1. The “Graveyard of Dead Deals” R.I.P.
It’s near Halloween so we thought it might be appropriate to visit
the “Graveyard of Dead Deals”: the final resting place for early stage
deals that expired prior to investment.
Please take a walk and view the gravestones of deals gone bad and explore
some possible modifications that may have “revived” the deal.
We hope the information included helps entrepreneurs avoid “deal killers”
and keeps your deal out of the “Graveyard of Dead Deals”!
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

2. R.I.P.
“Product Issues”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

3.  BE UNIQUE: have a unique product or service.
 Have strong IP or proprietary technology.
 BUILD MOAT: have a barrier to competition.
 Ideally: be a disruptive force in your market.
R.I.P.
“Product Issues”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

4. R.I.P.
“Management Issues”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

5.  BE “COACHABLE”: consider investor feedback.
 Vary team strengths: startup and growth stage.
 Value success of company over personal goals.
 BE COMMITTED: have “skin in the game”.
R.I.P.
“Management Issues”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

6. R.I.P.
“Valuation too High”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

7.  Have “reasonable” valuation: later rounds build on it.
 Use “comps” or “comparables”: company or industry.
 Investors see lots of deals, value their input.
R.I.P.
“Valuation too High”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

8. R.I.P.
“No Market
Validation”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

9.  Investors want high growth, will market support it?
 Potential customer reference(s), what is their pain?
 Ideally: prototype, test market and show data.
R.I.P.
“No Market
Validation”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

10. R.I.P.
“No Exit”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

11.  Be explicit about plan for future investor exit.
 Set expectations about timeframe and value.
 IPOs: highly unlikely without HUGE growth.
 M&A: more likely exit in a reasonable timeframe.
R.I.P.
“No Exit”
“Graveyard of Dead Deals”
©2010 Tech Coast Angels

12. Who are the Tech Coast Angels?
Tech Coast Angels, www.techcoastangels.com, the largest angel investor
network in the United States, provides funding and guidance to more
early‐stage, high‐growth companies in Southern California than any other
investment group. Since its inception in 1997, TCA members have focused
on building valuable companies, personally invested more than $100M,
and helped portfolio companies attract more than $1B in additional
capital, mostly from venture capital firms.
TCA members give companies more than just capital; they also provide
counsel, mentoring and access to an extensive network of potential
investors, customers, strategic partners and management talent.
TCA has more than 300 members, including its venture capital affiliates, in
five networks in Los Angeles, Orange County, San Diego, Westlake/Santa
Barbara and the Inland Empire.
“Graveyard of Dead Deals”
©2010 Tech Coast Angels