Strategies forDealing with Angels

Strategies forDealing with Angels

For MassMEDIC Richard Lucash

October 18, 2005

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Who Are the Angels?Who Are the Angels?

Friends Professional Groups“Angel” =>

Amateur (easy mark)Very friendly (ditto)Unprofessional (avoid)

Don’t bet on it!

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Increasing ProfessionalismIncreasing Professionalism

VC’s may personally investThen it’s their own money on the

line, and bear risk of loss Individuals – may have industry

expertise(But that’s not investment

expertise)

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Professionalism, continuedProfessionalism, continued

GroupsPool moneyPool expertiseFull or part time managementCommon, Hub, LaunchPad, many

others

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Angel DealsAngel Deals

Convertible Note Note with Warrants Series A May have

Board or observer statusParticipation in future rounds

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What to Look for in an AngelWhat to Look for in an Angel

Expertise that can help you Reputation that can help you Connections that can help you Someone you can spend time

withAnd who wants to spend time with

you

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Approaching the AngelsApproaching the Angels

Get An IntroductionGroup member

Seek a “champion”Affiliate: Attorney, accountant, etc.

Determine the angel/group’s area(s) of interest and expertise

Have an excellent executive summary

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What Angels Look ForWhat Angels Look For

TEAMFounder or committed CEO to do

presentationPast record of achievement in

relevant industryAdvisors: Names don’t count

unless actively involved

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What Angels Look For (2)What Angels Look For (2)

Product/Service should be “need to have”Line up industry contacts to support

Real market with attractive revenue stream

Clear, realistic, focused B-Plan Barriers to Entry – IP and/or other

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What Angels Look For (3)What Angels Look For (3)

Revenue – at least one customer has PAID for the product/service

Product is ready Product is under development

and demo ready

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Turn-offsTurn-offs

“Me too” Low Barriers to Entry “Missionary” Large follow - on capital needs “Keep the lights on” capital raise Multiple target markets addressed

at early stage of company

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Presenting to AngelsPresenting to Angels

Executive Summary – 2-4 pagesPowerPoint for the Presentation:

SimpleLegibleShort20 slides, 20 minutes under

pressure

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Presenting to Angels (2)Presenting to Angels (2)

Try out the presentation and Executive Summary:AdvisorsMIT Enterprise Forum; other

If you don’t succeed, seek feedback

Assume 3 months minimum from contact to close