This session was presented by Mark Graffagnini, Managing Member of Graffagnini & Associates. Find out more at http://graffagninilaw.com.

1. Louisiana Venture & Angel Capital: What
the Numbers Say about Capital Raising
Mark Graffagnini
NOEW 2014
New Orleans, LA 70130
mg@graffagninilaw.com
@GraffagniniLaw
Graffagninilaw.com

2. Background & Overview
Corporate and Securities law practice. Founded G+A in 2010
after practicing in Silicon Valley.
• G+A represents companies raising capital and investment funds and high
net worth individuals investing in companies.
Louisiana Venture and Angel Capital Report is an attempt to
quantify key metrics related to capital raising in Louisiana.
• It is the most comprehensive study to date of capital raising in Louisiana.
• It is now considered by many to be the “bedrock” gauge for venture and
angel investment, policy effectiveness and gaps between investors and
companies seeking capital
• Louisiana has lacked a source of data on capital investment and
availability.
Download now at graffagninilaw.com

3. Overview of Metrics Covered
Deal Size:
How much $
were
companies
trying to raise?
Closings:
How much $
was reported
raised?
Hubs:
Geographic
distribution of
financings
Deal Terms:
Types of
companies,
trends, etc.
Deal Flow:
How many
companies
were seeking
capital
Public Policy
Effectiveness
LA Venture and
Angel Capital
Market Health

4. Why is this so important?
1. Louisiana needs a framework to gauge progress.
• “What gets measured gets managed”—Peter Drucker
2. Other reports tend to underreport total deals.
• Outside investors and companies are evaluating LA market for early stage capital.
• Now is the crucial time for the LA early stage eco-system
3. Crucial to development of efficient capital raising market.
• Companies and investors cannot effectively match investment opportunities to capital without it
• Companies and investors are seeking out earlier stage deals
• Correct past advice that is not consistent with today’s economic realities
4. Key to measuring policy effectiveness
• Early stage companies need start up capital, not just tax credits
5. Determine whether grassroots/market efforts are responding
• NO/LA Angel Network
• Louisiana Seed Capital Program
• StepOne
• Legislative Changes

5. Data Sources
Louisiana Venture & Angel
Capital Market
Documents
used in
Deals
Form D
Filings with
SEC
Angel
Investor
Tax Credit
info

6. Angel Investor Tax Credit Data
Number of Angel Investment “Deals”
26
40
44
13
20
22
0
5
10
15
20
25
30
35
40
45
50
2011 2012 2013
Angel Investor Tax Credit:
Reservations and Awards
Total Angel Credit Reservations Total Awarded Reservations

7. Angel Investor Tax Credit Data
How much money companies sought versus what they got?
$24,874,650
$50,530,300
$23,935,499
$10,611,000 $11,069,693
$8,679,063
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
2011 2012 2013
Angel Investor Tax Credit:
Total Offering and Closings Reported
Total Offerings Reported to LED Total Closings Reported to LED

8. Angel Investor Tax Credit Data
How much capital were companies seeking (average & median)
$956,717
$1,263,258
$543,989
$690,000
$1,000,000
$400,000
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
2011 2012 2013
Angel Investor Tax Credit:
Average and Median Offering Size
Average Size of Offering Reported to LED Median Size of Offering Reported to LED

9. Angel Investor Tax Credit Data
How much money did companies raise per deal per year
(average, median)?
$816,231
$553,485
$394,503
$500,000
$204,834 $203,750
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
2011 2012 2013
Angel Investor Tax Credit:
Average and Median Closing Size
Average Size of Closing Reported to LED Median Size of Closings Reported to LED

10. Angel Investment Tax Credit Transactions
Geographic Distribution 1: Angel Investments by Parish
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2011 2012 2013
Louisiana Angel Tax Credit:
Size of Angel Investments by Parish
Orleans
East Baton Rouge
Caddo
Rapides
West Baton Rouge
Lafayette
Jefferson
Ouachita
St. Tammany
Tangipahoa

11. Angel Investor Tax Credit Data
Geographic Distribution 2: Total Amounts 2011-2013
$- $- $- $- $100,000 $150,000
$792,500
$3,863,000
$7,576,000
$17,878,256
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
Tangipahoa St.
Tammany
Ouachita Jefferson Lafayette West Baton
Rouge
Rapides Caddo East Baton
Rouge
Orleans
Total Louisiana Parish Angel Investments

12. Angel Investor Tax Credit Data
Geographic Distribution 3: Total amounts by Year (2010-2013)
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
Lafayette West Baton Rouge Rapides Caddo East Baton Rouge Orleans
2013 $- $- $207,500 $1,858,000 $1,875,000 $4,738,563
2012 $100,000 $- $- $2,005,000 $225,000 $8,739,693
2011 $- $150,000 $585,000 $- $5,476,000 $4,400,000
Louisiana Parish $ of Angel Credit Investments

