Angel Investors

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InnovateBuildImplement

• Angel Investors
• Presenter Vidyadhar Prabhudesai

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Who is an Angel Investor?

• An angel investor or angel (known as a business
  angel in Europe), is an individual or group of
  individuals who provides capital for a business
  start-up, usually in exchange for convertible
  debt or equity.
• They are known as "angels" because they often
  invest in risky, unproven business ventures for
  which other sources of fundssuch as bank loans
  and formal venture capitalare not available.

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Types of Angel Investors

• Corporate Angels
• Entrepreneurial Angels
• Enthusiast Angels
• Micromanagement Angels
• Professional Angels

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Profile of Angel Investors

• Self Employed individuals with annual income of
  90,000, net worth of 750,000, and average
  investment of 37,000 per venture.
• 9 out of 10 investments are made in small,
  mostly start-up firms with fewer than 20
  employees.
• Provide personal loans or loan guarantees to the
  firms they invest in.
• Average acceptance of 3 deals for every 10.
• Potential to provide a 20-30 times return over a
  five- to seven-year holding period.

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Investment by Industry Segment, US 2006
21, 5.4 m
43, 11 m
18, 4.6 m
18, 4.6 m
Based on research by Center for Venture Research
at the University of New Hampshire
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What does an investor expect?

• Position in Board and mentoring role
• Right to be informed and receive communication
• Internal Rate of Return of 30 over 5 years to
  sales projections of 20 million
• Potential return of 5 times investment in first
  five years
• 5 to 25 stake in business
• Stock (common or preference) with preference of
  certain rights and liquidation preferences over
  others
• Convertible debt or redeemable preference stock

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Common Pitfalls at Presentations

• Usage of highly technical descriptions of
  products, processes and operations.
• Giving vague or unsubstantiated statements.
• Forget to include the process of paying the
  borrowed funds
• Strong management structure
• Assumptions
• Fictions

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InnovateBuildImplement

• Thank You!