about angel groups
DESCRIPTION
Description of angel investment process a la Candy Land.TRANSCRIPT
UnderstandingAngel Investor
GroupsHow to Play the Game
The League
The Players
Paul Neeb,First Angels
Kalamazoo, Mich.
Ken Kousky,Bluewater Angels
Midland, Mich.
Loïc Couraud,Capital Community Angels
East Lansing, Mich.
The Game• Deals & Business Plans• Filtering & Screening• Initial Selection• Validation & Due Diligence• Negotiation • Investment (1st Cycle)• Monitoring & Nurturing• Follow-on Investment • Payoff
Get Deals, Business
Plans
Filtering Deals and
Plans
Interested in
Investment
Validate Business for Investment
Negotiate Terms of
Investment
Investment(1st Cycle)
Monitor and Nurture Business
Follow-on Investment
Payoff
Get Deals Business Plans
• Online– Angelsoft.net– Company web presence
• Events– Universities– PR Campaigns
• References– Member contacts– Entrepreneurial Support
Organizations
,
Filtering Deals Plans
• Quick Initial Review – 5 minute look– Executive Summaries!
• Venture-backable?– i.e. Fit for Angel
investment model– Not lifestyle business
• Group’s preferences– Industry Considerations– Regional Considerations
,
Filtering Deals Plans
• Business (50%)– What product/service?– What benefits to target
market?– What are competitors? – Marketing strategy?– Stage of development?– Scalability?– Barriers to entry? Long term
competitive advantages?– Intellectual Property?
• Entrepreneur (50%)– Phone meeting– Live meeting
,
Interest in Investment
• Members’ Meetings– 30 Minute Presentations
by Entrepreneurs– Discuss with Members– Call for a Champion– Form Committee to
Perform “Due Diligence”• Definition: An audit or
investigation of a potential investment.
Validate Business for Investment
• Verify Business Plan– Check Sources– Estimate Optimism of
Predictions– Verify Conclusions
• Due Diligence Checklists– Angelsoft.net – Angel Capital Association
• Risk Assessment– Development Risk– Manufacturing Risk– Marketing Risk– Management Risk– Growth Risk
• 100+ Hour Process
Negotiate Terms of Investment
• Funding Negotiation Converges with Final Due Diligence
• Outside Legal Help Brought In
Funds Released
• Milestone-Based• Majority Control
Required for Most Deals
Monitor and Nurture
• One Board-Seat Reserved for Angel Group Member
• Use Network and Experience to Support Management
Follow On Investment
• Milestone-Based• Make Investment
Attractive for Purchase or VC-Backing
-
Payoff
• Sell Company to a Bigger Company
• Recently Less Focus on IPOs
Candy Castle