13. Angel Investor Tax Credit Data
Potential Lessons
50% of Companies applying for angel tax credits do not qualify/receive tax credits
• 60-day closing window to submit proof of investment
• Rush at beginning of year, which tapers off
• Fundraising strategy may be questionable or VC investors don’t qualify
There may be some financing gap between what companies are seeking and what is available
• Failure to properly structure financing activity
• “Rolling Rounds” versus hard closing at one time
• Education is important!!!
Average and median tax credit per investor declined in 2013, as did Deal Size
• Indicates higher # of net worth individuals, fewer institutional investor
• Perhaps credit is now better being used for intended companies. **Not necessarily negative indicator
• May mean more investment opportunities are competing
Institutional Investors may be needed in later stages
• Large rounds and sizes in 2011 and 2012 led by a few major institutional investors
• Legislature considering amending tax credit for investment into funds
• Louisiana Seed Capital Program
• NO/LA Angel Network, Inc.
• StepOne
Despite some limitations, Outlook and Capital Raising Appear to be Healthy!!

14. Venture Capital Data
Data sources: SEC Form D Filings
Overlap between Companies that apply for AITC and that make SEC filings
• First task is to corroborate and compare the data
• Line between “angel investment” and “venture capital investment” cannot be drawn brightly
Form D is a filing that gives a company a safe harbor under the securities laws that
eliminates the requirement that a company file a “registration statement” (like an
IPO filing)
• It is rare not to make such a filing in a deal of any substantial size or that has professional or semi-pro
investors
• Rarer still for any company that plans to grow rapidly and take multiple rounds of investment
• Exception to the Rule: “mom and pop” businesses or completely local business
Companies likely raised more than what is reported in the “closing” reports. This is
because they file within 15 days of the first “offer or sale”.
• “Indefinite Amount” raise issue
• Rolling rounds  investments beyond 15 days

15. SEC Data
Number of Deals, Statewide
0
5
10
15
20
25
30
2011 2012 2013
NumberofDeals
Total Number of Deals Reported to SEC versus NVCA
G+A Report
NVCA

16. SEC Data
Number of Companies Raising Money:
Some companies did more than one “tranche”
17
18
26
14
16
26
0
5
10
15
20
25
30
2011 2012 2013
SEC Total Applications & Companies by Year
Total Applications
Unique Companies

17. SEC Data
Total Offering vs. Closing Sizes, Statewide, By Year
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
2011 2012 2013
Total SEC Offerings & Closings by Year
Total Offerings
Total Closings

18. SEC Data
Total Closing Investments by Parish by Year
Orleans
St.
Tamma
ny
East
Baton
Rouge
Ouachit
a
Lafayett
e
Jefferso
n
Caddo Lincoln
Concor
dia
St.
James
Rapide
s
Tangipa
hoa
Livingst
on
St.
Landry
2011 $16,66 $6,308 $1,500 $950,0 $972,0 $175,0 $250,0
2012 $11,04 $5,705 $500,0 $1,000 $1,515 $1,130
2013 $6,981 $15,74 $370,0 $6,500 $3,500 $1,310 $1,019 $247,5 $- $-
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
Total SEC Reported Closings, by Parish by Year

19. SEC Data
State of Incorporation/Jurisdiction
NOTE: These companies were still principally doing business here. This does not mean that they were
“out of state” companies in the common sense of that phrase.
29
27
1 1 1 1 1
0
5
10
15
20
25
30
35
DELAWARE LOUISIANA ALABAMA CALIFORNIA COLORADO FLORIDA SOUTH
CAROLINA
State of Incorporation (2011-2013)

20. SEC Data
Entity Type—How much did each type of entity actually close at
time of Form D Filing?
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
2011 2012 2013
SEC Closings by Entity Type
Corporations
Limited Liability Company

21. Analysis
Potential Observations from Data
LA companies are reporting raising considerably more money than is reported
in other sources
• 2013 saw quite a few large size deals
• Upward trend over 3 year period
• As outside investors evaluate capital and new groups form, it will be important to broadcast our actual
accomplishments
Data on “true” deal size (and totals) is elusive with either metric
• Info is limited to publicly reported info
• Companies not required to report final closings to SEC or LED
Trends may suggest renewed focus on attracting capital to state and/or
incentivizing capital in-state
• Institutional investors need to emerge in LA or we need to attract investors out of state as companies mature
Financing Strategy and Structure Should be Carefully Considered
• DE Corporations are more commonly financed and raise more money than LLCs
• “Rolling round,” “take it or leave PPM” strategies versus “term sheet” rounds with experienced investors
Policies should be evaluated against metrics

22. Questions/Comments & More Information
Contact:
• mg@graffagninilaw.com
• @GraffagniniLaw
• Graffagninilaw.com
Download copy of report to find additional information on the following:
• Industry financing breakdown
• Valuation terms
• Average angel investor investments made
• Full outlook
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