2. Opportunity
โข Southwest Missouri is an Entrepreneur Hotbed
โข Jordan Valley Innovation Center (JVIC) and the
Edward Jones Center for Entrepreneurship and
Innovation (EJC) are attracting opportunities for
new company formation
โข One missing link is seed- and early-stage capital
โข There are lots of opportunities in the area that can
become successful with funding, coaching and
support
3. Alternative Solutions
Explored
โข A taskforce has studied the issue for several months
โข Reviewed research from a variety of sources
โข Looked for success in other Midwest cities
โข Met with angel capital firms and Universities
โข Attended Centennial Investors meeting
โข Attended National Angel Funds Convention
4. Angel Investing
โข Angel investment totaled an estimated $22 billion in
48,000 deals during 2005
โข Provides crucial source for seed and early-stage
financing
โข More hands-on, generally within one to two hourโs
drive from home
โข An estimated 225, 000 individuals are active angels,
with an average of four to five investors joining
together to fund a startup
5. Angel Network
The Angel Network is the first of two planned
complementary components:
โข Angel Network
a network of active angel investors
โข Drury Fund
an early seed stage philanthropic fund
6. Vision
Springfield Angel Network meets the early capital
needs of university and private sector entrepreneurs
and is a highly regarded economic force for creation of
jobs and wealth in our community.
7. Angel Investors
โข Invest money in seed, startup and early stage
companies
โข Invest time in entrepreneurs and their companies
โข Business acumen
โข Mentoring and coaching
โข Serve on boards
8. Who Are
Angel Investors?
โข Often successful, entrepreneurs or retired business
persons โ active investors
โข Invest both time and money in companies
โข Accredited Investors โ SEC definition
โข Angels invest their own money
โข Invest in local companies
9. Why Become
an Angel Investor?
โข Return on Investment
โข Helping entrepreneurs
โข Staying engaged โ using skills and experiences to help
build a business
โข Giving back to community or university
โข An active form of investing โ not just watching markets
10. Stages of
Development
โข Seed/Startup โ The company has a concept or product
under development, not fully operational. (<18 months
in existence)
โข Early Stage โ Product or service under test or in early
commercialization by customers. May be generating
revenues. (>3 years old)
โข Expansion Stage โ Company demonstrating significant
growth. May not be profitable. (Usually >3 years old)
โข Later Stage โ Generating on-going revenues. Cash flow
positive. Includes spin-outs and established private
companies.
Source: PWC MoneyTree
11. Accredited Investor
โข Financial position of investor:
โข Net worth: $1 million, or
โข Annual personal income: $200,000, or
โข Annual family income: $300,000
โข Assumption:
โข Knowledgeable โ capable of due diligence
โข Can afford to lose invested funds
โข Implications:
โข Giving up regulated disclosure
12. Focus on High-Potential
Investments
โข One or two in 10 investments will produce almost all of
the ROI for the portfolio
โข These successes must yield 10-30x ROI
โข Andโฆwe cannot pick the winners
โข Therefore all portfolio companies should demonstrate
the opportunity for a 10-30x ROI
13. Integrating Exit Timing
into Portfolio Strategy
โข Angels expect to exit in 5-7 years and a balanced
angel portfolio contains 10 companies.
โข Ideally:
โข Build to ten company portfolio gradually
โข Consider a portfolio of companies in different
stages of development
14. Angels Invest Time
in Portfolio Companies
โข Angels bring expertise to portfolio companies
โข Business acumen
โข Financial experience
โข Technical expertise
โข Common roles
โข Advisor, Mentor, Coach, Director
โข Except in emergency, unpaid consultant
15. Investing through
an Angel Network
โข Dividing the work lessens the individual load
โข Variety of investor experience is available
โข Standardized processes and term sheets
โข Exposure to more deal flow
โข Pick and choose the deals you like
โข Camaraderie
17. Angel
Investing Process
โข Pre-screening
โข Screening
โข Dinner Meeting Presentation
โข Due Diligence
โข Follow-up Discussions and Negotiations
โข Closing
18. Pre-Screening
โข Entrepreneurs submit an application
โข Review Committee does preliminary review looking for
plans which fit the Angel Network profile
โข Approved companies move to Screening phase
โข Declined companies are notified
19. Screening
โข Entrepreneur presents plan to a small group of Angel
Network members
โข Application and business plan are reviewed
โข Looking for a champion among members
โข Outcomes:
โข Invitation to present at Dinner Meeting
โข Decline interest
20. Dinner Meeting
โข Dinner meetings for Angel Network members
โข Hear two 15-minute company presentations
โข 15-minute Question & Answer sessions
โข Identify interested investors at meeting
โข Approved companies move to Due Diligence phase
21. Due Diligence
โข Validation of the business plan
โข In-depth check of management team
โข Verification of exclusiveness of Intellectual Property
โข Confirm size of opportunity
โข Check competitive environment
โข Test barriers to entry
22. Angel Investors
โข Around the country, Angels are making a difference
โข In job creation
โข In wealth creation
by providing equity capital and mentoring to
entrepreneurs
โข High risks, but potentially high returns
23. Angel Network
โข Consider joining the Springfield Angel Network
โข Focal point for deal flow
โข Defined processes
โข Benefit from membersโ expertise
โข Camaraderie
โข Make a difference in the community
โข Potential for good returns
24. Membership
โข Annual $500 membership fee includes cost of
dinner meetings
โข Members decide what amount, if any, to invest in a
company
โข Members are expected to invest an average of
$25,000 per year in angel investments
โข Expectation that members will actively participate
25. Support for Angel
Organizations
Springfield Angel Network is considering membership
in the Angel Capital Association and gratefully
acknowledges the educational materials and strong
support provided by Marianne Hudson and others
affiliated with the Kauffman Foundation.