Viral Angels Business Opportunity/ Viral Angels Review/ Viral Angels Low Risk High Return Strategy
Don Morrison Chairman of Deal Flow BlueTree Allied Angels · Accidental Retailer Recovering...
Transcript of Don Morrison Chairman of Deal Flow BlueTree Allied Angels · Accidental Retailer Recovering...
How to Pitch to Angels
DonMorrisonChairmanofDealFlowBlueTreeAlliedAngels
AccidentalRetailer
RecoveringEntrepreneur
How to Pitch to Angels Beforeyoucanbegintoputyourpitchtogether,itisimportanttounderstand:• Whoangelsare• Thefundingprocess• Angelsplaceinthefundinglandscape
Who are Angel Investors? • O6ensuccessfulentrepreneursorre7red
professionals• Accreditedinvestors–SECdefini7on• Investtheirownmoney(notmoney
managers)• Generallyinvestinlocalcompanies• Investinbusinessesnotrunbyfamilies• Investindividuallyoraspartofanangelgroup
Why Angel Groups? • ThePowerofAggrega7on• Mi7gateRisk• HigherQualityDealFlow• GreaterInvestmentClout• PorNolioManagement
Advantage of Angel Groups for Entrepreneurs
• Diversifiedbusinessexperience• Extensiveindustrycontacts• Opportuni7estosyndicate
Growth in Number of Angel Groups
Sources: Center for Venture Research (pre 03 data) and Kauffman Foundation/ARI (04-13 data)
050
100150200
250300350
400
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
The Funding Landscape
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TechnologyDiscovery
Proof-ofConcept
IniEalDesign
Develop&Test
Build&Deliver
Pre-seedFunding
SeedFunding
ExpansionMezzanine
OperaEng&Growth
Start-upFunding
$25K$100K$500K$2M$10M$50M
$100K$500K $2M$10M$75M$250M
Company - Product
Stage
ScaleUp
FundingStage
Friends&Family
SeedFunds
VentureFunds
Founder
InsEtuEonalEquity
Loans/BondsGov.EconomicDev.
SBIRPhase1&2
IndividualAngels
AngelGroups
Sourceof
Funding
InvestmentNeeded
CompanyValuaEon
BusinessIncubators
Angels Fund Majority of Startups in USA
Sources: Center for Venture Research/ UNH; NVCA 2014 Yearbook; PwC MoneyTree
• $24.8billion• 71,000deals• 32,000seed• 29,000earlystage• 9,200expansion• >298,000individuals
AngelInvestors(2013)• $29.6billion• 4,050deals• 120seed• 1,375earlystage• 2,550later/expansion• 548ac7vefirms
VentureCapital(2013)AngelsProvide~90%ofOutsideEquityforStartups
Angels Fund Nearly All Seed/Early-Stage Deals…
Without angels few startups would make it to VC, PE or IPO funding
VCTotal=1,495
AngelTotal=61,000
Number of Deals in 2013: Angel Investment and Venture Capital
Source: Jeffrey E. Sohl, Center for Venture Research and 2013 NVCA Yearbook
32,00029,000
9,200
1201,375
2,550
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Startup/Seed EarlyStage Expansion/Later
VentureCapital
AngelInvestment
Telling Your Story (Elements of the Pitch)
Togetfunded,entrepreneursneedtotellacompellingstory.Yourstory,or“pitch”,mustcontainseveralimportantelements:• Product/Service• Market• BusinessPlan• Sales&Marke7ng• Financials• ManagementTeam• Exitstrategy 10
Product or Service (Elements of the Pitch)
Yourproductslidesshouldexplainwhat“problem”or“pain”youareaddressing:• Howbigistheproblem?• Whoisyourtargetcustomer?• Whoareyourcompe7tors?• Whatisyourproductdifferen7a7onorcompe77veadvantage?Howdoesitwork?
