How to Pitch to Angels?
DonMorrisonChairmanofDealFlowBlueTreeAlliedAngels
AccidentalRetailer
RecoveringEntrepreneur
How to Pitch to Angels? Beforeyoucanbegintoputyourpitchtogether,itisimportanttounderstand:• Whoangelsare• Thefundingprocess• Angelsplaceinthefundinglandscape
Who are Angel Investors? • ODensuccessfulentrepreneursorreEredprofessionals
• Accreditedinvestors–SECdefiniEon• Investtheirownmoney(notmoneymanagers)• Generallyinvestinlocalcompanies• Investinbusinessesnotrunbyfamilies• Investindividuallyoraspartofanangelgroup
Why Angel Groups?
• ThePowerofAggregaEon• MiEgateRisk• HigherQualityDealFlow• GreaterInvestmentClout• PorQolioManagement
Advantage of Angel Groups for Entrepreneurs
• Diversifiedbusinessexperience• Extensiveindustrycontacts• OpportuniEestosyndicate
Growth in Number of Angel Groups
Sources: Center for Venture Research (pre 03 data) and Kauffman Foundation/ARI (04-13 data)
0 50
100 150 200 250 300 350 400
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
The Funding Landscape 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 8
BusinessIncubators
Angels Fund Majority of Startups in USA
Sources: Center for Venture Research/ UNH; NVCA 2014 Yearbook; PwC MoneyTree
• $24.6billion• 71,000deals• 17,750seed• 31,950earlystage• 19,170expansion• 305,000individuals
AngelInvestors(2016)• $59.1billion• 4,380deals• 186seed• 2,219earlystage• 1,975later/expansion• 718acCvefirms
VentureCapital(2016)AngelsProvide~90%ofOutsideEquityforStartups
Where Angels Invest
Sources: Center for Venture Research/ UNH; NVCA 2016 Yearbook; PwC MoneyTree
SoGwareOtherHealthcareCommercialservicesPharma/BiotechMediaITHardwareConsumergoodsEnergy
Sector33.9%25.5%14.1%8.7%7.3%3.8%2.4%2.4%1.9%
%ofInvestmentAngelInvestments(2016)
Angel Investment Stats
• 50%newdeals,50%follow-onfunding• 75%ofangeldealsarenowsyndicated• $347,000averageinvestmentperdeal• Averagepre-moneyvaluaEon$3.6M
Telling Your Story (Elements of the Pitch)
Togetfunded,entrepreneursneedtotellacompelling
story.Yourstory,or“pitch”,mustcontainseveral
importantelements:– Product/Service– Market– BusinessPlan– Sales&MarkeCng– Financials– ManagementTeam– Exitstrategy
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Product or Service (Elements of the Pitch)
Yourproductslidesshouldexplainwhat“problem”or
“pain”youareaddressing:– Howbigistheproblem?– Whoisyourtargetcustomer?– WhoareyourcompeCtors?– WhatisyourproductdifferenCaConorcompeCCveadvantage?Howdoesitwork?
– WhatisyourvalueproposiCon?– Whatarethebarrierstoentry?(Patents,tradesecrets)– Whataretherisks?(Technology,regulatory)
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Market (Elements of the Pitch)
YoushouldaddressthefollowingquesEonsaboutthe
marketforyourproduct:– Whatisthetotalmarketsize?– Whatistheaddressablemarketsizeforyourproduct?– Whatistheprojectedmarketgrowth?– What%ofmarketsharewillyouhavein5years?
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Business Plan (Elements of the Pitch)
YourBusinessPlanslidesshouldaddress:– Whatisyourrevenuemodel?– WhatassumpConsareyoumakingregarding:• Pricingandmargin?• SG&A?• Supplychain?
– Howwillyouscale?– Whatisthelong-termprospectforproductormarket
extension?
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Sales & Marketing (Elements of the Pitch)
Eventhebestideasgonowherewithoutasoundsales
andmarkeEngstrategy.YourSales&MarkeEngslides
shouldaddress:– Gotomarketstrategy:• Directsales?• ChannelPartners?• Licensing?
– CostofcustomeracquisiCon?– Lengthofsalescycle?– RegulatoryDrivers(orBarriers)?
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Financials (Elements of the Pitch)
Aspartofthestory,theFinancialsshouldconvey:– 5YearP&LProjecCon• Revenue• Expenses• EBITDA
– Howlongandhowmuchwillittaketogettobreakeven?– Howmuchareyouraskingfor?– Useoffunds– Howmuchhaveyouraisedtodate?– HowmuchaddiConalcapitalwillyouneed?– PMV? 17
Management Team (Elements of the Pitch)
Youmusttalkabouttheteamthatwillberesponsiblefor
execuEngthebusinessstrategy.YourManagementTeam
slideshouldaddress:– WhatistheCEO’sstart-upexperience?– Whoaretheotherkeymanagementteammembersandwhatistheirexperience?
– Istheteambalanced?– Whoisonthecompany’sboardofadvisors/directors?
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Exit Strategy (Elements of the Pitch)
Everyinvestorwanttoknowhowtheymightgettheir
investmentback.Thistypicallyhappensbywayofan
acquisiEonormorerarelyviaanIPO.YourExitStrategy
shouldaddress:– Whomightacquireyou?– Whatothercompanieshavebeenacquiredinthisspace?– WhatweretheexitmulCples?(EBITDA,revenue)– Howlongwillyoutaketoexit?
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The Pitch
HerearesomeEpsonpresenEnganeffecEvepitch:
• Planona20Minutepitch• PracEce,pracEce,pracEce• “Lessismore”onyourslides• Avoidthe“beauEfulbaby”syndrome• GetfeedbackbeforeandaDer• Beexcitedandpassionate
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Information, Resources, and Support
• KauffmanFoundaEonwww.eventuring.com
• AngelCapitalAssociaEonwww.angelcapitaleducaCon.org
• Books– EarlyExitsbyBasilPeters– TermSheets&ValuaEonbyAlexWilmerding
– TheArtoftheStartbyGuyKawasaki21
Q & A
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