Preparing for Angel Investment

Preparing for Angel Investment Padmaja Ruparel Indian Angel Network Indian Angel Network  India’s first & largest Business Angel Group  Investors from across multiple sectors  Entrepreneur presentations in Delhi, Mumbai & Bangalore  Investments in 15 companies  Provides smart money – strategic leadership & contacts • Education • Intellectual Property • Consumer Internet • IT • Mobile • Robotics • IBank • Online Media Angels invest in start up / early stage ventures….  ….. but when there are no revenues, no clients, sometimes no marketable product, no complete team…… What do they look for? What Angels Look for Space – big? Rapidly growing? Clearly defined proposition Why will you succeed – what unique pain you resolve Do you understand who is your customer Understanding of competition Differentiators / USPs Management Team  Background, experience, track record, integrity, passion, mentorable,  Understanding of financial issues  P&L, Cash flow, cost & revenue models  Sales / Marketing strategy  Ideas are a dime a dozen – execution, execution, execution        What  What is the space  Not enough to say telecom / entertainment  Who are the market leaders – helps defining the space  Their size, model, etc.  Market potential from external sources  Endorses the opportunity  What is your product / service  Does it need seeding  How does it fit in the landscape Why  Why is your product / service necessary  What pain is it removing for the customer  Is it adding a service which will enhance a product / service  Is the process different increasing productivity, reducing cost, etc. etc.      Is it doing something Different / Differently Is it “need to have” / “nice to have” What will the customer exactly get / see Is the proposition too common / too unique Pain point in competition being addressed For Whom  Identify exactly who the customer is  Is it creating a new customer base  Enhancing a customer base  Is your target the real customer ?  What are the parameters of your customer?     Geography Age Urban / rural Etc etc. Market  Market size  A percentage of a billion dollar market is not YOUR market size - what is the market you can leverage  How has the market been validated by you?  Pilots, prototype endorsements, etc  Specific markets / geographies / segments which will be addressed  Marketing strategy Competition  Who is your competition?  Product / service  Company  Alternate process  Size up your competition  SWOT of competition  Lessons learnt from competition  Trends in competitive companies “Never say None” Potential buyers could continue without your product / service…. Is also competition Barriers for competition  Existing and future competition  First mover advantage – rarely sufficient  Needs more vision and could be  IP driven  market entry strategy  Innovative commercial model  Product enhancements, service add ons, etc.  IP / Patents  Customer retention strategies  Pricing is only one factor Customer  How will you acquire customers         Reflect market realities Customer behaviour Partnerships – conflict situations Demo / reference sites How did you acquire them Sales cycle time Why did they come to you vs competition Why did they go to competition vs you average revenue / client or target Acquisition Cost / client No of customers to break even  Current customers  Quantification    Delivery model  How will you deliver        Build yourself Technology used Service provider partnerships Branding After sales strategy Any relevant certifications Permissions reqd./ received  How will you scale  Infrastructure / Processes / productisation Team  Who is the team behind this venture           Background and experience Contribution till date Brief Job role Gaps in team Time contribution Roles Non compete Cash Equity ESOP   Advisors Team and Advisor Compensation   Mentor Team expansion    Attract Motivate Retain Financials  Current / Projected for next 3 years     Topline / bottom line Headcount Projected    When will it break even       Self investment & funding received till date Investment sought Skin in the game For what Where will it take your venture Next round requirement Cash flow based workings No debt retirement Profitable businesses are more attractive !  Valuation expectation Risks and Mitigating them  Are there risks to your plan  “No” is not an option  How will they be mitigated  Examples of early set backs and their handling is a good idea Exit  Investors keen to monetize their investment  How  When  What  Building an exit option is necessary for yourself, your team, and your investors Investor Perspective  Alternative investment options  Angel investing is an alternate asset class  This space / sector is one of many  Your plan’s niches is just one of the many niches  Your plan is in competition with another  Remember idea may be sold but investment may not happen Some tips                Be brief and direct; get to the bottom line quickly Identify what the business is immediately Define the customers quickly and the customer problem clearly Define what’s compelling and unique Describe how you will make money Provide a phased snapshot of your company 12, 24 and 36 months out Describe how you propose to take your product to market Make bottom-up as well as top-down projections Know what 4 to 5 assumptions your plan pivots on Discuss the key risk factors State how much money you will need and how you will use it State your possible exit strategies Presentation should be self explanatory – there will be investors who may not be in the room Clarity in text / relevant graphs more important than pictures Blue sky points not relevant  Investors are quite knowledgeable ! And Finally  Put some of your skin in the game  Getting a high valuation early can be fatal  Size of the pie wins every time over share of the pie Thank you Do write in to us with your queries / feedback info@indianangelnetwork.com