Post on 30-Aug-2020
angelonenetwork.ca
Angel One Investor Network
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angelonenetwork.ca
Angel One Investor Network
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A member-based, not-for-profit organization for accredited investors who live, work or have strong interests in Oakville, Burlington, Hamilton and other communities at the western end of Lake Ontario. STATS 38 Members in Good Standing 4 Closed Deals Over $1.5 million invested Due diligence underway with 5 more companies
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Angel One Investor Network
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Angel Backed Successes
DocSpace sold to Critical Path for over $750 Million in 2000.
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Angel One Investor Network
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Angel Backed Company Exits
• Radian6 (NS) – Salesforce paid $326 million in March 2011
• Q1 Labs (UNB) – Acquired by IBM Oct. 2011 ($ undisclosed)
• Sentinelle Medical (ON) developer of MRI coils and diagnostic
software – Hologic paid $85 million in July 2010
• DNA Genotek (ON) saliva testing kits to collect and preserve
DNA– Purchased by OraSure Technologies Inc. for US $53M in
July 2011
• BumpTop (Toronto) –$1.65 million in seed funding from angels
and VCs: acquired by Google at ~$25M to $35M April 2010
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Angel One Investor Network
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Investment Landscape
Syndicates of VC Funds
Syndicates of Angels
Angel Investors
Traditional Big Venture
Capital Funds
Small
Venture Cap Funds ≤$75
$10 to $100
Million
$5 to $10 Million
$10 to $100 K A
mo
un
t In
vest
ed in
Co
mp
any
Risk
Maturity Stage
Concept Start-up Growth Expansion
Govt.∕Quasi- Govt. Sources
Seed & Start-up Funds
Angel Funds
Friends & Family
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Angel One Investor Network
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Initial review by ED
Company applies to Angel one
Company meets
criteria?
Screening Committee
review
Investment meeting
Due diligence with interested Angels
Opportunity subscribed
Regular up-dates to and follow-up by
Angel One
Company given feedback and referral to
RICs/others
Our Process
Yes
No
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Angel One Investor Network
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• Typical angel investment ~$25K
• 10 investments = $250,000 invested
• 100% reserves, another $250,000
• 10% of Net Worth ($500K/10% = $5 million)
• Therefore:
— Minimum net worth for angels = $5 million
Angel Investor Profile
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Angel One Investor Network
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• 1-2 in 10 investments will produce almost all of the ROI for the
portfolio
• These successes must yield 20 – 30X ROI
• And… they cannot pick the winners
• Therefore, all portfolio companies must demonstrate the
opportunity for a 20 – 30X return on investment
Size of Each Opportunity
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Angel One Investor Network
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• VCs exit in 3-7 years (assume 5)
• Angels invest earlier and expect to exit in 5-7 years (assume 7)
• A balanced angel portfolio contains ten companies
• Consequently, angels should invest in 2-3 companies per year
— Build to ten company portfolio gradually
— A portfolio of companies in all stages of development
— Good balance for investors time
Exit Strategies
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Angel One Investor Network
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• Current market: back to fundamentals of investment & growth
• Angel values: patient, value-added investing, local/regional
focus, invest with 5-7 angels on average
• Angel investments are exceeding VC investment dollars
• Joining angel groups – 50% of groups formed in past 3 years
• Federal government is encouraging angel investment: FedDev
“Investing in Business Innovation” program: 1/3 gov’t funding
matching 2/3 qualified angel investment – Angels Lead!
Current Angel State
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Angel One Investor Network
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What do we look for?
• Business opportunity with superior products
• An understandable business model
• High growth potential
• Global prospects
• Sustainable competitive advantage
• Quality management team
• Customer engagement
• Realistic and alternative exit strategies
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Angel One Investor Network
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Valuation
Scorecard Method
• Determine median value for pre-revenue companies in the region: pre-revenue companies rarely worth more than $1m
• Determine critical criteria
• Assign % weighting to each critical criteria
• Assess company against the criteria
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Angel One Investor Network
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Hypothetical Evaluation
Valuation Criteria Weighting Full Marks Management 30% Quality team in place
Size of Opportunity 25% Huge, global opportunity
Product and Technology 15% Disruptive, prototype complete
Marketing/Sales Channels 10% Sales team not in place
Competitive Environment 10% Many small players lacking technology
Other Factors 10% Partners, foreign market
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Angel One Investor Network
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Hypothetical Evaluation
Criteria Analysis Weight Factor Input
Management On board 30% 120% .36
Size of Opportunity
enormous 25% 130% .325
Product and Technology
Disruptive, prototype okay 15% 130% .195
Marketing/Sales Channels
Sales team not in place 10% 50% .05
Competitive Environment
Many small players lacking technology
10% 110% .11
Other Factors Partners, foreign market 10% 80% .08
Weighted average multiple = 1.12
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Angel One Investor Network
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Pre-Money Valuation
Median value $1,500,000
Weighted multiple X1.12
Pre-money valuation $1,680,000
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Angel One Investor Network
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1. First Meeting – provide the big picture:
• Team, tech, territory
2. Get a quick “no” – ask why
3. Get to a “maybe” – due diligence team forms
4. Deliver business plan and start building the “brick”
5. Be prepared to answer questions
6. Provide introductions to customers, suppliers, inventors
7. Provide a site inspection, let them “kick the tires”
8. Answer more questions
9. Don’t be greedy
Attracting Investors
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1. Ask around
2. Find out who else has invested
3. Be comfortable with the valuation
4. Complete the due diligence
5. Review shareholders’ agreement – are they protected?
6. Check for leveraged financing eligibility
7. Sign a subscription agreement and write the cheque
8. Monitor the investment and your performance
What Will Angels do?
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Angel One Investor Network
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• Many lone angels got burned in the dot-com collapse. Angels
see networks as a way of sharing deals, sharing due-diligence
and of reducing risk.
• Groups provide more efficient matching of entrepreneurs and
investors.
• Market recognition of an angel group leverages public
presence and grows a network of members to increase quality
deal sourcing and opportunity review.
• Enhanced economic power in group investing.
Angel Groups
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Angel Groups
• 30 member groups • 4,000 accredited investor members • Est. national total: 15,600
source: NACO
• 150 member groups • 6,500 accredited investor members • Est. national total: 125,100
source: University of New Hampshire's Center for Venture Research
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Angel One Investor Network
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Thank You
Questions?