angel investors presented by: chris golden chairman, boynton angels
TRANSCRIPT
Angel Investors
Presented by: Presented by:
Chris Golden Chris Golden
Chairman, Boynton AngelsChairman, Boynton Angels
September 2010 2
Agenda
What is an Angel Investor?Who are we? And Where?Where do we fit in the financing
cycle?Angel Deals – TypicalClosing Comments
September 2010 3
Angels - What is an Angel?
High Net Worth Individuals (Qualified Investors) Usually Male (15% -20% Female)* Retired and/or Cashed Out High Tolerance for Risk Experienced Entrepreneurs/Executives Interested in Giving Back Expect “Reasonable Return” Increasingly Moving Into Groups Private!!!! *Angel Capital Association
September 2010 4
Years investing 7 Number of investments 7 Total exits/ closures 1 Years as entrepreneur 13 Number of ventures founded 2 Age 57 Percent of wealth in angel investing 10% Education Masters
degree
Angels - - - Who Are We?
Source: Angel Capital Association
Where the Angels*Are!
* ACA Groups* ACA Groups
259,480 Angels (USA) 259,480 Angels (USA) $17.6B Invested in 57,225 deals$17.6B Invested in 57,225 deals259,480 Angels (USA) 259,480 Angels (USA) $17.6B Invested in 57,225 deals$17.6B Invested in 57,225 deals
2009 DATA2009 DATA2009 DATA2009 DATA
September 2010 6
Stage
Angel Organizations
Funding Gap between $500,000 and
$2,000,000/$5,000,000(depending on region)
Source Founders, Friends and
Family(Fools)
Venture Funds
$2,000,000/$5,000,000 and up
Pre-Seed Seed /Start-Up
Early Later
Investment
IndividualAngels
$25,000 to$100,000
$100,000 to$500,000
Source: Angel Capital Association
The Investment Gap
Research Funds, SBIR, GrantsResearch Funds, SBIR, Grants
September 2010 7
Investment Criteria Typical
Targeting Life Sciences (Not Pharmaceuticals), energy, communications, and software
Location within a 2 hour driving radius Seeking no more than $2M with minimal follow on
funding 5-7 Years to liquidity w/potential to generate a
strong ROI Clear Market Need and Value Proposition Exceptional Management with Domain Experience Strong Intellectual Property Position A COMPELLING STORY!
September 2010 8
Closing - -
Angels are active early stage investors/more Groups are players now Syndication of deals is common Deals (funds in) have major economic impact VC’s and Angels act more alike Angels and early stage technology are
symbiotic
September 2010 9
Chris Golden Chris Golden Boynton AngelsBoynton Angels
617-413-5787617-413-5787
[email protected]@boyntonangels.com
10
Reaching Out To Angels
Angels tend to be hidden/private Groups offer best access ACA offers widest access Angelsoft – On Line Access Profiling Angels and Groups VC – early stage – together more than ever Communications – Reaching out
11
Group Structures
LLC Umbrella – Individual InvestorsFund – Professionally managed pool of
funds. Hybrid – Group may have individual
investments and a side car fund.
12
Angel Investment Deal Trends
Angels equity deals look increasingly like VC deals Too many bad consequences of not adding all types of protection
Angels groups are focused on a range of deal sizes now enabled by syndication deals (many single rounds over $1m)
Angel equity deals trends
More participating preferred deals recently
Anti-dilution (weighted average) for deals thought to be over priced
Cumulative Dividends
Board membership designed to persist
Angel equity deals are increasing as a percent of deals
Most deals have one or more follow on rounds
13
Angel Investment - PLUS
Money Management Experience Expertise - Domaine Contacts Maturity Mentor
14
Angel Investment Deal Trends
Angels continue to use Convertible Notes as an investment instrumentThese notes collect interest (8-10%), convert into preferred
stock in a future round
If the company never closes a qualified deal this is debt
Usually discounted on the price of a future equity round as a risk adjustment
(10-30% discount to next round pricing) on average . . . . or
Issue common warrants
Trends include default pricing on notes and a noteholder agreement to provide board rights
15
The Investment Process
Screening
[89]
Presentation
[23]
Deal Input
[123]
LeaderDue Diligence
Terms
[8]
InvestmentMaybe!!!
[ 3 ]
Monitor Report
Board Seat
Source Deals Members, ACA, Venture Forums, Other Groups, Contest, Networking
Source: Boynton Angels/ACA
26 % Avg. IRR