angel investors presented by: chris golden chairman, boynton angels

Angel Investors

Presented by: Presented by:

Chris Golden Chris Golden

Chairman, Boynton AngelsChairman, Boynton Angels

September 2010 2

Agenda

What is an Angel Investor?Who are we? And Where?Where do we fit in the financing

cycle?Angel Deals – TypicalClosing Comments

September 2010 3

Angels - What is an Angel?

High Net Worth Individuals (Qualified Investors) Usually Male (15% -20% Female)* Retired and/or Cashed Out High Tolerance for Risk Experienced Entrepreneurs/Executives Interested in Giving Back Expect “Reasonable Return” Increasingly Moving Into Groups Private!!!! *Angel Capital Association

September 2010 4

Years investing 7 Number of investments 7 Total exits/ closures 1 Years as entrepreneur 13 Number of ventures founded 2 Age 57 Percent of wealth in angel investing 10% Education Masters

degree

Angels - - - Who Are We?

Source: Angel Capital Association

Where the Angels*Are!

* ACA Groups* ACA Groups

259,480 Angels (USA) 259,480 Angels (USA) $17.6B Invested in 57,225 deals$17.6B Invested in 57,225 deals259,480 Angels (USA) 259,480 Angels (USA) $17.6B Invested in 57,225 deals$17.6B Invested in 57,225 deals

2009 DATA2009 DATA2009 DATA2009 DATA

September 2010 6

Stage  

Angel Organizations

Funding Gap between $500,000 and

$2,000,000/$5,000,000(depending on region)

Source Founders, Friends and

Family(Fools)

Venture Funds

$2,000,000/$5,000,000 and up

Pre-Seed Seed /Start-Up

Early Later

Investment

IndividualAngels

$25,000 to$100,000

$100,000 to$500,000

Source: Angel Capital Association

The Investment Gap

Research Funds, SBIR, GrantsResearch Funds, SBIR, Grants

September 2010 7

Investment Criteria Typical

Targeting Life Sciences (Not Pharmaceuticals), energy, communications, and software

Location within a 2 hour driving radius Seeking no more than $2M with minimal follow on

funding 5-7 Years to liquidity w/potential to generate a

strong ROI Clear Market Need and Value Proposition Exceptional Management with Domain Experience Strong Intellectual Property Position A COMPELLING STORY!

September 2010 8

Closing - -

Angels are active early stage investors/more Groups are players now Syndication of deals is common Deals (funds in) have major economic impact VC’s and Angels act more alike Angels and early stage technology are

symbiotic

September 2010 9

Chris Golden Chris Golden Boynton AngelsBoynton Angels

617-413-5787617-413-5787

cgolden@boyntonangels.comcgolden@boyntonangels.com

10

Reaching Out To Angels

Angels tend to be hidden/private Groups offer best access ACA offers widest access Angelsoft – On Line Access Profiling Angels and Groups VC – early stage – together more than ever Communications – Reaching out

11

Group Structures

LLC Umbrella – Individual InvestorsFund – Professionally managed pool of

funds. Hybrid – Group may have individual

investments and a side car fund.

12

Angel Investment Deal Trends

Angels equity deals look increasingly like VC deals Too many bad consequences of not adding all types of protection

Angels groups are focused on a range of deal sizes now enabled by syndication deals (many single rounds over $1m)

Angel equity deals trends

More participating preferred deals recently

Anti-dilution (weighted average) for deals thought to be over priced

Cumulative Dividends

Board membership designed to persist

Angel equity deals are increasing as a percent of deals

Most deals have one or more follow on rounds

13

Angel Investment - PLUS

Money Management Experience Expertise - Domaine Contacts Maturity Mentor

14

Angel Investment Deal Trends

Angels continue to use Convertible Notes as an investment instrumentThese notes collect interest (8-10%), convert into preferred

stock in a future round

If the company never closes a qualified deal this is debt

Usually discounted on the price of a future equity round as a risk adjustment

(10-30% discount to next round pricing) on average . . . . or

Issue common warrants

Trends include default pricing on notes and a noteholder agreement to provide board rights

15

The Investment Process

Screening

[89]

Presentation

[23]

Deal Input

[123]

LeaderDue Diligence

Terms

[8]

InvestmentMaybe!!!

[ 3 ]

Monitor Report

Board Seat

Source Deals Members, ACA, Venture Forums, Other Groups, Contest, Networking

Source: Boynton Angels/ACA

26 % Avg. IRR