insider tips for finding and landing angel investors

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1Insider Tips for finding and landing Seed InvestmentWorld Startup Expo 2016 Bangalore #WSE

STARTUP MANUFACTORY 2016

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Startup Manufactory STARTUP MANUFACTORY 2016

Our services3Startup business consultingFinTech startup compliancePublic sector consultingEntrepreneurship educationRoute-to-market strategyFundraising servicesBusiness planning documents STARTUP MANUFACTORY 2016

Our Location4 STARTUP MANUFACTORY 2016

Our clients5

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6Introspection STARTUP MANUFACTORY 2016

Why raising money in the first place?

7On fundraising

Four Factor Value MatrixFrequency8NeedScalabilityBarriers STARTUP MANUFACTORY 2016

Should I really raise money? Why cant I make it work it without?Who is my best source of funding?9Introspection STARTUP MANUFACTORY 2016

10On Crowdfunding STARTUP MANUFACTORY 2016

11Crowdfunding platforms STARTUP MANUFACTORY 2016

12Crowdfunding: The 30% rule STARTUP MANUFACTORY 2015 | @StartupMfactory

Projects starting with 0% showed a 15% chance of successProjects beginning with 1% experienced a 27% likelihood of successProjects with 5% gives 50-50 oddsProjects with 10%odds increase to 70%Projects having 20%experienced a80% chance of successProjects starting with 35% or more completed their goals in every instance = 100%13Crowdfunding: Success probability STARTUP MANUFACTORY 2015 | @StartupMfactory

Crowdfunding pros/cons14Never met investors beforeOpportunity costs investorsSign many terms sheetLegal costs may be higherRed tapeEarly stage valuationEasy to raise moneyEarly market validationIncrease visibility/PRRaise a couple of timesSaves timeReach low-end investor marketProsCons STARTUP MANUFACTORY 2016

15The fundraising campaign STARTUP MANUFACTORY 2016

Where to start searchingYour alumni network, friends startups, events, news, etcList everyone you know and send a 10 line max teaser email ask for referralsInvestment clubs register, but use connections mercilessly to jump the queue!Approach professionals local accountants, banks, notariesOnline: LinkedIn, AngelList, Startups, Crunchbase, Startups sites, incubators, accelerators do your homework!Advantage Austria16The fundraising campaign STARTUP MANUFACTORY 2016

Your alumni network, friends startups, events, news, etcList everyone you know and send a 10 line max teaser email ask for referralsInvestment clubs register, but use connections mercilessly to jump the queue!17Where to start searching STARTUP MANUFACTORY 2016

Approach professionals local accountants, banks, notariesOnline: LinkedIn, AngelList, Startups, Crunchbase, Startups sites, incubators, accelerators do your homework!Advantage Austria18Where to start searching STARTUP MANUFACTORY 2016

They dont like people asking for money

19Common perception of angels

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They want to invest

20Real angel investors

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In y3 we expect a revenue of $12mWe aim to minimise staff recruitment costs through our MBA networkProvided we get 250 sign-ups/day we will meet our projected figures21The usual rubbish STARTUP MANUFACTORY 2016

We will be fully operational 60days after funding and profitable after 90 days!No backup data We will send this missing piece later!We will sell our startup to Google and if not then to Yahoo!22The usual rubbish STARTUP MANUFACTORY 2016

Proposition whats in it for me, the investor?Pitch winning engagementPersistence - through to close23The usual rubbish STARTUP MANUFACTORY 2016

Management team shows commitment (financial, time spend)The idea/plan/business model is oven ready and just needs the last ingredient (money)Add value- background sector to the angel (personalisation!) Enough funding asked for to make it work24What do angels look out for? STARTUP MANUFACTORY 2016

At least 10% of equity for having a voice Accessible location of the businessAttractive valuation/investment return min. 5x+ Downside protection before upside gains!25What do angels look out for? STARTUP MANUFACTORY 2016

Back up your business model with as much evidence as possible (facts, comparable, research, focus groups, interviews, etc.)Team looks like it can pull it off in terms of credibility, experience, track record, etc.Former corporates with do my own thing attitude are usually more professional26What facts do angels need? STARTUP MANUFACTORY 2016

Be familiar with the terminology27Sweat equityEquity optionsTriggerPreferred sharesCliffTag alongEISSEISVesting periodFully vestedDilution protectionDrag along STARTUP MANUFACTORY 2016

28The fundraising pitch STARTUP MANUFACTORY 2016

Main objective:Get another meeting!

