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Accessing Capital From an Angel
       Investor Network
    Your First Professional Investment
      Who, What, When and How
Agenda
•   90 Second Company Elevator Pitch
•   Who is an Angel Investor
•   Angel Network in Canada
•   NACO 2011 Survey
•   Angel Investing is a changing
•   Maple Leaf Angels
•   The Benefits for Entrepreneurs
•   Q&A
MLA
Who is an Angel Investor
• A person prepared to invest money
• A person who can add value to the company
• An accredited investor as defined by OSC
• A member of an angel network
• The majority of angel investment in Canada is
  completed by individuals >75%
• Estimate of Cdn Angel Investment is 916mm in
  approx 1500 companies
Incubes Presentation Accessing Capital From An Angel Investors 2012 08 08
Angel Network’s in Canada
•   NACO – National Angel Capital Organization
•   28 Angel Groups in Canada
•   They have collectively about 1500 investors
•   Three large groups accounted for 58%
•   The majority have fewer than 50 members
•   50% of groups set up since 2008
•   Vast majority do volunteer due diligence
•   13 Angel Groups in Ontario
National Survey of Canadian Angel
 Groups Investment Activity 2011
• 134 Investments in 2011 (103 new and 31
  follow on) totaling 82.4 million (60.5m new
  and 21.9m follow on) an increase from 2010
  of 90 investments (80 new and 10 follow
  on)totaling 35.3m (34.2m new and 1.1m
  follow on)
• 12% increase in business plans funded from
  those selected for detailed review
• 80% - Ont, 7% Que, 10% BC, 3% Atlantic
• Co-investment occurred in 58% of investments
  and invested a further 29.4mm
• The groups have a portfolio of 250
  investments, three groups accounted for 55%
• Most groups make between 1 & 5 investments
  per year
• ICT (51%), Clean Tech (21%), Life Sciences
  (17%)
• 74% of investee businesses had sales revenue
  in 2010
Angel Group Investment
• 73% of companies invested had a valuation of
  between 1 & 3 million
• 12 % of funding at seed stage
Angel Group Benefits
•   Qualified Opportunities
•   Opportunity referral
•   Increased Capital Diversification
•   Great Valuation and Favourable Terms
•   Networking
•   Portfolio company mentoring or engagement
•   Shared Due-Diligence
•   Advisory Board and BOD Roles
Traditional Angel Network is
             Changing
• Currently Southern Ontario Angel Investment
  community is fragmented with 12 groups
• Government programs ( IAF, MaRS, OCE, IBI)
• Online - Angel List, The Funded, Gust
• Y Combinator, Tech Stars, 500 Start-ups
• Incubators & Accelerator funds
• Crowd funding such as kickstarter.com
• Super Angels & Micro-VC’s
Incubes Presentation Accessing Capital From An Angel Investors 2012 08 08
Maple Leaf Angels
• Toronto based and in existence since 2007
• MLA has invested in 17 companies since
  inception in 2007 for $7,000,000
• Currently 38 members
• MLA conducted a strategic renewal in Nov
  2011 with a new business plan released in
  January 2012 and a new BOD elected March
  2012
Incubes Presentation Accessing Capital From An Angel Investors 2012 08 08
Entrepreneur Benefits
•   Large capital source
•   Broad pool of Knowledge & Contacts
•   Efficient Process
•   Capital Connections
•   In many provinces there is investor tax credit
•   Leverage sources of funding (AEF, IBI, OETF)
Equity Capital Life Cycle
         Concept and               Introduction    Growth     Maturity     Decline
           product
         development
                                                                             Sales




                       Sales and
                       profit
                                                                             Cash flow

