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10/2011 Copyright 2011 - John Ason 1
Angel Investing
10/2011 Copyright 2011 - John Ason 2
Personal Background
25 years AT&T Bell Labs experience
Successful in stock market Angel investor last 15 years
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Angel Investments
Xlibris.com Dygest.com DoodleDeals.comKodingen.com SiteSimon.com ERANYC.com
Centrak.com OffTrackPlanet.com Ology.comDiapers.com HotList.com SocialFeet.com
CallunaVineyards.com Pogby.com Spling.comCarbomNanoProbes LiveLook.com Bikini.com
FulcrumGallery.com Geometrix SpatialLabs AdPilot Hooja MotionMathGames.com
MakeUsAnOffer PhlatBall.com IvyExec.com
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What is Angel Investing ?
Source of funds for early stage companies
Typically first “professional” level Typically $100,000 to $500,000 Experience / assistance provided
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Angel Profile
Usually private Ability to accumulate capital
Retired professionals Entrepreneurs
Financial return secondary concern
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What do Angels Want ?
A pleasant experience Excitement of growing a company Financial return
An environment to contribute / participate Management / oversight Contacts
An exit strategy
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Exit Strategies (descending order)
Chapter 11 / Disbanding Life style (put option) Buyout / Merger Venture Capital round IPO
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How to Find Angels ?
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How to Find Angels ?
Networking Venture groups Venture fairs Internet University lectures
Intermediaries
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What do Angels Want to See ?
Short focussed business plan Quality management / people Reasonable valuation (20-30%
equity) Market validation
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Negotiating with Angels
Must be win / win Process is asymmetrical
Valuations fuzzy Angel contribution fuzzy Angels timeframe is casual / slow Angels do not HAVE to invest Angels can walk away at anytime
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Financial Returns
Ten times investment in 3 to 5 years
50% per year Lifestyle companies do not
qualify
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Company Culture
Speed, speed, speed Outsource everything Leverage / margins Compete / cooperate Open non-secretive
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Angels VS VCsMoney Own Other people’s
Revenues None $2 – 5 million
Management Partial Complete
Stage Early Expansion
IRR 50% 30%
Multiples 10X 2X – 4X
Risk High Low
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Evaluation Process Clear, concise, compelling, coherent
one page executive summary Very large potential (10X) Intellectually stimulating Marketing/sales skills Fundamental keystone patent Execution capabilities
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Negatives Feature proliferation (unique) “Problem solution” approach “Can’t explain must see” “Enabling” approach Product not company focus
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Exploding Angel Market Starting a company close to zero Validating a company close to zero Emergence of accelerators Emergence of Super Angels (Micro VCs) Emergence of AngelList Emergence of graphical investor decks
Dramatic increase in speed of angel investing
