About Angel Groups
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![Page 1: About Angel Groups](https://reader033.fdocuments.in/reader033/viewer/2022061222/548c9f8cb47959d2658b45b2/html5/thumbnails/1.jpg)
UnderstandingAngel Investor
GroupsHow to Play the Game
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The League
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The Players
Paul Neeb,First Angels
Kalamazoo, Mich.
Ken Kousky,Bluewater Angels
Midland, Mich.
Loïc Couraud,Capital Community Angels
East Lansing, Mich.
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The Game• Deals & Business Plans• Filtering & Screening• Initial Selection• Validation & Due Diligence• Negotiation • Investment (1st Cycle)• Monitoring & Nurturing• Follow-on Investment • Payoff
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Get Deals, Business
Plans
Filtering Deals and
Plans
Interested in
Investment
Validate Business for Investment
Negotiate Terms of
Investment
Investment(1st Cycle)
Monitor and Nurture Business
Follow-on Investment
Payoff
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Get Deals Business Plans
• Online– Angelsoft.net– Company web presence
• Events– Universities– PR Campaigns
• References– Member contacts– Entrepreneurial Support
Organizations
,
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Filtering Deals Plans
• Quick Initial Review – 5 minute look– Executive Summaries!
• Venture-backable?– i.e. Fit for Angel
investment model– Not lifestyle business
• Group’s preferences– Industry Considerations– Regional Considerations
,
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Filtering Deals Plans
• Business (50%)– What product/service?– What benefits to target
market?– What are competitors? – Marketing strategy?– Stage of development?– Scalability?– Barriers to entry? Long term
competitive advantages?– Intellectual Property?
• Entrepreneur (50%)– Phone meeting– Live meeting
,
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Interest in Investment
• Members’ Meetings– 30 Minute Presentations
by Entrepreneurs– Discuss with Members– Call for a Champion– Form Committee to
Perform “Due Diligence”• Definition: An audit or
investigation of a potential investment.
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Validate Business for Investment
• Verify Business Plan– Check Sources– Estimate Optimism of
Predictions– Verify Conclusions
• Due Diligence Checklists– Angelsoft.net – Angel Capital Association
• Risk Assessment– Development Risk– Manufacturing Risk– Marketing Risk– Management Risk– Growth Risk
• 100+ Hour Process
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Negotiate Terms of Investment
• Funding Negotiation Converges with Final Due Diligence
• Outside Legal Help Brought In
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Funds Released
• Milestone-Based• Majority Control
Required for Most Deals
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Monitor and Nurture
• One Board-Seat Reserved for Angel Group Member
• Use Network and Experience to Support Management
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Follow On Investment
• Milestone-Based• Make Investment
Attractive for Purchase or VC-Backing
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Payoff
• Sell Company to a Bigger Company
• Recently Less Focus on IPOs
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Candy Castle