thinking like an angel investor: what are angels looking for?

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What are angels looking for?

Angel Funding: Thinking Like an Angel

About Your Hosts

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Deepak GuptaManaging Director

Sirk RohChief Operating Officer

What’s an angel?

• High net worth/Very high net worth

• Live in tech hubs, typically invest locally

• Well-educated• Part-time investor• Sees 50-250 startups/year• May be member of an angel

group

Well-off, either from tech/finance

What kind of companies do angels invest in?

• Companies who are in seed or early stage

• Diverse: In technology, clean tech, fin tech, healthcare

• Looking for: Solve a problem, management team, IP, business model

How do entrepreneurs connect with angels?

• Full time, 12 hours/day, 4-6 months• Rely on your network• Must have persistence and outstanding

communications skills• Objectives

o Get introductions to 100-250 investorso Meet 50-100 investorso Follow up with 25-75 investorso Conduct diligence process with 25-50 investorso Get checks from 8-15 investors

Questions angels askProduct What’s your business about? Why will people use your

product?How do you make money?

Market How big is your market? Who’s your competition? Distribution?Have you talked to customers? Product-market fit?

Team How did the founders meet?Who is on (and not on) your team?

Risks What is the biggest problem you need to solve now?

Technology and IPFunding Justification/Use of Funds

MilestonesFinancial projectionsThink ahead to Series A

Questions angels don’t ask

• Do the founders like each other?

• Do I trust you?• Can you sell?• Can you build a team?• Can we work together?• Is anyone else going to

invest?• Why isn’t XYZ going to crush

you?

Non-rational criteria

Founders

Do I identify with you?

IndustryUniversityExperience

Product

Cool factor

Resolving personal pain

Market

Personal experience

Interest

Angel decision-makingtimeline

Contact

Meeting #2

Meeting #5

Meeting #6

Meeting #3

Meeting #1

Meeting #4

DUE DIIGENCE

$ TERMS

INTEREST

Decision-making process…

Elevator pitch

Pitchdeck

Founder info

ProductMarketBusiness modelCompetition

Domain expertiseIntelligenceCommunication skillsPersistence IntegrityRelationship

CustomerMarket sizeCompetition

Prob/SolutionTractionProduct-Market fit

Product overview

Market

Product

Decision-making process

Tech Financials Deal Legal

Tech team Use of fundsMilestonesGrowth plan

AmountTermsInvestors

Regulatory threatFormationStock IP

Funding Pitch Guidelines

• Tell a story• Problem• Solution• Market size• Business model• Competition• IP• Team• 10-12 slides maximum• One key point/slide: Backup data in appendix• Don’t read it from slides

ValuationsWhat is the valuation of my startup?

• Based on traction • Based on geographical comps• Entrepreneur ask vs investor tell?

Q&A and Thank You!

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Deepak Gupta415 Jackson StreetSan Francisco, CA 94111www.seedchange.comdeepak@seed-change.com415.908.1016@Deepaksgupta500

Sirk Rohwww.earlygrowthfinancialservices.comsroh@earlygrowthfinancialservices.com415.234.3437@EarlyGrowthFS