My off-the-cuff perception of deals that fit within an angel investor's sweet spot.

1. ANGELS &
a quick peek at
DEMONS
https://www.flickr.com/photos/xubangwen/
start-up financing
the logic of

2. The goal of this deck is just to present a typical scenario from my
perspective. Obviously all businesses are as unique.
That said, they are not as unique as each entrepreneur thinks 

3. why finance?
GESTATION
(Prototypes,
Pilots, & Plans)
COMMERCIALIZATION
(Products & Pivots)
GROWTH
(Scale & Scope)
TRADE SALE OR IPO
(Lipsticking, Woooing, &
Exit)
All businesses go through phases in their life cycles. During some
phases, financing helps a company cross a chasm. There are 4
chasms that financiers typically help with….

4. why finance?
GESTATION
(Prototypes,
Pilots, & Plans)
COMMERCIALIZATION
(Products & Pivots)
GROWTH
(Scale & Scope)
TRADE SALE OR IPO
(Lipsticking, Woooing, &
Exit)
~Time 9 months
~Needed 125K
Spent on? MVP Design,
Engineering,
and Testing
~Valuation 500K
~Seed Investor
Gets
25%
~Series A
Investor Gets
~Series B
Investor Gets
~You Get 75%

5. why finance?
GESTATION
(Prototypes,
Pilots, & Plans)
COMMERCIALIZATION
(Products & Pivots)
GROWTH
(Scale & Scope)
TRADE SALE OR IPO
(Lipsticking, Woooing, &
Exit)
~Time 9 months 18 months
~Needed 125K 1M
Spent on? MVP Design,
Engineering,
and Testing
Sales, Sales, Sales &
production /
engineering support to
keep up
~Valuation 500K 3M
~Seed Investor
Gets
25% 20%
~Series A
Investor Gets
30%
~Series B
Investor Gets
~You Get 75% 50%

6. why finance?
GESTATION
(Prototypes,
Pilots, & Plans)
COMMERCIALIZATION
(Products & Pivots)
GROWTH
(Scale & Scope)
TRADE SALE OR IPO
(Lipsticking, Woooing, &
Exit)
~Time 9 months 18 months 18 months
~Needed 125K 1M 2.4M
Spent on? MVP Design,
Engineering,
and Testing
Sales, Sales, Sales &
production /
engineering support to
keep up
Expanding into
New Segments /
Locations,
Brand, & Rebuild
~Valuation 500K 3M 8M
~Seed Investor
Gets
25% 20% 14%
~Series A
Investor Gets
30% 21%
~Series B
Investor Gets
30%
~You Get 75% 50% 35%

7. why finance?
GESTATION
(Prototypes,
Pilots, & Plans)
COMMERCIALIZATION
(Products & Pivots)
GROWTH
(Scale & Scope)
TRADE SALE OR IPO
(Lipsticking, Woooing, &
Exit)
~Time 9 months 18 months 18 months 18 months
~Needed 125K 1M 2.4M
Spent on? MVP Design,
Engineering,
and Testing
Sales, Sales, Sales &
production /
engineering support to
keep up
Expanding into
New Segments /
Locations,
Brand, & Rebuild
Finding, Pitching &
Closing w/ continued
growth
~Valuation 500K 3M 8M 20M (4x
PAT)
100M
~Seed Investor
Gets
25% 20% 14% 2.8M
(11x)
14M (55x)
~Series A
Investor Gets
30% 21% 4.2M (4x) 21M (20x)
~Series B
Investor Gets
30% 6M (3x) 30M (15x)
~You Get 75% 50% 35% 7M 35M

8. lies, damn lies, statistics, and spreadsheets
FY01 FY02 FY03 FY04 FY05 FY06 FY07
REVENUE 0 200,000 1,500,000 3,500,000 7,000,000 12,000,000 23,000,000
INVEST 125,000 1,000,000 2,400,000
COST 170,000 500,000 750,000 1,500,000 2,000,000 2,500,000 3,500,000
CASH -45,000 700,000 750,000 4,400,000 5,000,000 9,500,000 19,500,000
DISCOUNT 0.95 0.7 0.7
NPV $566,469 $2,834,597 $8,586,727
Behind the scenes, the previous slides were driven by a pro-forma
projection that would need to look something like the following….
Funding is needed to fill a hole that is not covered by sales revenue.
Usually, that means growing ahead of revenue, either start-up, or
fast growth.
An angel is primarily interested in understanding/validating
your assumptions about revenue (price times volume) and
cost (people, production, promotion, and place). You need to
be able to explain why your business can deliver these
numbers.
An angel needs to understand
what you are spending her
money on….

9. exhaustion warning
One other thing…
Each round of fundraising will take 6-9
months to close
So you need to start the next round
soon after you close the current round.

10. SELF
BANK
PRIVATE
EQUITY
PUBLIC
EQUITY
CROWD VENTURE
FUNDS
ANGEL
INVESTORS
INCUBATORS
BIZ PLAN
COMPETITIONS
SELFFRIENDS & FAMILY SALES
LOAN
OVERDRAFT
$
where does financing come from?

11. FUNDING CRITERIA ANGELS
Quantum of funds LOW
Cost of funds HIGH
Speed to get funds FAST
Availability of options MANY
Ease of discovery HARD
Due Diligence EASY
Mentorship and Coaching GREAT
Cost Support NONE
Restrictive Terms MINIMAL
Control you give up MINIMAL
Business Development GREAT
when would you source from angels?
• Angels are useful early on
(ideation & POC)
• Don’t get greedy at this
stage. You are much
higher risk than you might
think
• Don’t expect too much
from angels. They may be
as new as you
• Angels may not even know
they are angels, you need
to prospect!

12. Who to stalk in 2013…
1. There are many Managing Directors who have been
retrenched from banks after the sub-prime collapse.
These guys have lots of play money and think
associating themselves with the start-up world makes
them sexy
2. 1st
generation entrepreneurs who made it in Singapore
before
3. Brick and mortar 2.0 – by 2013, the children of family
businesses who are now budget deciders are about 40
years old…they were the first generation of cyberians, so
they get it. Up till now, they have been too young and
inexperienced to be trusted with big family businesses. In
the next decade, they will be able to allocate play money
and innovation for their big businesses

13. DOCUMENT LINK
Sample Agreements &
Investment Documents
http://ycombinator.com/seriesaa.html
Inc’s “How to find an Angel
Investor”
http://www.inc.com/guides/start_biz/24011.html
Convertible Debt http://en.wikipedia.org/wiki/Convertible_debt
How to be an Angel Investor http://www.paulgraham.com/angelinvesting.html
useful links

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Please note that all content & opinions
expressed in this deck are my own and don’t
necessarily represent the position of my
current, or any previous, employers

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