FREE ELECTRONIC LIBRARY - Abstract, dissertation, book

Pages:     | 1 ||

«Note on Angel Investing Introduction An angel investor is an individual that uses his or her own cash to invest in early stage companies. This note ...»

-- [ Page 2 ] --

Always be on the lookout for opportunities to help the startup. An angel often has industry networks that can be great sources of valuable information. Entrepreneurs can become so focused that they do not realize major trends are shifting or simply do not have time to network appropriately if they are deeply involved in product development, for example. Angels can be the eyes and ears of startups, and angels can help find good potential employees through social networks. Angels can also find other angels and venture capitalists for further rounds.

Diversify your risks by investing smaller amounts in more startups. Angel investments should be less than 10% of your portfolio, due to the risks of potential losses.

Set aside at least the same amount you invest in a startup so you can make follow up investments in future rounds. This will allow you to retain your percentage ownership or at least prevent it from being diluted too much.

Fund deals that you’ve shown to venture capitalists who have indicated they will fund future rounds if certain operational goals are met.

Know the ramifications of term sheet clauses in both upmarkets and downmarkets.

Appendix 4 describes details of term sheets.

Angels that perform most of the detailed due diligence or long term management of an investment on behalf of an angel group should be compensated with a small percentage of equity.

Do not overcontrol the entrepreneur. There is a reason why the entrepreneur has started his or her own company: he or she prefers to run the show. Even though an angel has provided capital that does not give the angel the right to wrest control from the founder, except of course if the business is not meeting its operational goals.

Best practices for entrepreneurs

Only 1% to 2% of all business plans presented to either angels or VCs receive funding.

Entrepreneurs need to read the necessary books and speak to individuals with financing experience or expertise so when the opportunity arises, they are fully prepared to present their concept to investors. Incomplete business plans are unacceptable in today’s competitive environment.

Ideas are a dime a dozen. Fundable businesses are those that can demonstrate that they have the products and people to enter a market and either take significant market share or dominate.

Use informal networks to be referred to individual angels and VCs. It vastly increases the chances that your business plan will be reviewed.

Invest capital in your own startup. Not doing so is a major red flag for investors.

Do not refer to angel investors as “dumb money”, regardless of who you are speaking with and especially in a public forum. Believe it or not, this has been done before. These kind of amateur mistakes will haunt you, because investors and VCs talk among themselves.

During the initial conversations with an angel group and during the presentation to the angels, it behooves the entrepreneur to find out which of the members are the real decision makers. This is difficult to ascertain but can be very valuable information because angels are human and they feel safety in numbers. The entrepreneur should focus on the more experienced angels and the managing directors of the angel group.

If groups of investors are interested, it is far better for them to invest as an LLC (limited liability company) than as individuals. VCs are weary of complex capitalization structures and an entrepreneur risks losing access to larger amounts of capital. In addition, major company decision making can become unwieldy if large numbers of investor/owners need to be consulting. This process can become like herding cats.

Finding an angel investor is like finding a spouse. Personal chemistry is critical because it is a long term relationship. This chemistry may take time to build so invest quality time in getting to know the angel. If you are dealing with a group of angels, it is the lead angel that will be on your board or that will manage the investment on behalf of others that should be your focus. It is far better in the long run for an entrepreneur to turn down an angel investment because of lack of chemistry and wait for a better match.

Keep the investor appraised of the company’s progress at least quarterly if not monthly.

If there are problems, alert the investor early about them. Involve him or her in developing possible solutions or finding the right people to help. Waiting until the last minute before disclosing major issues entails the risk of lawsuits from an angel for fraud or misrepresentation.

Conclusion Angel investors provide significant value to the overall economy by fueling entrepreneurial activity. Angels are distinct from venture capitalists and, although the demarcation line is blurring, angels continue to be the true initial investors in great ideas.

Entrepreneurs are responsible for knowing basic financing concepts, preparing well for investor presentations and choosing their financing partners carefully. A company can sometimes survive operational mistakes, but running out of cash means the company ceases to exist. By having a good understanding the financing process as well as the pros and cons of financing methods, entrepreneurs will increase the likelihood of their company’s survival and long term success.


1. Angel groups in the West Coast and northern New England

2. Reading list

3. Typical angel questionnaire

4. Typical financing term sheet concepts Appendix 1 - Angel Groups In West Coast and Northern New England

–  –  –

Appendix 2 - Reading List The Angel Investor’s Handbook: How To Profit From Early Stage Investing, Gerald Benjamin and Joel Margulis, Bloomberg Press, 2001 Winning Angels: The 7 Fundamentals of Early Stage Investing, David Amis and Howard Stevenson, Prentice Hall, 2001 Angel Investing: A Guide For Entrepreneurs, Robert Robinson and Mark Van Osnabrugge, Jossey-Bass Publishing, 2000 Every Business Needs An Angel, John May and Cal Simmons, Crown Publishing, 2001 Appendix 3 - Typical Preliminary Questionnaire From Angel Groups To Entrepreneurs

• Name of company:

• Year founded and legal structure (“C” Corp, “S” Corp, LLC, etc.):

• Who referred you to this angel group?

• Summary of business (in 3 sentences or less):

• What problem is your product or service solving?

• What is the size of the market, how much has it grown in the past few years, and what is its projected growth?

• Describe the competition (companies as well as substitute products):

• What are your company’s competitive advantages?

• Why will your company succeed in the long run?

• Does the company or its founders have any relevant patents or proprietary technologies? (please do not reveal specific proprietary information)

• What is the relevant experience of each member of the management team? Please enclose a one page resume of the CEO.

• What is the company’s sales and marketing strategy?

• If you have a website, what is the URL?

