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Wisconsin Science and Technology Wisconsin Science and Technology SymposiumSymposium
Angel Investments Angel Investments
July 18, 2008July 18, 2008
Pete MarsnikPete MarsnikManager, Chippewa Valley Angel Investors Network, LLC
715-878-9791 [email protected]
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
What is an Angel? What is an Angel?
High net worth individualHigh net worth individual SEC “Regulation D”SEC “Regulation D”
Desire to invest in early stage Desire to invest in early stage venturesventures
Provide Funding and/or ExpertiseProvide Funding and/or Expertise
Put the “smart” in smart moneyPut the “smart” in smart money
Individual or Network Individual or Network
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Why Angels? Why Angels?
Financing between 3F and Financing between 3F and InstitutionalInstitutional
Venture Capital Deals too bigVenture Capital Deals too big $10 million + $10 million + Typical Angel deals smaller equity Typical Angel deals smaller equity investmentinvestment $100,000 to $ 2 million$100,000 to $ 2 million
2007 – U.S. Angel investments $26 2007 – U.S. Angel investments $26 billionbillion
up 1.8% from 2006, 2006 10.8% over up 1.8% from 2006, 2006 10.8% over 2005 2005 12% more ventures, 10% more investors12% more ventures, 10% more investors 2007 exits – 61% M/A, 6% IPO, 33% 2007 exits – 61% M/A, 6% IPO, 33% bankruptbankrupt
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Founded in 2003 – currently 17 Founded in 2003 – currently 17 membersmembers
Portfolio contains 7 investmentsPortfolio contains 7 investments $ 3.1 million value of portfolio$ 3.1 million value of portfolio Typical round $100,000 to $400,000Typical round $100,000 to $400,000
$1,000 annual dues with Monthly $1,000 annual dues with Monthly meetingsmeetings
ProcessProcess Business Plan Screen versus criteria – Business Plan Screen versus criteria – Stage 1 Stage 1 Presentation – straw poll for Stage 2?Presentation – straw poll for Stage 2? Due Diligence – Term Sheet – Negotiations Due Diligence – Term Sheet – Negotiations Subscribe – interested members form new Subscribe – interested members form new LLCLLC Tracking/Additional investmentTracking/Additional investment Exit – 3-7 years to harvestExit – 3-7 years to harvest
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Criteria Criteria
Business Plan Business Plan Complete and Comprehensive Complete and Comprehensive
Sufficient Opportunity and ReturnSufficient Opportunity and Return Venture vs Lifestyle businessVenture vs Lifestyle business How will company make money?How will company make money? How will investor make money?How will investor make money?
Quality Management TeamQuality Management Team
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Criteria Criteria
Proof of ConceptProof of Concept
Desire for coaching/mentoringDesire for coaching/mentoring
Sustainable Competitive AdvantageSustainable Competitive Advantage Intellectual Property/PatentsIntellectual Property/Patents
Minimum $100,000 equity Minimum $100,000 equity investmentinvestment
Exit Strategy Exit Strategy
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Key Question 1Key Question 1
What is the Size of the Opportunity?What is the Size of the Opportunity?
Product and Market?Product and Market?
Scalable?Scalable?
High-Multiples Return on Investment?High-Multiples Return on Investment?
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Key Question 2Key Question 2
What is the Quality of Management Team?What is the Quality of Management Team?
Experience?Experience?
Skill Sets?Skill Sets?
Deficiencies? Deficiencies?
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Key Question 3Key Question 3
What is the Sustainable Competitive What is the Sustainable Competitive Advantage?Advantage?
Intellectual Property?Intellectual Property?
First mover?First mover?
Barriers to Entry?Barriers to Entry?
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Key Question 4Key Question 4
What is the Exit Strategy?What is the Exit Strategy?
How will the angels realize the return?How will the angels realize the return?
How soon?How soon?
Chippewa Valley Angel Investors Network, LLCChippewa Valley Angel Investors Network, LLC
Key Question 5Key Question 5
Is it in the Sweet Spot?Is it in the Sweet Spot?
Equity Stake sufficient to have influence?Equity Stake sufficient to have influence?
Board Member?Board Member?
Minimum Dilution?Minimum Dilution?
Manufacturing AdvantageManufacturing Advantage
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