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Presentation to Interactive Ontario on "Accessing Angel Capital from an Angel Investor Network"

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Accessing Capital From an Angel Investor Network. Your First Professional Investment - Who, What, When, Why, Where and How?

Text of Presentation to Interactive Ontario on "Accessing Angel Capital from an Angel Investor...

  • 1. Accessing Capital From an Angel Investor NetworkYour First Professional Investment Who, What, When, Why, Where and How?

2. 2Agenda What is Angel Investing Who is an Angel Investor Why Invest in Early Stage Companies The Benefits for Entrepreneurs Angel Network in Canada NACO 2013 Survey Angel Investment in Ontario Halo Report 2013 Angel Investing is a changing Q & | | 416.646.6235 | @mapleleafangels 3. 3Who Am I I am Gerard Buckley Founder & CEO of Jaguar Capital an Advisory Practice for GrowthCompanies in Governance, Financial Management & Funding Strategies Chairperson of Board of Directors, Maple Leaf Angels Corporation &Investor in eight early stage companies Nominated & Finalist for National Angel Capitals Angel of The Year in 2014 Certified Corporate Director of the Institute of Corporate Directors Previously Entrepreneur in Residence with Incubes (An Internet CompanyAccelerator) Past member of Small & Medium Enterprise Committee of The OntarioSecurities Commission Investment Committee of MSV University, Halifax, NS 32 yr. Career with Scotia Capital as a Financial Risk Management Advisor toFortune 200 Companies: Rogers, Irving Group, Empire Co., Four Seasons,Bruce Power, OPG, Province of Ontario, Ford | | 416.646.6235 | @mapleleafangels 4. What is Angel Investing Angel Investing is individuals investing their personalmoney in the equity or debt of a Early or Growth StageCompany Often referred to as Smart Money, it is where individualswish to invest their time or experience as well money in astart-up company. People wishing to give back their experience so others maybenefit which is often referred to as mentoring or servingon a company Advisory Board or Board of Directors Angel Investing is Active Investing not | | 416.646.6235 | @mapleleafangels 5. Who is an Angel Investor A person prepared to invest their personal orfamily money A person who can add value to the company An accredited investor as defined by OSC 45-106 A member of an angel network The majority of angel investment in Canada iscompleted by individuals >85% Estimate of Cdn Angel Investment is 916mm inapprox 1500 companies (VC about 2b) | | 416.646.6235 | @mapleleafangels 6. Profile of an Angel - MedianYears investing 9Number of Investments 10Total Exits 2Years as a Entrepreneur 14.5Number of ventures founded 2.7Age 57Percent of net worth 10%Education Masters DegreeAngel Resource Institute Source: Wiltbank Study | | 416.646.6235 | @mapleleafangels 7. Why Would Someone be an AngelInvestor Qualified Opportunities Opportunity referral Increased Capital Diversification High Risk Asset Class . Seeking High Returns Favourable Valuation and Terms in comparison to VCs Networking Portfolio company mentoring or engagement Shared Due-Diligence Advisory Board and Board of Director | | 416.646.6235 | @mapleleafangels 8. What Type of Companies Do AngelsInvest In? Companies who are in seed and early stage. In technology, life sciences, ict, health caredevices, med tech, clean tech, powersolutions, fin tech, .. Solve a Problem, Secret Sauce or technology....... USP, validated business model, Greatmanagement | | 416.646.6235 | @mapleleafangels 9. Equity Capital Life | | 416.646.6235 | @mapleleafangels 10. Factors that appear to impact investoroutcome Due diligence time: More hours of due diligencepositively related to greater returns (> 40 hours) Experience: An angel investor's expertise in theindustry of the venture being invested Participation: Angel Investors that interactedwith their portfolio companies at least a coupleof times per month mentoring, coaching,providing leads and monitoring performanceexperienced greater | | 416.646.6235 | @mapleleafangels 11. Solo Angel Investing Process is time-consuming Deal sourcing Reading plans (MLA sees 250 Business Plans a year) Meeting with entrepreneurs Due Diligence is difficult Finding Vertical experience May require using outside experts Legal Support is Expensive Most have Family Offices Super AngelsAngel Resource | | 416.646.6235 | @mapleleafangels 12. | | 416.646.6235 | @mapleleafangels 13. 