Ishay Green Angel Vs Vc
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Angel VS. VCAngel VS. VCIshay GreenIshay Green
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Angel VS.
Venture Capital(And some tips about both…)
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DisclaimerDisclaimer
Entrepreneurship is a game of imagination – The following are my
opinions
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TERMINOLOGYTERMINOLOGY
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TerminologyTerminology
• Valuation• Shares• Dilution
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ANGEL VS. VC ANGEL VS. VC MONEYMONEY
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Angel VS. VC MoneyAngel VS. VC Money
VC’s are professionals who invest other people’s money
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Angel VS. VC MoneyAngel VS. VC Money
Angels are private people investing their hard earned money
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ANGEL VS. VC ANGEL VS. VC PROFIT EXPECTATIONSPROFIT EXPECTATIONS
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Profit ExpectationsProfit Expectations
VC’s look for double digits profit multipliers(10 Times)
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Profit ExpectationsProfit Expectations
Angles would usually be happy in low end of a single digit(3 Times)
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ANGEL VS. VC ANGEL VS. VC INVESTMENT RISKSINVESTMENT RISKS
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Investment RisksInvestment Risks
The Angel is risking their own money
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Investment RisksInvestment Risks
The Angel is usually less knowledgeable than a VC in most aspects
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Investment RisksInvestment Risks
The Angels tend to follow their gut feeling
(So you better be damn sure you know what you’re doing…)
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Investment RisksInvestment Risks
The Angel knows where you live
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Investment RisksInvestment Risks
The VC risk is divided through a larger
portfolio
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ANGEL VS. VC ANGEL VS. VC EXCEPTED HOLDINGSEXCEPTED HOLDINGS
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Excepted HoldingsExcepted Holdings
VC’s expect a minimum of 20%-25%
share holdings(They will ask for much more)
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Excepted HoldingsExcepted Holdings
Angles are agnostic.
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TIMINGTIMING
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TimingTiming
Angels can afford investing in the scenarios of:1.Seed2.Down-round* Angels will usually not execute their preemptive right
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TimingTiming
VC will usually require a more mature company,
and even a proof of concept before
investing
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TimingTiming
Angel money is faster(For most Angels a meeting or two is
sufficient to decide)
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TimingTiming
“Some VC’s will yes you to death”
- Adi Pundak-Mintz
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WHY DO ANGELS EXIST?WHY DO ANGELS EXIST?
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Why do Angels Exist?Why do Angels Exist?
Potential for large multipliers on their
investment outside of the stock markets
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Why do Angels Exist?Why do Angels Exist?
The investment is not liquid – When it is gone
it is gone
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Why do Angels Exist?Why do Angels Exist?
The Google – Facebook – The Marker Effect
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Why do Angels Exist?Why do Angels Exist?
Tax Benefits
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Why do Angels Exist?Why do Angels Exist?
It’s Fashionable& Cool
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VC TYPES – ENTREPRENEUR POVVC TYPES – ENTREPRENEUR POV
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VC Types – Seed FundsVC Types – Seed Funds
Invest small amount of money in early stage, with no promise for recurring investment
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VC Types – Israel Top Five VC Types – Israel Top Five
- Has more then $100M fund- Known for its smart and
beautiful partners*
* Yaron from Giza VC is a great example
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VC Types – InternationalVC Types – International
Enables you to tell everyone you now have direct access to Steve Jobs, Balmer and God
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VC Types – Famous VC Types – Famous
Proven winners - Index Ventures invested in
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VC Types – Top TierVC Types – Top Tier
- Sequoia- Draper Fisher Jurvetson
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ANGEL TYPESANGEL TYPES– ENTREPRENEUR POV– ENTREPRENEUR POV
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Angel Types IAngel Types I
Rich Industry Expert / Entrepreneur
(Eduardo Shoval)
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Angel Types IIAngel Types II
Super Angel(Yossi Vardi / Paul Grahm)
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Angel Types IIIAngel Types III
Richie Rich
Oil / Real-estate / Diamonds / Weapons
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Angel Types IVAngel Types IV
The Gambler
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Angel Types VAngel Types V
Family
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BOARD OF DIRECTORSBOARD OF DIRECTORS
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Board Of DirectorsBoard Of Directors
The board represents the share-holders
(investors)
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Board Of DirectorsBoard Of Directors
The board devises tactics and strategies for
the company
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Board Of DirectorsBoard Of Directors
The CEO is responsible for executing board
decisions
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Board Of DirectorsBoard Of Directors
Entrepreneurs & CEO keep the board up-to-
date
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Board Of DirectorsBoard Of Directors
An effective board:• Smart and self-conscience members• One member+ is an industry expert
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INVESTOR RIGHTSINVESTOR RIGHTS
1111
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Investor RightsInvestor Rights
Voting Rights Are Dangerous
(Try to avoid them)
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Investor RightsInvestor Rights
Veto Rights Are Lethal (Unacceptable)
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ANGEL-MAINTENANCE ANGEL-MAINTENANCE TECHNIQUESTECHNIQUES
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Angel-Maintenance TechniquesAngel-Maintenance Techniques
Angel turns into Devil:• Conflict of Interest • Disappointment• Greenmail • Ignorant / Boarder Line Disorder
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Angel-Maintenance TechniquesAngel-Maintenance Techniques
Proxy Mechanism -• Protect the company from its investors• Protect the investors from themselves• Protect the individual investor from himself
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Angel-Maintenance TechniquesAngel-Maintenance Techniques
Define a board representative for the
angels with past experience
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ANGEL VS. VC VALUATIONANGEL VS. VC VALUATION
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VCVC
• VC allocates ~$10M total for an investment• The money is divided between rounds• The VC needs to maintain 25% holdings in the company – unless you go to huge valuations. (*)
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AngelAngel
The Tomer-Ishay Method™• Find a prominent lead investor and then negotiate • Talk to the rest of the investors only after valuation was set• Raising money in chunks
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AngelAngel
What should you tell the Angels before closing
• Make sure they understand the business plan• Tell them they need to consider the money as gone.• Say that you do not take money from widows and orphans.
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SUMMARYSUMMARY
&&
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SummarySummary
•There are not definite pros & cons•Angels are a great way to start•Do you believe in Angels?
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I doI do
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THANK YOUTHANK YOU
!#%!#%