Common Angels 2003
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Transcript of Common Angels 2003
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Team -7
SUDERSHAN SHARMA -1226108251
LAWI ANUPAM -1226108221
K.S.SRINIVAS -1226108132
COMMON ANGELS
Fools rush in where angels fear to tread
GITAM INSTITUTE OF INTERNATIONAL BUSINESSVISAKHAPATNAM
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Investment Stages
Five Stages: Seed
Start-up
Early Expansion
Mezzanine/Bridge
Most VCs have a preference for a particular
investment stage.
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ValuationValuation
Stage Criteria Methodology Range
Seed - Mgmt. track record Comparables, $400K to$1.5MM- Market size/growth What's the going
- Competition rate in the region- Investment to date
Start-up - Market size/growth Comparables $750K to 2.0MM- Working prototype?- Team complete?
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ContdContd
Stage Criteria Methodology Range
Early - Market size/growth Comparables $1.5 to $5.0MM- Revenue run rate- Gross margin %
- Performance to date
Expansion - Revenue run rate - 1X sales Varies- Profitability ratios - EBIT multiple- Performance vs. plan
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The Role of the VC
Board involvement
Management recruitment
Future capital raising Access to business network
Strategy development
Patience
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How Do VCs MakeMoney? Collect management fees
from L.P.s - 2 1/2%
annually Share profits with L.P.s -
20/80 split on investmentgains
5%
95%
Mgmt. Fee Investment Gains
How do VCs earn
their income?
Source of VC Income:
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VCs focuses
Areas of Focus: Management
Marketplace
Competition
Business Economics
Risks
Venture capitalists tend to focus on five specificareas
when evaluating a company:
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The Venture Capital Process
Business Plan
First Meeting
Second Meeting
Term Sheet
Due Diligence Negotiations
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Exit Strategies
Sale or MergerMost likely exit Initial Public Offering
Small fraction go this way Redemption
Least attractive
Management buy-out
Generally not possible
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Introduction
Common Angels was founded in June 1998 and is headquartered in
Lexington, Massachusetts
Common Angels is a venture capital firm specializing in early stage
investments. The firm seeks to invest in software, telephony, semiconductors, RFID, and
medical devices not requiring extensive trials.
It primarily invests in companies based in Boston Area.
The firm typically invests in series A between $500,000 and $5 million with
the total investments less than $20 million.
The firm prefers to have a seat on the companys board of directors in its
portfolio companies.
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Three Exceptional Rules
1. Attract High Quality opportunities & Entrepreneurs
2. Able to access those opportunities & decide to allocate
scarce resources
3. Assist Entrepreneurs in building companies that enable
them & common Angles
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FACTS about COMMON ANGELS
Invested in more than 23 billions in more than50000 venture.
It had network of 70 accredited private investors.
Helped more than 115 companies. Out of which 100 were sold & 3went for IPO.
It had 70 members part time & full time members.38 limited
members.
All the members where interested in investing capital for the firms.
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Turning Point..
In 2000 due to dot com crash IT industry came to halt.
In April 2001 2002 360 companies where shut down.
Common Angels business also decreased from 2000 deals
to 700 deals & from $28.4 billions to $5 billions.
Then they thought of focusing on non-IT technologies
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