Building a local Ecosystemby John Sechrest

@sechrest

Mapping the Clusters

Including non-tech Clusters

Life cycle of a business

Outside Investment Stages

Angel Conference Model

20-60 companies apply 20-40 investors join LLC $5500 for each investor 10 weeks of due diligence Workshops for Angels and Entrepreneurs Large Final Event

How does Angel Investing work?

Company Pitches

Due Diligence Feedback

Detailed Event Program

Select an investment

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10

20

30

40

50

60

<1X 1X to 5X 5X to 10X 10X to 30X >30X

Exit Multiple

Per

cent

of E

xits

Angel Investing Distribution of Returns

UK: Overall Multiple: 2.2X

US: Overall Multiple: 2.6X

0

10

20

30

40

50

60

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Per

cent

of T

otal

Exi

tsDistribution of Returns by Venture Investment

Overall Multiple: 2.6X

Avg. Holding Period: 3.5 years

$20M

$40M

$60M

$80M

Blue bars: % of exits in that CategoryGreen Bars: $’s returned in that Category

Hold: 3.0 yrs.

Hold: 3.3 yrs.

Hold: 4.6 yrs.

Hold: 4.9 yrs. Hold: 6.0 yrs.

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Series1 Series2Revenue in (current portfolio): $84.6M +47% from 2011

FTE’s in (current portfolio): 535 +16%

Rev/FTE (current portfolio): $158K +27%

Raised $7.1M $88M cumulative

Economic Impact of Angel Oregon Alumni

As a reminder: Angel Investor Performance Project

More than half fail to return capital

Wins take longer to exit than losses

“Asset Class” return of approx 2.6X

10% of exits = 90% of cash returned

www.AngelResourceInstitute.org

Estimated Multiple of AO as a Portfolio

Multiple by year, if portfolio were cut off after that year

Assumes even investment in every presenting company

Underspecified Terms/Dilution as an imaginary portfolio

2006 2007 2008 2009 2010 2012 AIPP0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Series4Series3Series2Series1

5 Types of Angel Groups

Angel Networks 98% Managed Angel

Funds - Founders Coop

Passive Angel Funds – Side car funds

Active Angel Funds – Oregon Angel Fund

Angel Conference

Cities with Angel Conferences

Portland ( Since 2003 ) Bend Corvallis/Eugene ( Since 2009 ) The Gorge Medford Seattle ( Since 2012 )

WWW.SEATTLEANGEL.COM

Where are they now?Tracking the Angel Oregon

Alumni

Willamette University Angel Fund

6/2/13

Median Early Stage Pre-Money Valuation

*

*Including all rounds with angel groups before Series A

$2.5MMedian

$1.5M1st Quartile

$3.7M3rd Quartile

$0.11M

$6.6M

Robert E Wiltbank, Ph.D.wiltbank@willamette.edu

www.Willamette.edu/~Wiltbank

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10

20

30

40

50

60

<1X 1X to 5X 5X to 10X 10X to 30X >30X

Exit Multiple

Per

cent

of E

xits

Angel Investing Distribution of Returns

UK: Overall Multiple: 2.2X

US: Overall Multiple: 2.6X

0

10

20

30

40

50

60

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Per

cent

of T

otal

Exi

tsDistribution of Returns by Venture Investment

Overall Multiple: 2.6X

Avg. Holding Period: 3.5 years

$20M

$40M

$60M

$80M

Blue bars: % of exits in that CategoryGreen Bars: $’s returned in that Category

Hold: 3.0 yrs.

Hold: 3.3 yrs.

Hold: 4.6 yrs.

Hold: 4.9 yrs. Hold: 6.0 yrs.

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10

20

30

40

50

60

<1X 1X to 5X 5X to 10X 10X to 30X >30X

Exit Multiple

Per

cent

of E

xits

2X better multiple for 20+ due

diligence

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10

20

30

40

50

60

<1X 1X to 5X 5X to 10X 10X to 30X >30X

Exit Multiple

Per

cent

of E

xits

60% better multiple for deals related to industry

expertise

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10

20

30

40

50

60

<1X 1X to 5X 5X to 10X 10X to 30X >30X

Exit Multiple

Per

cent

of E

xits

Follow-On Investment from Same Angel Investor

3X better multiple in dealswhere the investor did not make

a follow-on investment.

30% of deals had follow on investments.

6/2/13

Diminishing Marginal Returns to Raising Capital

6/2/13

Diminishing Returns to Invested Capital

Private Acquisition Size from ‘96 to ‘06

Only 15%> $50M

… But Trending Up at Year EndMedian Angel Round Size Reaches Five Quarter High in Q4 2012

Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012$0.00

$0.50

$1.00

$1.50

Series1Series2

*

*Angel rounds include angels & angel groups only

$950K $950K $900K

$1.25M

$850K

$500K $550K $550K$620K $690K

$M

Median Early Stage Pre-Money Valuation Stays the Same in 2012

*

*Including all rounds with angel groups before Series A

$2.5MMedian

$1.5M1st Quartile

$3.7M3rd Quartile

$0.11M

$6.6M