Managing Structured Angel Groups & Fostering Innovation:
Sam Sezak Senior Associate, New Vantage Group
Medellin Agosto 2006
What is an Angel Investor?
Expectation of financial reward first Role in entrepreneurial process Mentoring and advising entrepreneurs Provide seed or early-stage investment dollars Invest smaller dollar amounts per investment ($25,000-$500,000) Invest personal wealth Tolerance to lose entire investment Ability to have diversified portfolio Patient money
Medellin Agosto 2006
Angel Organizations Can Fill Capital Gap
Stage Pre-Seed Seed/StartUp Early Later
Source
Founders, Friends and Family $25,000 to $100,000
Individual Angels
Funding Gap between $500,000 and $1,000,000 (depending on region)
Venture Funds
Investment
$100,000 to $500,000
$1,000,000/$5,000,000 and up
Medellin
Agosto 2006
Reasons for Organizations of Angels:
Quality of deal flow Greater investment clout from combined dollars Can meet the larger funding gap Collective due diligence – minimize risk Group social benefits
Medellin
Agosto 2006
New Vantage Group
Creates and manages early stage funds for angels Dinner Club, E-Media Club, Washington Dinner Club Active Angels Investor Network Seraphim Fund, LP Consults & educates groups of angels globally Power of Angel Seminars – Kauffman Foundation Costa Rica Link Inversiones - Fundacion MesoAmerica Conferences - Chile, Uruguay, Argentina, Malta, Finland, France, Mexico, United Kingdom.
Medellin Agosto 2006
John May, Managing Partner
Co-founder and managing partner of New Vantage Group Co-founder of the Investors' Circle and Private Investors Network Chairman of the newly formed Angel Capital Association Lead instructor for their "Power of Angel Investing" seminars Co-author of two books, Every Business Needs an Angel and State of the Art, An Executive Briefing on Cutting_Edge Practices in American Angel Investing
Medellin Agosto 2006
Dinner Club, E-Media Club, Washington Dinner Club
Manager-led fund model Washington, DC focused early-stage venture fund that included approximately 75 angel investors $100,000 - $150,000 to join Clubs invested $500,000-$1,000,000/company Co-invested with other venture funds that are raising $1-5M. Focused on disruptive technologies
Medellin
Agosto 2006
Active Angels Investor Network
Manager-led pledge fund model 60+ members $2500/year to join Clubs invests in seed stage, Series A rounds $250,000-$500,000/investment General focus on innovative technologies
Medellin
Agosto 2006
Key characteristics of an innovative business:
Management Opportunity recognition Systems Thinking Receptivity to coaching and investor input Business Idea Solid technology Market differentiator & competitive advantage Network Strategic Partnerships – Outsourcing
Medellin Agosto 2006
Why does NVG seek out innovative businesses?
Innovative businesses have the ability to stay ahead of the curve by consistently coming up with new things that are useful and successful We believe in social networking Strong belief in leading innovation rather than managing it
Medellin
Agosto 2006
Some of our Innovative Companies:
•Turns waste into viable product •Uses low-cost recycled bottles for packaging •Socially responsible while profitable •High resolution PET scanner significantly enhances detection of breast cancer •6 technology patents, 8 pending, 2 foreign pending
Medellin Agosto 2006
Benefits of working with angel investors?
Cash infusion Relationships and industry contacts Wealth of experience
Medellin
Agosto 2006
Examples of Active Angels in our group:
A protein manufacturing company that allows for both rapid and large-scale expression of a broad range of high-quality proteins without expensive process development for scale-up Added Value: Bob Balcerzak, COO Created an ATM network that provides surcharge free transactions on over 32,000 ATM’s. Added Value: Mark Rothman, Board Member
Medellin Agosto 2006
Governmental and Institutional Support of Innovation:
1. Kentucky’s Prescription for Innovation – Full broadband deployment by the end of 2007 – Improve citizen services and promote economic development through e-government, virtual education, and online healthcare – Local technology teams in every community to support technology growth strategies for public, business and community leaders. 2. Kauffman Foundation’s iBridge Program
Medellin Agosto 2006
Seraphim Fund, LP
Investment Size: Focus: $30,000,000 Innovative UK technology firms seeking expansion capital Partners: Angel groups across the UK from London to Edinburgh Government Leverage: 2:1
Medellin
Agosto 2006
San Jose, Costa Rica – Link Inversiones
Develop and deliver 1 day education/training modules modified from US experiences, and provide a customized starter kit that includes: Best practices of early stage company investing Legal considerations and documentation Operating procedures and policies Operations knowledge Hands on assistance to angel group leaders and ongoing support from a distance Access to NVG’s multi-country Angel network
Medellin Agosto 2006
Examples of Innovative Companies Locally?
Technologically innovative: Dedicated to the development of tools and software components: 2 products Biable & InfoContable Started: Group of small chocolate manufacturers wanting to expand the market, improve financial & production capacity, and avail of scale economies. Now: Launched to the U.S. and European market, “Chocolate Santander,” oriented to gourmet consumers.
Medellin Agosto 2006
Summary
Angel Organizations play a crucial role filling a void in the equity gap Angel investors foster innovation Innovation provides the building blocks for a developing economy Innovation starts with the ability to change
Medellin
Agosto 2006
Progress is impossible without change, And those who cannot change their minds cannot change anything. – Albert Einstein
Medellin
Agosto 2006
Gracias!
Sam Sezak Senior Associate New Vantage Group Sam@newvantagegroup.com +1-703-255-4930 ext. 13
Medellin Agosto 2006
Appendix – Useful Resources
Books:
1. Angel Investing: Matching Startup Funds with Startup Companies -- A Guide forEntrepreneurs, Individual Investors, and Venture Capitalists (Hardcover), by Mark Van Osnabrugge and Robert J. Robinson The Art of Innovation, Lesson in Creativity from IDEo, by Tom Kelley The World is Flat, by Thomas Friedman An Executive Briefing on Angel Investing in Latin America edited by Elizabeth F. O’Halloran, Peter L. Rodriguez, and Felipe Vergara
2. 3. 4.
Websites:
www.angelcapitalassociation.org www.eventuring.org www.newvantagegroup.com/site/links.asp
Medellin Agosto 2006
Appendix – Useful Resources
Some examples of worldwide innovation initiatives:
1. Kauffman Foundation
www.kauffman.org Kauffman Thoughtbook 2005, Ewing Marion Kauffman Foundation
2. 3. 4. 5.
State of Kentucky
www.connectkentucky.org, Press Release June 01, 2006: ConnectKentucky Named Winner of National Economic Development Excellence Award by U.S. EDA
Australian
http://www.dest.gov.au, The Australian Government’s Innovation Report, 2005-6: Real Results, Real Jobs
Southeastern United States
www.southern.org/pubs/2006AnnualReport/InnovationIntro.pdf
Mexico – FUMEC – Mexico Foundation for the Sciences
www.northamericaninstitute.org, FUMEC experience and the tri-national cooperation in Science, Technology and Education for Competitiveness
Medellin Agosto 2006