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Top 5 Do’s and Don’ts Seeking Angel Investment ENET - SEEDING WITH ANGELS 11.6.18 JOHN HALLAL

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Top 5 Do’s and Don’tsSeeking Angel Investment

ENET - SEEDING WITH ANGELS

11.6.18

JOHN HALLAL

Page 2: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

My Journey

OrthoSupply

Seeking Angel Investment

DO determine readiness•Do you need or even want angel $$?

•Problem being solved/are existing solutions inadequate?

•Does your solution really differ from competition?

•Do you have traction? Prototype? Beta?

•Is this an “Angel Deal”?• 10x return in 5-7 years• Additional capital needs

Page 5: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

Financing for Start-UpsKaufman Foundation 2015

Page 6: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

DO master your market•K Y C

•How large is addressable market –specific data?

•Determine how you will reach and acquire customers• Google AdWords• Direct Sales• Online Advertising• E-Retailer

•Address typical sales cycle

Page 7: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

DO build a business model•Determine if you have a business or just a product

• Few companies survive on one or two products (e.g., umbrella)

•Build financial pro forma• Sales/revenue projection• COGs/customer acquisition costs• Likely lifetime value of a customer• Calculate monthly burn• How long will the capital last?

Page 8: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

DO understand use of funds•Amount of raise/terms

•Identify use of proceeds• Sales and marketing• R&D• SG&A too high?

•What will you prove with the capital?

Page 9: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

DO know your exit strategy•Identify potential acquirers

• Strategic v. Financial Buyers

•Identify market comps

•Be clear about value inflection points for selling

Top 5 Don’ts

Top 5 Don’ts1. Don’t have an unreasonable valuation

2. Don’t have a simple analysis about market penetration

3. Don’t underestimate customer acquisition issues or competition

4. Don’t expect easy or “dumb money”

5. Don’t give investors a 50-page plan to review. They don’t have the time.

Page 12: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

Executive Summary and Deck•Identify the problem

•Explain your solution

•Marketing and sales• (customer acquisition)

•Business model• How will you make money?

•Underlying magic/technology

•Competition

•Management team

•Projections and milestones

•Status and Timeline

•Exit (comps)

Practice, Practice, and Practice Some More

Page 13: Top 5 Do’s and Don’ts Seeking Angel InvestmentTop 5 Don’ts 1. Don’t have an unreasonable valuation 2. Don’t have a simple analysis about market penetration 3. Don’t underestimate

Thank you.

John Hallal

[email protected]

www.networkblueinc.com

Don’t underestimate us

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