                                                                           Profit

                                                                                     Time

R&D         Pre-Seed     Start-Up        Round 1    Round 2
             & Seed                                                 Exit
Grants
/ Love       Angel           Angel       VC $        VC $
Money          $               $
   $
What Angels Look For
•   High anticipated growth rate
•   Experienced management team
•   Sustainable competitive advantage
•   Barriers to entry
•   Clear strategy for commercialization
•   Proof of concept
•   Business model anchored in Reality
•   Investor exit strategy
Five types of Angel Investors
1.   The Coach Angel Investor
2.   The Do’er Angel Investor
3.   The CEO of a Public Company Angel Investor
4.   The Spectator Angel Investor
5.   The Boss Angel Investor
Three factors that appear to
      impact investor outcome
• Due diligence time: More hours of due
  diligence positively related to greater returns
• Experience: An angel investor's expertise in
  the industry of the venture being invested
• Participation: Angel Investors that interacted
  with their portfolio companies at lest a couple
  of times per month mentoring, coaching,
  providing leads and monitoring performance
  experienced greater returns.
The Application Process
• Start with www.mapleleafangels.com
• There is a full education section for
  entrepreneurs
• You apply using www.gust.com
• Selection Committee
• Monthly Breakfasts
• Due Diligence
• Term Sheet
Target Investee Companies
• Companies who are in seed and early
  stage, one for each meeting if the quality can
  be found
• In technology, provided they are backed by a
  member who is willing to sponsor
• Great management
  team, valuation, technology .......
Selection Criteria
• The stage, quality of the management team,
  valuation and technology of companies are
  more important than the sector criteria
• Quality is more important than quantity
• The best of the best should only present and
  the number of companies presenting should
  be limited to one or two, introduced by
  someone who is willing to sponsor or lead the
  investment
Selection Criteria
• Select the very best in seed and early stage
• Seed investment amounts should be from
  $250k to $500K and early stage investments
  should be from $350k to $1,500K
• Deal flow of members – both group
  investments and private or small group
  investments should be tracked and reported
  on, with clear communication on which
  investments went through MLA’s group due
  diligence
Future Topics
1. Bootstrapping a Company & Exec Summary
2. Forming an Advisory Board
3. Preparing a Pitch for Investors
4. Accessing Capital from a Angel Network
5. Terms to expect from an Investors Term
   Sheet
6. Pros of Cons of accessing Venture Capital too
   early & some of the pitfalls to avoid
Gerard Buckley, BBA, FICB, ICD.D
President and CEO
Jaguar Capital Inc.
(C) 416-884-9522
(W) 416-646-6789
g.buckley@jaguarcapital.ca

www.jaguarcapital.ca

@jaguarcapital
@gerardbuckley

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Incubes Presentation Accessing Capital From An Angel Investors 2012 08 08

