angel investment decoded - [river city labs event]

How to Apply to Brisbane Angels for Investment

RiverCityLabs

Welcome!Who are we?We are a not for profit organisation, providing co-working space for start-ups and early stage companies in the technology, Internet, telecommunications and mobile sectors.

What do we offer?• Desk Space for $350/ mnth [ex GST] and includes; desk space, chair,

internet, access to all facilities, partnership offers, mentor network and business, technology and social events.

• NEW! Casual Pass $250/ mnth [ex GST] and includes; 24x7 access to the casual seating in the labs and status as a River City Labs Resident, including internet, access to all facilities, partnership offers, mentor network and business, technology and social events.

Finding your way around

• Bathrooms can be found out the exit door near the kitchen

• Emergency exit stairs out the back near the bathrooms or at the front as indicated in the picture

River City Labs respectfully asks you to place all your food and rubbish items in the bins provided and to not touch any property belonging to our residents or staff.

Have a great event!

Agenda

• Who are Brisbane Angels • What does the group look for in a venture• What do some of the individual members look

for when making their investment decision• What makes a good application• What is the application and investment

process• Post investment management

Agenda

• Who are Brisbane Angels • What does the group look for in a venture• What do some of the individual members look

for when making their investment decision• What makes a good application• What is the application and investment

process• Post investment management

Mission Statement

We are a community of active angel investors, investing time and

money into innovative start up ventures, to achieve outstanding

commercial success.

Group metrics

Formed late 2006 48 Members 10 Investee companies 20 transactions $2.6m invested

4 ITC 3 BioTech 1 AgriTech 1 BlueTech 1 Mining

Investment metrics

Smallest Investment $40,000 Largest Investment $400,000 Smallest pre-money $450,000 Largest pre-money $3.9M

Co-investment partners

• Gold Coast Angels• Bio Angels• Melbourne Angels• Wyoming Angels• Sacramento Angels• Huston Angel

Network• One ventures LP• Yuuwa Capital LP

Agenda

• Who are Brisbane Angels • What does the group look for in a venture• What do some of the individual members look

for when making their investment decision• What makes a good application• What is the application and investment

process• Post investment management

The group’s review criteria

• Novel intellectual property that can be leveraged to provide a strategic exit within 3-6 years.

• Reasonable market opportunity size to provide a projected exit of at least 10x to Angel investors.

• Active post investment management by Brisbane Angels or a co-investor.

Agenda

• Who are Brisbane Angels • What does the group look for in a venture• What do some of the individual members look

for when making their investment decision• What makes a good application• What is the application and investment

process• Post investment management

Nondisclosure Agreements (NDAs)

• Most angels and VCs will not sign NDA’s– May already have a potential conflict– See too many deals– Integrity is key to continuing business– Not motivated to steal technology

• May sign NDA…– During due diligence, not earlier– Covering a very narrow set of issues

• Bus Plan - no proprietary information

Why Investors Turn Down Deals

• Quality of Management • Size of Opportunity• Rate of Market Growth• Product Quality• Competition• Barriers to Entry• Stage of Development

Key Issues• The

Management • The Market• The Method• The Money• The Numbers

The Management

• Proven track record– Relevant business experience– In the industry, in a similar position– A failure can be significant (learning on someone else’s $$$)

• Integrity, dedication, commitment, passion• Vision and the ability to articulate it• Knowledge, skill level, intelligence• Leadership skill & ability to build a team

The Market

Macro • Size• Growth Rate• Concentration• Barriers to

Entry

Micro• Revenue Model• First-to-market• Economics (pricing)• Customers• Segmentation• Differentiation

The Method

• Business Model• Value Proposition• Distribution Strategy• Competitive Differentiation• Growth Strategy

Money

• Financial Strategy• Capital Requirements• Structure• Valuation• Exit Strategy

The Numbers

• Income Statement – Revenue Projections ($, units)– Timeliness of Revenues– Expenses Projections (head count, O/H)– Salary – Margins

More Numbers

• Balance Sheet– Cash– Accounts Receivables, Inventory (are they real)– Debt (usually not an issue, but...)– Liabilities

• Cash Flow– Operating (recent performance vs budget)– Financing

• Capitalisation Schedule

Agenda

• Who are Brisbane Angels • What does the group look for in a venture• What do some of the individual members look

for when making their investment decision• What makes a good application• What is the application and investment

process• Post investment management

First Impressions

• Clarity– Vision– Path

• Completeness– Business plan

• Transparency– Team– Numbers

Agenda

• Who are Brisbane Angels • What does the group look for in a venture• What do some of the individual members look

for when making their investment decision• What makes a good application• What is the application and investment

process• Post investment management

How Angel Groups Work: Typical Deal Process

SubmissionsOnline Only

(Gust)

Review committee pre-

screens submissions.

Screening TeamReview

Screening team votes on which companies to

invite to member meeting.

Member MeetingPresentations

Deal committee polls members for level of

investment interest in deals, recruits

diligence team, and facilitates selection of

deal lead to begin term sheet

negotiations.

Manage Investment

Deal lead represents member

interests and seeks an

attractive exit.

Deal lead closes transaction.

Diligence & TermSheet Negotiations

(Coordinated byDeal Lead)

Agenda

• Who are Brisbane Angels • What does the group look for in a venture• What do some of the individual members look

for when making their investment decision• What makes a good application• What is the application and investment

process• Post investment management

Ongoing commitment

We spend ~100 hours doing the deal and next several years engaged on a monthly and sometimes weekly basis with the company.

Benefits of informed investors

Mentoring, coaching and “value-added” services are contributions angel investors and angel groups can provide to the company.

Common Goal

Incredible Exits!

Valuation Estimator

http://www.caycon.com/valuation.php

Thank you

John MactaggartChairmanBrisbane Angels Groupjohnm@jontra.com.au