29The fundraising pitch

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100% of story in first 10 minutesPlan your first 10 min emphasis:Introducing the team 1 minThe elevator pitch 1 minThe big idea/ revenue model 2 minsShow evidence it will work 2 minsFinancial summary/funds needed 2 minsPersonal offer to this angel 2 minsBe positive, confident, then...Close!30The fundraising pitch structure STARTUP MANUFACTORY 2016

No interaction with the audience does the Angel actually understand what you do after the first 30 seconds? Did you ask?Slides and images too complex and confusing could be very simple, might be shown to someone else do they tell the story if youre not presenting them?No conclusion Dont forget to close!!!31Common mistakes STARTUP MANUFACTORY 2016

How your input will be of valueHow much we want from youWhat return on your investment we expectHow we are managing risk for youWhy this would be enjoyable/rewarding to you

32The bespoke offer STARTUP MANUFACTORY 2016

Be prepared to haggle:Pre-money valuation re-negotiatedEquity % given for the angel funding is linked to performance against business plan Funds offered as convertible debtFinders fees - angel wants fee for find own money!Board fees for directorshipOption/warrant - future bargain on equityComplex shareholders agreement33The fundraising pitch STARTUP MANUFACTORY 2016

Were looking for 4 angel investors with complementary (non-overlapping) industry skills and connections to put up 50,000 each.Were looking for a lead investor who will take the primary due diligence role and go forward to be a non-executive director on our boardWere looking for a small group of angel investors to put in 250,000 now but with an option to follow on in about 12 months with the same amount at an attractive (to them) options price34The fundraising pitch STARTUP MANUFACTORY 2016

Board seat offered?Shareholders agreementTime/access commitment from AngelTitle = chairman, director, or noneFees or no fees? (an issue nowadays)Any conflicts of interest check it out35The fundraising pitch other factors STARTUP MANUFACTORY 2016

I would like you Mr/Ms Investor to invest X for Y% of my business. The business will achieve Z financial performance over N years. The proposition will become valuable to various potential buyers from 5 years, and I intend to sell to one of these acquirers between 5 to 7 years. Given comparable deals in the market, I anticipate that the business will sell for a price which equals 5X profit [sometimes revenue is the multiple used], and our forecasts show that we will achieve that in that time period.36The bespoke offerCourtesy of Julie Meyer, London STARTUP MANUFACTORY 2016

BREAKING THE ICETHE MARKETTEAM, FOUNDERS, GROUP INTERACTIONYOUR IDEA / PRODUCT / SERVICETHE COMPETITIONROUTE-TO-MARKET / CUSTOMER ACQUISITIONTRACTION & ADOPTIONDOWNSIDES, RISKS AND THREATSTHE EXIT STRATEGYPATENTS / INTELLECTUAL PROPERTY / TRADEMARKYOUR FINANCIALSTHE FINANCING ROUND

37Be prepared not scared!Source: Startup Manufactory http://www.startupmanufactory.com/questions-investors-ask-startups-when-pitching/ STARTUP MANUFACTORY 2016

38You made it!

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ContactMatt Kuppers | Founder & CEOmatt@startupmanufactory.com

Letitia Seglah| Venture Developmentletitia@startupmanufactory.com

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39Startup Manufactory Ltd207 Regent StreetLONDON W1B 3HHUnited Kingdom

STARTUP MANUFACTORY 2016