Information Page

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Entrepreneur Alert Presentation by John
May Anheuser-Busch Angel-in-Residence University
of Arizona October 30, 2008
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• Be half full, be patient, collaborate, and
  remember
• Every Business Needs an Angel

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The Economy Contracts

• Greenspan, who stepped down in 2006 (as Federal
  Reserve Chair), called the banking and housing
  chaos a once in a century credit tsunami.
• Alan Greenspan
• I dont like to opine on the stock market, and
  again I emphasize that I have no idea what the
  market will do in the short term. Nevertheless,
  Ill follow the lead of a restaurant that opened
  in an empty bank building and then advertised
  Put your mouth where your money was. Today my
  money and my mouth both say equities.
• Warren Buffet
• The market turmoil we are experiencing today
  poses great risk to U.S. Taxpayers. When the
  financial system doesnt work as it should,
  Americans personal savings and the abilities of
  consumers an businesses to finance spending
  investment and job creating is threatened.
• Henry Paulson

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Stock Markets Shudder

• Since their peaks in 07-08
• Brazils Bovespa is off 55
• Japans Nikkei 225 is off 58
• U.S. DJIA is off 36
• Russias RTS is off 77
• UKs FTSF is off 42

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VCs and Angels Reaction

• Angels are angry, but positive
• Cautious angels seek to minimize risk
• VCs throw cold water on portfolio companies
• Angel Ron Conway to portfolio companies Cut
• expenses now!
• Silicon Valley Ducks and covers Market
  Crashes
• and Burns

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Entrepreneurs in our Economy

• Myth
• Challenges
• Reality

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U.S. in the World

• Myth
• Challenges
• Reality

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Financing of Innovation

• Myth
• Challenges
• Reality

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Markets Large, Complementary
Mostly later stage 3,813 deals 29.4B
25.6B 51,000 deals Mostly early-stage
Early Stage Late
864 Early- Stage
312 Seed/Start-up
2007 Angel Investment source UNH CVR
2007 VC Investment source NVCA/PWC/VE
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Role of Angel Groups in the Future

• Myth
• Challenges
• Reality

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What Is An Angel?

• A minority equity investment in a strangers
  business (usually a start-up) by an accredited
  individual (multi-millionaire) who gives time as
  well as money to the entrepreneur and gets
  long-term capital gain after three, five or seven
  years and the only protection is the rule of
  law.

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U.S. Map of Angel Groups
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Why Invest in Groups?

• Dividing the work eases the pain
• Variety of vertical experience available
• Standardized processes term sheets
• Deal flow encouraged entrepreneur-friendly
• Pick and choose the deals you like
• Greater potential to diversify angel portfolio
• Great camaraderie among like-minded investors

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Top Ten Angel Tips

• Use patient capital only
• Develop mentor capital
• Invest in what you know, or at least what you
  can understand
• Expect the plan will take 2x longer and twice as
  expensive as pitched by entrepreneurs
• Find a way to get psychic reward from your
  investment along the way
• Remember it is cash on cash, not IRR that
  rewards
• Time is an angels most valuable resource
• Post investment relationship starts at due
  diligence and structuring the terms
• Save powder for follow-on investments
• Mentoring and luck trump rule of law

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Six Points for Start-Ups

• be honest and realistic
• demand stark reality in planning and operations
  and assume the worst of the coming recession
• remember cash is king
• expand on collaboration with like minded
  investors - syndicate partner
• task angels to seek alternatives to growth and to
  find exits that were previously ignored
• angels need to be honest with themselves and not
  ignore the reality of limited resources available
  for new deals while protecting our own children

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• Be half full, be patient, collaborate, and
  remember
• Every Business Needs an Angel