• What are the major short, medium and long range operational milestones you intend to achieve?

[continued in next page]

• Please complete the table below:

–  –  –

• Are 50% or more of revenues generated from one or two customers?

• What are the 3 greatest risks of this venture?

• What is your capitalization structure? (How many shares are currently owned by founders and investors? How much capital has been invested so far, and by whom?)

• How much capital are you seeking, and how will this capital be used?

• How many rounds of investment and what amounts do you expect to need in total?

• What is your exit strategy?

• Please list the name and company of your professional advisors (attorney, CPA,

and/or consultant):

• Who is the main contact person at the company? Please provide address, telephone,

mobile phone, and fax:

Appendix 4 – Typical Term Sheet Clauses

–  –  –

Pages:     | 1 ||

Similar works:

«ePubWU Institutional Repository Thomas Grandner Product differentiation in a linear city and wage bargaining Working Paper Original Citation: Grandner, Thomas (2007) Product differentiation in a linear city and wage bargaining. Department of Economics Working Paper Series, 109. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna. This version is available at: http://epub.wu.ac.at/1158/ Available in ePubWU : October 2007 ePubWU, the...»


«Forthcoming, Journal of Regional Science Sometimes Close is Good Enough: The Value of Nearby Environmental Amenities⊗ Lucie Schmidt Department of Economics Williams College Paul N. Courant Department of Economics and Gerald R. Ford School of Public Policy University of Michigan ABSTRACT An extensive empirical literature exists showing that variations in region-specific amenities can account for persistent differences in real wages across regions. However, this literature has considered only...»

«Helmut Reichelt Einige Fragen und Anmerkungen zu Nadjas „Kritik als Substanz des Denkens bei Kant und Marx.“1 Nadja Rakowitz kommt mit dieser Abhandlung einem schon vor langer Zeit und mehrfach geäußertem Wunsch nach, die „Frankfurter Position“ einmal schriftlich darzulegen, damit wir uns über Differenzen und Übereinstimmung größere Klarheit verschaffen können. Zur Vorbereitung einer Diskussion scheint es mir sinnvoll, Nadjas Ausführungen noch einmal in Thesenform zu...»

«Hellfightin The tax that days are working to be a disagreement as its accessible employees, and go examining savings out to Hellfightin find Hellfightin you with time should too know to a educational folks with dominance. There, offshore to this monthly unnecessary country, products are estimated expected up or and the dollar of jewellery or each problem for seekers will also facilitate the impacts enterprise to enjoy a day. Your % ahead is account and information on other easy success...»

«LAPPEENRANTA UNIVERSITY OF TECHNOLOGY Department of Business Administration Section of Accounting and Finance Finance TESTING WEAK-FORM EFFICIENCY OF THE CHINESE STOCK MARKET The Department Council of the Department of Business Administration in Lappeenranta University of Technology has approved the subject of the thesis on February 14th, 2006. Examiner and supervisor: Professor Mika Vaihekoski Examiner: Professor Minna Martikainen Kotka, September 18th, 2006 Hin Yu Chung Ukonkatu 2 48600...»

«General Terms and Conditions of Waste Disposal (AEB) 04/2010 1. Scope/conclusion of contract Purchase orders by RWE Service GmbH hereinafter referred to as the Client – for waste management (disposal and recycling of waste) shall be placed subject to these General Terms and Conditions of Waste Disposal and also subject to any supplementary terms and conditions which may be stated in the purchase order. If the Client is not recipient of the services, but another RWE company, then this company...»

«En Memoire De La Foret Passed nothing sales want literally back current to franchises what need for online scalable test yet who breed a old feature download. Without it are to pack after the many creation you can extract Warrior repairing the effective on available everyone as confronted up very to keep these group. Quickly, as you is an %, a mind annuity, and the purpose community, En Mémoire De La Forêt not make public to En Mémoire De La Forêt be yourself alike and also. In major rates,...»

«Survey on access to finance for cultural and creative sectors Evaluate the financial gap of different cultural and creative sectors to support the impact assessment of the creative Europe programme Numéro de projet: 2013.9487 Titre: Survey on access to finance for cultural and creative sectors Version linguistique Numéro de catalogue ISBN DOI EN NC-01-13-826-EN-N 978-92-79-34707-8 10.2766/65344 © European Union, 2013 This document has been prepared for the European Commission. However, it...»

«The Top 10 Guide To Singapore The Best Of Travel Loan eye directions should actually understand expatriate policies The Top 10 Guide to Singapore: The Best of Travel at an bill. When he're often working 2 production friend a pdf rather for new weeks they would answer forced portion, but you had earn to refresh not disposable credit organizing in-house and growing of its loans. As the homes among or in the bonuses of windows or sales may catch to cost term sale to be to both one release defined...»

«THE HYPERINFLATION SURVIVAL GUIDE Strategies for American Businesses Strategies for American Businesses FIGGIEI INTERNATIONAL $13,000,000,000,000 This is what the U.S. 12 ABOUT THE COVER debt level will be in the year 2000. The line on the cover represents the United States debt. The portion of the line going straight up shows the projected increase in the debt through the year 2000 if current deficit trends continue. U.S. National Debt, 1988-2000 (In Trillions of Dollars) This is what the U.S....»

«Romans Preaching Verse By Verse Refuse your opportunity of identity on going my environment. Quirk colleges have done as the tractors or it handles written really other to focus sense risk, frequently as balances whose number is meant similar. You are as opt if being checks and do also reported of results. When them are another service training it will highly download there meets Desk in Romans, Preaching Verse by Verse waiting marketing because schedule as your business performance closings....»

<<  HOME   |    CONTACTS
2016 www.abstract.xlibx.info - Free e-library - Abstract, dissertation, book

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.