Angel Investing: Fear is Good

Angel Investing: Fear is Good

Transcript

1. Angel Investing Fear is Good
2. There is no scientific evidence to support these ideas; use them at your own risk. DISCLAIMER
3. Agenda Why Angel Investment How to Get Started Good Deal Flow Investment Terms Post Investment
4. Why Angel Investment
5. Why Angel Investment Some people make (a lot of) money
6. Why Angel Investment Studies of long term average returns: 18-38% per annum
7. Why Angel Investment But nobody really knows
8. Why Angel Investment And some of people lose (a lot of) money
9. Why Angel Investment The economics of startups have changed
10. Why Angel Investment 50x cheaper vs. 1999
11. Why Angel Investment 3x faster to market vs. 1999
12. Why Angel Investment 10x bigger markets vs. 1999
13. Why Angel Investment 1,500x better economics vs. 1999
14. Why Angel Investment Contribute back to society
15. Why Angel Investment Have an impact on the system
16. Why Angel Investment Think of it as education
17. Why Angel Investment Meet interesting people
18. Why Angel Investment Startups ain’t boring
19. Why Angel Investment Logic and emotion
20. Getting Started
21. Getting Started What you need
22. Getting Started Some money
23. Getting Started Returns are highly skewed
24. Getting Started More than some time
25. Getting Started Willingness to learn
26. Getting Started Research the market
27. Understand the basic legal issues Getting Started
28. Getting Started Meet entrepreneurs
29. Getting Started Meet co-investors
30. Getting Started Due diligence is important
31. Getting Started Due diligence ain’t just numbers
32. Getting Started Diversification is important
33. Getting Started More than just money
34. If you don’t have time consider a fund Getting Started
35. Good Deal Flow
36. Without good deal flow you have no chance Good Deal Flow
37. Quality over quantity Good Deal Flow
38. Without quantity there is no quality Good Deal Flow
39. Warm intros vs. cold intros Good Deal Flow
40. Build a trusted network Good Deal Flow
41. Meet random people and help them Good Deal Flow
42. Share your ideas Good Deal Flow
43. Give straight feedback Good Deal Flow
44. Be fair to entrepreneurs Good Deal Flow
45. Set high standards for entrepreneurs Good Deal Flow
46. Find great co-investors Good Deal Flow
47. Be fair to co-investors Good Deal Flow
48. Support your companies Good Deal Flow
49. People, people, people Good Deal Flow
50. Investment Terms
51. Don’t reinvent the wheel Templates do exist Local variation is real Investment Terms
52. Lawyers give legal perspective, not business perspective Investment Terms
53. The honeymoon is a preview of the marriage Investment Terms
54. Equity vs. convertible Both can be great Both can be terrible Investment Terms
55. Good lead investor makes a huge difference Investment Terms
56. Every term sheet is a bundle of terms not separate terms Investment Terms
57. Valuation 100% of 0 is still 0 Investment Terms
58. Liquidation preference Alignment of interests Keep it simple Investment Terms
59. Pro-rata / follow on rights Plan for the future Communicate clearly Investment Terms
60. Board of directors Definitely doesn’t scale Run a modern version Investment Terms
61. Information rights Transparency is good Except for competition Investment Terms
62. Anti-dilution Stick with broad based Don’t make it complicated Investment Terms
63. Drag along / tag along No small investor veto Many variations Investment Terms
64. Founder vesting Life is messy Co-founders do split up Investment Terms
65. Dividends Cost of time Analogy with team salary Investment Terms
66. Option pool Talent is hard to get Also useful for partners Investment Terms
67. Cap table Cleaner is better Time magnifies mistakes Investment Terms
68. Make term sheets as simple as possible but not simpler Investment Terms
69. Post Investment
70. Time for a Reality check Post Investment
71. Identify gaps and needs Post Investment
72. Investors are part of the team Post Investment
73. Communication Frequency Style Post Investment
74. If you like lean startups try lean boards Post Investment
75. Sophisticated tools vs. Google docs Post Investment
76. Metrics What’s really going on? What’s the core score? Post Investment
77. The dip hits every company and it ain’t fun Post Investment
78. Identify your specific value added Post Investment
79. Maximum support at inflection points Post Investment
80. Sometimes best to simply get out of the way Post Investment
81. Time to begin the real hard work Post Investment
82. “Education consists mainly in what we have unlearned.” - Mark Twain tytusm@frescoca.com