leadership. Some parts of the
diligence process can be ad hoc and some meetings may be
challenging. Investors will be impressed by your ability to manage the
process.
DON'T put all your eggs in one basket. Use your network to
help identify prospective investors who are a good fit, and
reach out to as many as possible.
DON'T be defensive, dismissive, arrogant, or dishonest, ever,
under any circumstances.
DON'T run your company based on wishful thinking. Assume
things are not going to go as planned, and assume you are
going to need more money than you think.
DON'T wait until you are almost out of money to raise funds.
Dos & Don’ts