Innovate…Build…Implement
Angel Investors
Presenter: Vidyadhar Prabhudesai
Who is an Angel Investor?
• An angel investor or angel (known as a business
angel in Europe), is an individual or group of
individuals who provides capital for a business
start-up, usually in exchange for convertible debt
or equity.
• They are known as "angels" because they often
invest in risky, unproven business ventures for
which other sources of funds—such as bank loans
and formal venture capital—are not available.
11/16/2011 Angel Investors - Presented by
Vidyadhar Prabhudesai
Types of Angel Investors
• Corporate Angels
• Entrepreneurial Angels
• Enthusiast Angels
• Micromanagement Angels
• Professional Angels
11/16/2011 Angel Investors - Presented by
Vidyadhar Prabhudesai
Profile of Angel Investors
• Self Employed individuals with annual income of
$90,000, net worth of $750,000, and average
investment of $37,000 per venture.
• 9 out of 10 investments are made in small,
mostly start-up firms with fewer than 20
employees.
• Provide personal loans or loan guarantees to the
firms they invest in.
• Average acceptance of 3 deals for every 10.
• Potential to provide a 20-30 times return over a
five- to seven-year holding period.
11/16/2011 Angel Investors - Presented by
Vidyadhar Prabhudesai
Investment by Industry Segment, US 2006
21%, $5.4 m
43%, $11 m
18%, $4.6 m
18%, $4.6 m
Based on research by Center for Venture Research at the University of New Hampshire
11/16/2011 Angel Investors - Presented by
Vidyadhar Prabhudesai
What does an investor expect?
• Position in Board and mentoring role
• Right to be informed and receive communication
• Internal Rate of Return of 30% over 5 years to
sales projections of $20 million
• Potential return of 5 times investment in first
five years
• 5% to 25% stake in business
• Stock (common or preference) with preference of
certain rights and liquidation preferences over
others
• Convertible debt or redeemable preference stock
11/16/2011 Angel Investors - Presented by
Vidyadhar Prabhudesai
Common Pitfalls at Presentations
• Usage of highly technical descriptions of
products, processes and operations.
• Giving vague or unsubstantiated statements.
• Forget to include the process of paying the
borrowed funds
• Strong management structure
• Assumptions
• Fictions
11/16/2011 Angel Investors - Presented by
Vidyadhar Prabhudesai
Innovate…Build…Implement
Thank You!