idcee 2013: angel investing - john ason (business angel)
DESCRIPTION
http://idcee.org/p/john-ason-business-angel/ John Ason has been an angel investor for over 17 years specializing in early stage pre-revenue companies. He has made over forty eclectic investments in the areas of e-commerce, technology, advertising, digital social media and entertainment. For about half of his investments, John has been the lead angel devoting a significant amount of his time to mentoring the companies. A typical company consists of one or two people in a garage or kitchen with minimal or no revenues. Any capital efficient industry with high growth potential qualifies with the exception of medical and biotech. As a starting point, John will accept only one page executive level summaries via email ([email protected]). Some of John’s companies are: Xlibris.com, Scoople.It, Bikini.com, Diapers.com, Soap.com, FulcrumGallery.com, Tips.by, AppyCouple.com, GetMaid.com, LiveLook.com, HotList.com, Hooja, CarbonNanoProbes, Centrak.com, TuckerToys.com, Geometrix, CallunaVineyards.com, Ology.com, Koding.com, WeHostels.com, DoodleDeals.com, MotionMathGames.com, MakeUsAnOffer, OffTrackPlanet.com and Spling.com. Pic's are here: http://www.flickr.com/photos/idcee/sets/ More @ http://idcee.org Follow us on: YouTube: http://www.youtube.com/user/OfficialIDCEEChannel Facebook: https://www.facebook.com/IDCEE Linkedin: http://www.linkedin.com/groups/IDCEE-3940138 Twitter: https://twitter.com/idcee_eu Google+: http://gplus.to/idcee Flickr: http://www.flickr.com/photos/idcee/collections/TRANSCRIPT
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Angel Investing
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Personal Background
25 years AT&T Bell Labs experience
Successful in stock market Angel investor last 17 years
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Angel Investments
Xlibris.com Scoople.it DoodleDeals.comKoding.com EndlessTV.com ERAnyc.com
Centrak.com OffTrackPlanet.com Ology.comDiapers.com HotList.com Imbookin.com
CallunaVineyards.com Tips.by Spling.comWeHostels.com LiveLook.com Bikini.com FulcrumGallery.com Geometrix SpatialLabs
AdPilot Hooja MotionMathGames.comAppyCouple.com PhlatBall.com Monaeo.com
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What is Angel Investing ?
Source of funds for early stage companies
Typically first “professional” level Typically $100,000 to $500,000 Experience / assistance provided
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Angel Profile
Usually private Ability to accumulate capital
Retired professionals Entrepreneurs
Financial return secondary concern
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What do Angels Want ?
A pleasant experience Excitement of growing a company Financial return
An environment to contribute / participate Management / oversight Contacts
An exit strategy
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Exit Strategies (descending order)
Chapter 11 / Disbanding Life style (put option) Buyout / Merger Venture Capital round IPO
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How to Find Angels ?
Networking Venture groups Venture fairs Internet Accelerators University lectures
Intermediaries
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What do Angels Want to See ?
Short focussed business plan Quality management / people Reasonable valuation (20-30%
equity) Market validation
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Negotiating with Angels
Must be win / win Process is asymmetrical
Valuations fuzzy Angel contribution fuzzy Angels timeframe is casual / slow Angels do not HAVE to invest Angels can walk away at anytime
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Financial Returns
Ten times investment in 3 to 5 years
50% IRR per year Lifestyle companies do not
qualify
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Company Culture
Speed, speed, speed Outsource everything Leverage / margins Compete / cooperate Open non-secretive
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Angels VS VCsMoney Own Other people’s
Revenues None $2 – 5 million
Management Partial Complete
Stage Early Expansion
IRR 50% 30%
Multiples 10X 2X – 4X
Risk High Low
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Evaluation Process Clear, concise, compelling,
coherent one page executive summary
Very large potential (10X) Intellectually stimulating Marketing/sales skills Execution capabilitiesWhat’a missing???
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Exploding Angel Market Starting a company close to zero Validating a company close to zero Emergence of accelerators Emergence of Super Angels (Micro
VCs) Emergence of AngelList
Dramatic increase in speed of angel investing
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International Activity Foreign startups looking for funding Foreign governments looking to build
angel and startup ecosystems VCs getting active Accelerators going international International conferences/hackatons
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How to seduce an early seed stage angel
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Investors Want
Detailed market data
Detailed ROI analysis
Explicit problem statement
Prior successes
Industry experience
Complete management team
Business plan
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WRONG!!! (sorry!!)
This is for a later stage expansion company
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Available Data
%
Angel Expansion VC
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Angels Want
Explicit statement of what you do Rationale for market size Bottom up market forecast Quality management team
Prior failures acceptable Prefer outside of industry
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To be sold EQUITY in your company and
NOT a product or service
Angels Want
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First encounter
EntertainImpressInform
Only one chance to make first impression
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Less Words
Less Data
More Pictures
More Action
How??
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The sale is
Emotional not data driven
