As both an Entrepreneur and an Angel Investor, I thought it was important to share what Angels are looking for so Entrepreneurs can have an inside view into what Angels are looking

1. February 10, 2016
Elaine Werffeli
elaine@elaingelinvest.com
@Elaingelinvest
Presented at Seattle Angel Conference Training Program
Know Your Angels
What Entrepreneurs need to know about Angel
Investors
Credit to John Sechrest (SAC Founder) for additional content

2. Spectrum of Angels
Angel Investor
• Accredited investor
who provides early
capital for a business
startup, usually in
exchange for
convertible debt or
ownership equity
Super Angels
• Serial investors in
early stage ventures
who are particularly
sophisticated,
insightful, or well-
connected in the
startup business
community
• Angelist is a great
resource
https://angel.co/
Angel Groups
• Angel Investors who
come together to
pool time, expertise,
diligence, research,
resources and
investment capital to
fund startup
businesses
@Elaingelinvest

3. Series B+
$25K - $1.5M $2M - $5M $10M+
Series A
Customer/Problem Fit
Source: iBusinessAngel.com
Problem/Solution Fit Product/Market Fit Product/Channel Fit Expansion
@Elaingelinvest
$100M$10K$1K

4. Angel & Seed deals have increased rapidly
over the past decade
W a s h i n g t o n V C d e a l c o u n t b y s t a g e
*Through 12/31/2015
28
66
161
206
86 90
78 79
61
40
57 53
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Angel/Seed Early VC Later VC
Source:

5. Seattle Angel Ecosystem
• 92% of Angel Investments happen within 1 hour of home
• There are several Super Angels in town - visit
https://angel.co/seattle/investors and sort on deals
• 11 Angel groups in town
• Not all groups are created equal
• Good to understand the differences among the area groups
• Best to match with your stage & focus
@Elaingelinvest

6. Forms of Angel Investment Groups
Form Description
Angel Network Angel groups which bring together investors for pitches and company reviews , but which then
let each investor decide if they want to be part of each deal separately. This is a Pitch then
Invest format. More than 90% of the US Angel Groups are in the form of a network.
Funds While all Angel Groups are seeing presentations and pitches of some kind, Funds take a
commitment for investment ahead of time. The key distinguishing feature between the types
of funds are Who makes the decision to invest and When they make the decision to invest.
Active Fund An Active Angel fund has a significant portion of the member investors actively involved in the
screening, deal flow, due diligence and investment decision.
Passive Fund In Passive funds, investor are passive in the selection of which companies to invest in.
Essentially, the passive fund relies on some other group or agency to do the fundamental due
diligence and investment selection.
Managed Fund When you have specific partners who you want making the investment analysis and investment
decision, a managed fund provides for General Partners who manage the decision process.
Event Fund In this case both the investment is taken up front and the date of when the investment will be
decided are defined up front before the companies are known.
@Elaingelinvest

7. Angel Groups in Seattle
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Group Industry Stage Form
SAC Designed to cultivate New Angel Investors
– Sector agnostic
Seed & Early Event Fund
SAF Sector agnostic Seed & Early Active Fund
Swan Venture Fund B2B Tech companies Seed Network
Pipeline Angels Sector Agnostic Seed Active
Element 8 Cleantech Focus –Nation wide Seed, Early & Expansion Network + Passive Fund
Wings Medical Technology Focus Seed & Early Network
Founders Co-op 100% IT; 80% B2B Seed Micro VC Managed Fund
Puget Sound Venture Club 2/3rds tech/ 1/3rd non-tech Early Network
TiE Angel Group Seattle (TAGS) Industry agnostic angel arm of TiE Seed, Early & Series A Network
Alliance of Angels Mostly Tech focused Seed, Early & Expansion Network + Passive Fund
Keiretsu Forum on the NW Tech, Consumer & Real Estate Go To Market funding Passive Fund

8. Source: Pacific Northwest Angels Group Startup Seattle.com
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9. Source: Pacific Northwest Angels Group Startup Seattle.com
@Elaingelinvest

10. Amount of Due Diligence Matters
Source: Return to Angel Investors In Groups 2007, Robert Wiltbank & Warren Boeker
@Elaingelinvest
Spending time on
due diligence is
significantly
related to better
outcomes.

11. 2 Key Questions
• Evidence that the market and more
importantly customers care (Also called
Traction and usually measured by Revenue)
• Evidence that your team can execute
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12. What to Include in your Pitch
• Story
• Problem you are solving
• Clearly articulated Product/Idea –
easily understood statement
• Show & Tell – Very Short Demo
• Size of Market Opportunity
• Target Customers
• Traction in Revenue as well as
customer Behavior
• Revenue Model (Include Pricing
and Projected growth to show
expected multiples)
• Metrics for Measurement
• Unique Value Prop &
Differentiation
• Competition – And there always is
• Barriers to entry/moat
• Go To Market Strategy/Channels
• Potential Exit
• Strong Team
@Elaingelinvest

13. Effective Pitches
• You need to be a Purple Cow – Remarkable and memorable
• Nail the problem or need you are meeting
• Deliver with Confidence
• Exude Passion
• Minimize Text, Nothing smaller than 28 point font
• 3-4 bullets max keeps the focus on you
• 10 Slide Average
• Deliver in 3 – 15 minutes
• Close – Ask for the money and follow-up

14. Traits Angels are Looking for in CEO
• Team centric
• Coachable – Listens and responds to feedback – Is a sponge
• Good storyteller
• Kind and respectful to every and all
• Ability to attract and keep investors, employees, customers
• Pays attention to the wobble in spinning plates
• Experience in sector

15. Common Funding Turn Offs
• Valuation is too high
• Management team is thin/inexperienced
• No unfair Competitive Advantage
• Insufficient Growth Potential

16. Expertise of Angel Matters
Source: Return to Angel Investors In Groups 2007, Robert Wiltbank & Warren Boeker
@Elaingelinvest
Analysis indicates that
expertise had a material
impact on angel
investors’ earned
returns. Investment
multiples were twice as
high for investments in
ventures connected to
investors’ industry
expertise.

17. Angel Participation Matters
Source: Return to Angel Investors In Groups 2007, Robert Wiltbank & Warren Boeker
@Elaingelinvest
After an angel makes an
investment, his or her
participation in the
venture—through
mentoring, coaching,
financial monitoring, and
making connections—is
significantly related to
that venture’s outcomes.

18. Smart Money
• Due Diligence should happen both ways
• Entrepreneurs are not only seeking monetary investment
• They also need advice, knowledge, experience, connections
• Relationships are key - More about engagement than you may
think
• Angels have portfolios and don’t usually invest in competing
companies
• Start building relationships very early
@Elaingelinvest

19. Important thing is to start connecting
• Lots of venues to get to know angels in town - Geekwire calendar
http://www.geekwire.com/calendar/
• Sign up for the Seattle Angel Newsletter
http://www.seattleangel.com/p/entrepreneur-resources.html
• Bryan Brewer is a startup mentor in town and has created the
Minimum Fundable Company Test. www.mfctest.com
• Weekly Seattle Angel Office Hours - Impact Hub Bellevue and Surf
Incubator in Seattle
• SAC is one of the places you can meet 40 Angels at once
• SAC IX starts on Feb 23rd and deadline to apply to pitch is Feb 22nd
• Main event with 6 finalist on May 12th
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20. Questions?
@Elaingelinvest