Historic Inflection Point

Historic Inflection Point

Web 2.0 was about creating community, content, and focused on B2C (Facebook, Pinterest, Tumblr, LinkedIN

Web 3.0 is taking some of those principles and putting them to work in B2B silos

Where Should You Invest To Increase

Return?

Where Should You Invest To Increase

Return?

“Fish Where the Fish Are”

Data on Midwestern B2B Verticals

Data from Corum Group; Q1 2013, actual exits

Healthcare-3.95x on sales 21.8x on EBITA

Fin Service-3.49x on sales 14.05x on EBITA

A/E/C-2.80x on sales 14.43x on EBITA

HR-2.12x on sales 53.54x on EBITA

CRM-3.83x on sales 18.53x on EBITA

Supply Chain-5.36x on sales 40.56x on EBITA

Money Money Money!

Money Money Money!

1 Trillion waiting to be deployed by Private Equity

Over 300 Billion on Corporate balance sheets

Strategic Acquisition for employees or IP

New ExitsNew ExitsFamily offices buying for cash flow

New entrants to the market from outside the US (Bosch, Shuanghui)

Exit Market is BIGExit Market is BIG

Demand is there

Problem is there are few opportunities

Factors For ExitsFactors For Exits9/10 companies fail

Investors don’t invest enough

Investors investing in round 1, and done

Spray and pray

No information arbitrage

Investing in companies where investor has no experience

Risk takers instead of risk managers

Learning curve effects of angel investing-curve is steep and hard

Pick Jockeys not horses

Passive investors serve on boards-active investors make things happen

Some Problems in the Midwest

Some Problems in the Midwest

Few funds want to lead Series A investment

Few funds dominate one vertical

Developed West Loop Ventures around that thesis

Deal FlowDeal FlowAlways a problem

Need to see lots of deals so there isn’t adverse selection

Need diversity to look at solutions from variety of angles

Even if you don’t invest, you learn something

Remedy For Deal Flow

Remedy For Deal Flow

Join or affiliate with an angel group

Mentor at an accelerator like TechStars

Network with other angels-talk

Attend Meetups where Entrepreneurs are

Work At University Entrepreneur Ctrs (for free) like Polsky Center at Univ Chicago

Invest in a Series A fund

Ensuring SuccessEnsuring Success

Talk to potential exit partners prior to investing

Get management references

Make sure you can fail fast

Cultivate next rounds of investment

Network, Network, Network!

Ways to Grow Without Investing a

Dime

Ways to Grow Without Investing a

DimeMentor companies

Take a meeting, become a customer

Open your Rolodex (for free) make introductions

Talk about Midwest startups with your peers

Download their apps, use, and give feedback

Q and AQ and A• Co-Founder of Hyde Park Angels (www.hydeparkangels.com)

and West Loop Ventures

(www.westloopventures.com)

• Blog at pointsandfigures.com Tweet @pointsnfigures

• Active investments in: KapowEvents.com, YCharts.com, Brilliant.org, Alltuition.com, Desktimeapp.com, UICO.com, Supply-vision.com, Tallgrassbeef.com, Dabble.co

• Trustee at the National World War Two Museum (http://www.nationalww2museum.org) in New Orleans, Louisiana