Basics of Angel Investing

Silvia Armitano Mah

•  Wealthy individuals / Accredited investors •  Invest in high risk, early stage ventures •  Reserve a portion of their total investment

portfolios to provide emerging companies with seed and startup capital through direct, private investments.

•  They want a better return than they’d get in a normal investment

•  Typically looking for 5-25% stake

What is an angel investor?

What Angels Want •  Scalable •  High gross margins •  Large niche market

•  Unfair competitive advantage

•  Ready for customers

The Jockey or the horse?

Do you invest on the horse (=idea/business)

or the jockey (=founder/CEO)?

The Jockey

$ 1. It’s always personal

2. Angel Sweet Spot:

$150,000 – $1.5 million

3. Go to them EARLY ... but not too early

4. Most angels are ACTIVE investors

5. Angels like to make a DIFFERENCE

Angel Investing ...

It’s always personal Angels write checks out of their own accounts.

They want to connect with entrepreneurs and

their businesses, but also with people.

Founders: Be authentic,

not some PR story you've already concocted.

Angel Sweet Spot : $150,000 – $1.5 mil lion

•  Up to $25,000, the choice is usually self-funding. If you don't have that much money in, many others will be uneasy about taking part.

•  From $25,000 to $150,000, you're looking at friends and family, offering either common stock or convertible notes.

•  The angel sweet spot is between $150,000 and $1.5 million, more often raised from a number of individuals but sometimes from a single generous and well-off person.

•  In the $1.5 million to $10 million range, you're in early-stage venture capital in at least two phases, with half of the money up front and the rest paid in phases. More than this, and it's a late-stage venture fund.

Go to them EARLY.. But not too early Angels want to see early stage ideas, accept some risk, see opportunities

Founders: •  Working with angels may make sense at a

particular early stage of business growth. •  Going to them too early or too late will

minimize your chances of getting interest.

Venture Funding Stages Seed Money (proof of concept – Angel)

Start-up (Early-stage / Product development)

First-Round / Series A (Early sales & manufacturing funds)

Second-Round / Series B (Working capital, not turning profit)

Third-round / Series B or C (Expansion, turning profit)

Fourth-round (Finance the “going public” phase)

Stage 0: Friends, Family, and Fools

Stage Final: IPO or sale of entire company to a bigger company

Most angels are AC T IVE investors

Focus on YOU! Magnificent YOU!

Angles contribute their time and experience

Angels offer introductions to valuable contacts essential to the company's success.

Founders: Better 20% of something HUGE than

100% of something small

Angels like to make a DIF FERENCE

Angels typically don't make money from their investments. They go into deals knowing they might loose it all.

Angels are OPTIMISTIC and want to make a difference.

1/3 or sometimes 1/10 of early stage investments are hits,

meaning they return five times the investment or more.

Founders: Be clear with angels about the risks, threats and obstacles

your company might encounter and how you plan to mitigate them

What’s the state of female angel investing?

Business Accelerator

Join the movement of female funders helping female founders!