13Entrepreneur Benefits Large capital source Broad pool of Knowledge & Contacts Efficient Process Capital Connections In many provinces there is investor tax credit Leverage sources of funding (IAF, IBI, BDC etc.) Focus on value-add and advice, not the | | 416.646.6235 | @mapleleafangels 14. 14Entrepreneur Tips Find your lead investor early Investors dont have to be in tech Most Decks Suck Make yours Good Set a deadline Put money in yourself, it goes a long wayMichael Katchen - | | 416.646.6235 | @mapleleafangels 15. Selection Criteria Pre-seed Investments up to $200k Seed investment should be from $250k to $500K Early stage investments should be from $350k to $1,500K Valuation 1 to 3.5 million (Halo 2013 median 2.5m) The stage, quality of the management team, valuationand technology of companies are more important thanthe sector criteria Quality is more important than quantity In Canada 5% of companies get funded (95% dont) In Silicon Valley (1/300) get | | 416.646.6235 | @mapleleafangels 16. Investment Process1. Pre-screening MLA Staff2. Curbside Mentoring or Individual Member Mentoring3. Present to Investment Review Committee4. Present at members meeting5. Due-diligence Committee is formed and led by a member6. Term Sheet is negotiated & agreed between parties7. Investment is papered by lawyer8. Member is appointed to board9. Quarterly company reportingOutlined on MLA | | 416.646.6235 | @mapleleafangels 17. What Angels Look For High anticipated growth rate Scalability Experienced management team Sustainable competitive advantage Barriers to entry ie. Exclusive IP Clear strategy for commercialization Proof of concept or enterprise level validation Business model anchored in Reality Investor exit strategy in 5 to 8 years Investing in what you know vertical expertise Coach ability of the entrepreneur Amount of dilutive capital | | 416.646.6235 | @mapleleafangels 18. Angel Networks in Canada NACO National Angel Capital Organization 33 Angel Groups in Canada They have collectively over 2100 investors Three large groups accounted for 58% The majority have fewer than 50 members 75% of groups set up since 2007 68% not-for-profit, 14% for profit & 18% not incorporated Vast majority do volunteer shared due diligence 12 Angel Groups in Ontario Keiretsu Forum & Golden Horseshoe Venture Forum are PrivateFor Profit Angel | | 416.646.6235 | @mapleleafangels 19. Canadian Angel Group InvestmentActivity 2013 199 Investments in 2013 totaling $89 million, an increasefrom 2012 of 13 investments and a increase ininvestment from 40.5 million Average investment is $504k up fr $314k 2012 50% of angel groups made over 6 investments in 2012,an increase of 20% over 2011 Of over 2100 investors 55% - Ont & Que, 40% West, 5%Atlantic ICT (32%), Life Sciences (23%), Clean Tech (9%) Valuation Median $5.0m, Mean 2.06m 55% of transactions involved a | | 416.646.6235 | @mapleleafangels 20. Angel Networks in Ontario Network of Angel Organizations - Ontario Funds 12 Angel Groups They have collectively over 679 investors Have completed 328 investment rounds since 2007 for $102 million There are 14 Investment Clubs in Ontario that dont receive funding They have collectively over 192 members Have completed 62 investment rounds since 2007 for $33 million Many of the clubs are Boutique Investment Dealers and VCs who takea interest carry and management fees on their investments Three large groups accounted for 58% The majority have fewer than 50 members 75% of groups set up since 2007 Vast majority do volunteer due diligence Keiretsu Forum & Golden Horseshoe Venture Forum are examples ofPrivate For Profit Angel | | 416.646.6235 | @mapleleafangels 21. Angel Resource Institute Halo Report 2013 Median Angel Round Size $600K in 13 and Q2 14 similar to 12 Pre-Money Valuations continue to climb at $3M in Q2/14;however, top valuations increased from $6.6M to $9.3M 72% of deals occur in angel groups home states 73% of Angel Deals are Syndicated or Co-Invested Median Round Size $2M in Q2 14 from $1.5M in 2012 whenco-invested Share of Deals by Sector - Internet 38.5%(+), Healthcare19.6%(-), Mobile & Telecom 16.2%(+), Software (non-Internet/mobile) 4.0%(-) Interesting that the top US angel group in 2013 is Golden Seedswith 300+ members invests predominately in women led &controlled | | 416.646.6235 | @mapleleafangels 22. Traditional Angel Network is Changing Currently Southern Ontario Angel Investment community has 12Angel groups Government programs ( IAF, MaRS, OCE, IBI) Online - Angel List, Syndicates, Funders Club, The Funded, Gust Y Combinator, Tech Stars, 500 Start-ups, +110 Accelerators in Canada. Consolidation occurring to access govt funding

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