  • 1. Accessing Capital From an Angel Investor Network Your First Professional Investment Who, What, When and How
  • 2. Agenda • 90 Second Company Elevator Pitch • Who is an Angel Investor • Angel Network in Canada • NACO 2011 Survey • Angel Investing is a changing • Maple Leaf Angels • The Benefits for Entrepreneurs • Q&A
  • 3. MLA
  • 4. Who is an Angel Investor • A person prepared to invest money • A person who can add value to the company • An accredited investor as defined by OSC • A member of an angel network • The majority of angel investment in Canada is completed by individuals >75% • Estimate of Cdn Angel Investment is 916mm in approx 1500 companies
  • 6. Angel Network’s in Canada • NACO – National Angel Capital Organization • 28 Angel Groups in Canada • They have collectively about 1500 investors • Three large groups accounted for 58% • The majority have fewer than 50 members • 50% of groups set up since 2008 • Vast majority do volunteer due diligence • 13 Angel Groups in Ontario
  • 7. National Survey of Canadian Angel Groups Investment Activity 2011 • 134 Investments in 2011 (103 new and 31 follow on) totaling 82.4 million (60.5m new and 21.9m follow on) an increase from 2010 of 90 investments (80 new and 10 follow on)totaling 35.3m (34.2m new and 1.1m follow on) • 12% increase in business plans funded from those selected for detailed review • 80% - Ont, 7% Que, 10% BC, 3% Atlantic
  • 8. • Co-investment occurred in 58% of investments and invested a further 29.4mm • The groups have a portfolio of 250 investments, three groups accounted for 55% • Most groups make between 1 & 5 investments per year • ICT (51%), Clean Tech (21%), Life Sciences (17%) • 74% of investee businesses had sales revenue in 2010
  • 9. Angel Group Investment • 73% of companies invested had a valuation of between 1 & 3 million • 12 % of funding at seed stage
  • 10. Angel Group Benefits • Qualified Opportunities • Opportunity referral • Increased Capital Diversification • Great Valuation and Favourable Terms • Networking • Portfolio company mentoring or engagement • Shared Due-Diligence • Advisory Board and BOD Roles
  • 11. Traditional Angel Network is Changing • Currently Southern Ontario Angel Investment community is fragmented with 12 groups • Government programs ( IAF, MaRS, OCE, IBI) • Online - Angel List, The Funded, Gust • Y Combinator, Tech Stars, 500 Start-ups • Incubators & Accelerator funds • Crowd funding such as kickstarter.com • Super Angels & Micro-VC’s
  • 13. Maple Leaf Angels • Toronto based and in existence since 2007 • MLA has invested in 17 companies since inception in 2007 for $7,000,000 • Currently 38 members • MLA conducted a strategic renewal in Nov 2011 with a new business plan released in January 2012 and a new BOD elected March 2012
  • 15. Entrepreneur Benefits • Large capital source • Broad pool of Knowledge & Contacts • Efficient Process • Capital Connections • In many provinces there is investor tax credit • Leverage sources of funding (AEF, IBI, OETF)
  • 16. Equity Capital Life Cycle Concept and Introduction Growth Maturity Decline product development Sales Sales and profit Cash flow Profit Time R&D Pre-Seed Start-Up Round 1 Round 2 & Seed Exit Grants / Love Angel Angel VC $ VC $ Money $ $ $
  • 17. What Angels Look For • High anticipated growth rate • Experienced management team • Sustainable competitive advantage • Barriers to entry • Clear strategy for commercialization • Proof of concept • Business model anchored in Reality • Investor exit strategy
  • 18. Five types of Angel Investors 1. The Coach Angel Investor 2. The Do’er Angel Investor 3. The CEO of a Public Company Angel Investor 4. The Spectator Angel Investor 5. The Boss Angel Investor
  • 19. Three factors that appear to impact investor outcome • Due diligence time: More hours of due diligence positively related to greater returns • Experience: An angel investor's expertise in the industry of the venture being invested • Participation: Angel Investors that interacted with their portfolio companies at lest a couple of times per month mentoring, coaching, providing leads and monitoring performance experienced greater returns.
  • 20. The Application Process • Start with www.mapleleafangels.com • There is a full education section for entrepreneurs • You apply using www.gust.com • Selection Committee • Monthly Breakfasts • Due Diligence • Term Sheet
  • 21. Target Investee Companies • Companies who are in seed and early stage, one for each meeting if the quality can be found • In technology, provided they are backed by a member who is willing to sponsor • Great management team, valuation, technology .......
  • 22. Selection Criteria • The stage, quality of the management team, valuation and technology of companies are more important than the sector criteria • Quality is more important than quantity • The best of the best should only present and the number of companies presenting should be limited to one or two, introduced by someone who is willing to sponsor or lead the investment
  • 23. Selection Criteria • Select the very best in seed and early stage • Seed investment amounts should be from $250k to $500K and early stage investments should be from $350k to $1,500K • Deal flow of members – both group investments and private or small group investments should be tracked and reported on, with clear communication on which investments went through MLA’s group due diligence
  • 24. Future Topics 1. Bootstrapping a Company & Exec Summary 2. Forming an Advisory Board 3. Preparing a Pitch for Investors 4. Accessing Capital from a Angel Network 5. Terms to expect from an Investors Term Sheet 6. Pros of Cons of accessing Venture Capital too early & some of the pitfalls to avoid
  • 25. Gerard Buckley, BBA, FICB, ICD.D President and CEO Jaguar Capital Inc. (C) 416-884-9522 (W) 416-646-6789 g.buckley@jaguarcapital.ca www.jaguarcapital.ca @jaguarcapital @gerardbuckley