• Whatisyourvalueproposi7on?• Whatarethebarrierstoentry?(Patents,tradesecrets)
• Whataretherisks?(Technology,regulatory) 11
Market (Elements of the Pitch)
YoushouldaddressthefollowingquesEonsaboutthemarketforyourproduct:• Whatisthetotalmarketsize?• Whatistheaddressablemarketsizeforyourproduct?
• Whatistheprojectedmarketgrowth?• What%ofmarketsharewillyouhavein5years?
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Business Plan (Elements of the Pitch)
YourBusinessPlanslidesshouldaddress:• Whatisyourrevenuemodel?• Whatassump7onsareyoumakingregarding:• Pricingandmargin?• SG&A?• Supplychain?
• Howwillyouscale?• Whatisthelong-termprospectforproductormarket
extension?
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Sales & Marketing (Elements of the Pitch)
EventhebestideasgonowherewithoutasoundsalesandmarkeEngstrategy.YourSales&MarkeEngslidesshouldaddress:• Gotomarketstrategy:• Directsales?• ChannelPartners?• Licensing?
• Costofcustomeracquisi7on?• Lengthofsalescycle?• RegulatoryDrivers(orBarriers)?
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Financials (Elements of the Pitch)
Aspartofthestory,theFinancialsshouldconvey:• 5YearP&LProjec7on
• Revenue• Expenses• EBITDA
• Howlongandhowmuchwillittaketogettobreakeven?
• Howmuchareyouraskingfor?• Useoffunds• Howmuchhaveyouraisedtodate?• Howmuchaddi7onalcapitalwillyouneed?• PMV?
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Management Team (Elements of the Pitch)
YoumusttalkabouttheteamthatwillberesponsibleforexecuEngthebusinessstrategy.
YourManagementTeamslideshouldaddress:• WhatistheCEO’sstart-upexperience?• Whoaretheotherkeymanagementteammembersandwhatistheirexperience?
• Istheteambalanced?• Whoisonthecompany’sboardofadvisors/directors?
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Exit Strategy (Elements of the Pitch)
Everyinvestorwanttoknowhowtheymightgettheirinvestmentback.ThistypicallyhappensbywayofanacquisiEonormorerarelyviaanIPO.YourExitStrategyshouldaddress:• Whomightacquireyou?• Whatothercompanieshavebeenacquiredinthisspace?
• Whatweretheexitmul7ples?(EBITDA,revenue)• Howlongwillyoutaketoexit?
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The Pitch
HerearesomeEpsonpresenEnganeffecEvepitch:
• Planona20Minutepitch• Prac7ce,prac7ce,prac7ce• “Lessismore”onyourslides• Avoidthe“beau7fulbabysyndrome”• Getfeedbackbeforeanda6er• Beexcitedandpassionate
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Information, Resources, and Support
• KauffmanFoundaEonwww.eventuring.com• AngelCapitalAssociaEonwww.angelcapitaleduca7on.org
• Books– EarlyExitsbyBasilPeters– TermSheets&ValuaEonbyAlexWilmerding– TheArtoftheStartbyGuyKawasaki
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TheWiltonE.ScoqIns7tuteforEnergyInnova7onatCarnegieMellonUniversityisfocusedonusinganddeliveringtheenergywealreadyhavemoreefficiently;expandingthemixofenergysourcesinawaythatisclean,reliable,affordableandsustainable;andcrea7nginnova7onsinenergytechnologies,regula7onsandpolicies.TheCenterworkswithitspartnerstoservetheen7reCMUcommunity—departments,colleges,centersandcampuses—toacceleratebringingresearchinnova7onsandpromisingideastotheglobalmarketplaceandhelpingallentrepreneurialstudents,faculty,staffandalumnitapintothe'innova7onecosystem.ProjectOlympusencouragesandsupportentrepreneurshiponcampusbyhelpingfacultyandstudentsturntheircuvng-edgeresearchandgreatideasintostartups.