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Successful Early Stage Investing Networks:

Angels, Entrepreneurs and

Enterprises

Dan LoagueDan Loague

National Association of Seed and Venture FundsNational Association of Seed and Venture Funds

www.nasvf.orgwww.nasvf.org


Angels, Entrepreneurs and Enterprises

Outline:

About NASVF NASVF’s Seed Investing Seminars

For investors and for entrepreneurs Market Natural attractions Scope Examples Results



Outline (continued):

Deal Flow Sources- Angels and Founders, Etc.

Deal Flow Sources- “The Network” Community, local, state and regional Public - universities, state and local Private and Corporate Professional

Network Building Tools

Outcomes



NASVFNational Association of Seed and Venture Funds

a network of private, public and nonprofit organizations

committed to building their local economies

by investing and facilitating investment in local

entrepreneurs.



NASVF’s Seed Investing Seminars

provide basic information on the process of seed investing help create and expand local early stage investing networks focus on enterprise creation and growth stimulate the local seed investing market effective tools for communities to harness key local resources.



Swing for the Fences -

Seed Investing for Entrepreneurs



The Market:

Center for Venture Research - University of New Hampshire

StageEarly LaterSeed/ Start-Up

SourceFDRS FFF Angels Venture Funds

Demand$25K $100K $500K $2,000K

Supply ------------------------------------------------------------------

Funding Gap

Equity Capital for Entrepreneurs



Entrepreneur* Terrifically Smart

High Integrity

Cash Flow Fluent

Proprietary Advantage

Leading Edge Technology

Market Dominance

“5 in 5” ROI

Clear Exit Strategy

*From “What Angels Want,” Jeffrey L. Seglin.

Inc magazine, Nov., 1997, p. 43.

Early stage investor* Investing Expertise

Industry Experience

Risk Tolerance

Patient Money

Additional Investment

Congruent Exit Strategy

Active Participation

Cheerleader Potential*Adapted from participant workshop at the

1997 NASVF Annual Conference, Santa Fe, NM.

Natural Attractions:



National Scope: 80+ communities and 39 states 3,500+ persons trained, including -

seed investors (angels) investment professionals entrepreneurs with technology based enterprises economic developers community leaders



Some Example Communities:

Fairfield IA Alexandria MN Las Cruces NM Pasadena CA Spokane WA Portland ME Charleston SC Huntsville AL Jackson MS Columbus OH

Results: increased deal flow

expanded sources of seed capital

expanded enterprise development

more active local seed investing market

expanded investment in tech-based deals





Deal Flow Sources - AngelsAbout 400,000 angels invest about $30 billion to $40 billion annually in

over 50,000 ventures - angels are the "invisible" portion of the

venture capital investment market.

Undercover - vast informal market, by far the largest and oldest.

Venture Capital clubs/groups

Angel alliances

Networks

Electronic networks



Deal Flow Sources - Founders, etc. Founders - entrepreneurs who bootstrap their enterprises with

personal resources and sweat equity

FFF (Friends, Family and Fools; also referred to as "Uncle Harry or

Aunt Harriet") - investors in loosely structured seed/start-up deals



Deal Flow Sources - “The Network” Consultants skilled in due diligence Local financial organizations with regional and national seed and

venture capital relationships Local and regional private seed fund managers Local entrepreneurial associations Local entrepreneurs who have “cashed out” of a successful

enterprise and seeking new opportunities (especially those entrepreneurs with successful technology-based companies)

Local entrepreneurs who have successfully raised capital from seed investors and who understand the seed investing process



Deal Flow Sources - “The Network” (continued) Regional financial organizations that promote local economic

development Technology associations that help develop specialized “clusters” of

companies Local financial organizations with regional and national seed and

venture capital relationships

Venture Capital companies that work with local private investors

(first and later rounds)



Deal Flow Sources - “The Network” (continued)

Corporate research and development directors with IP available for

investment Corporate new product investment managers Corporate seed and venture funds Local/Regional private and nonprofit foundations with a community

development mission Local/Regional investment forum organizers




Attorneys experienced in: seed deals and expert in term sheets intellectual property (IP) law and investment

Private investors High profile “super angels” Individual local investors part of community leadership Local informal angel investment clubs skilled in assessing and

“scrubbing” potential investments Local angel organizations with a legal structure, also skilled in

assessing and “scrubbing” potential investments




Economic developers skilled in technology commercialization University IP and technology managers with IP available for

investment University seed and venture funds Recipients of SBIR and other federal technology business

development grants Federal facility intellectual property and technology managers




SBA Small Business Development Center professionals

experienced in successful development of technology based

companies Business incubators assisting local start up companies Chamber of commerce programs assisting in development of new

companies




State sponsored seed and venture funds State sponsored technology commercialization programs State departments of economic development/commerce with

funded technology development programs State and local finance authorities that have relationships with

regional and national seed and venture capital companies State and federal officials helping increase the availability of

venture capital and to capitalize on public funded research by taking technologies into the commercial marketplace.



Network Building Tools: Seed Investing network-building interactive workshops Engaged regional and community civic leadership Initiatives to raise and expand capital for early-stage enterprises Formation of angel clubs and formal seed investing organizations Technology based enterprise associations



Outcomes:

Harnessing local resources to create and grow ENTERPRISES produces:

Increased number of great deals in which to invest Increased number of investors interested in HOME GROWN companies Expanded early stage capital to fill the funding gap for enterprises with high

growth potential Expanded networks of investors and entrepreneurs with links to regional

and national venture capital resources A potential for creating cashed-out entrepreneurs to sustain and strengthen

the local economy



Dan LoagueNational Association of Seed and Venture Capital

301 N.S. 63rd Street Suite 500

Oklahoma City, OK 73116

Ph: 405-824-5549

Fx: 800-420-8329

Web: http://www.nasvf.org

Em: [email protected]

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