How To Obtain Start-up Funding
The Care and Feeding of Angel Investors
Blair Garrou & Marc Nathan
March 14, 2005
Who We Are
Marc Nathan
Blair Garrou
UT RTF Grad Assisted Dad’s Client
Started/Ran Tech Companies Launched Several Houstonbased Tech “Accelerators” Venture Capitalist For Past 5 Years Successes And Scar Tissue
Dotcom Boom-BustBoomlet Cycle
More Success Than Failure
– But Not By Much
Bulldog Financial
DFJ Mercury
So You Think You Need Start-up Capital…
Before You Move Forward, Ask Yourself:
How Much Money?
• Need vs. Want vs. Time
How Long Will It Take?
• Breakeven vs. Profit
How Much Responsibility?
• Having Outside Investors Is A Big Step
What Can Angels Do For You?
Money
Experience
Contacts Perspective
What’s In It For Them?
Financial Return $$
Philanthropy
• Gives Something Back
Excitement
• Stays In The Loop, Need To Be Needed
Played Enough Golf…
• Can’t Stay Home And Keep Your Edge
Start-up Investors - the 3 Fs
Family
Obligated to Love You, Not Fund You
Friends
Believe In You, But Know Your Faults
Fools
Customers, Professionals (DD&Ls), Angels
What Do Angels Look For?
Lifestyle vs. Growth Business Return Of Capital And Return On Capital High Risk, But High Reward Betting On The Jockey And The Horse An Idea That Is Fully “Fleshed Out” Communication Is Key…
Where Do You Find Angels?
Family Dinner Table Business Development Orgs
• ATI, HTC, Rice Alliance, AeA
Local Angel And Investment Orgs
• HAN, Eyes Of Texas, Etc.
Communicating to Angels
Elevator Pitch
• 2 minute overview – “8 and 80”
Executive Summary
• 1–2 pages; clear, concise and compelling
Business Plan
• A roadmap for success
Investor “PowerPoint” Presentation
• 10-12 slides
Bottom line – Capture the Angel’s Attention!
Capturing the Angel’s Attention
Clear, Large Market AND Need YOU Can Deliver The Product/Solution Customers Will Pay You Barriers To Entry Credibility & Believability
Angel Communication Takeaways
Luck Favors The Prepared Know Your Audience One Shot To Present – Make It Count! Presentation Materials Are A Direct Reflection On Management Clear, Concise And Compelling If You Don’t Know, Admit It Assumptions, Not Facts Write It Down, And Follow Up
Before An Angel Invests…
REQUIRED
OPTIONAL
Business Plan Investment Proposal Proposed Clients
Final Corporate Structure Website/Email Paying Clients
Angel Warning Signs
Big Egos
Too Controlling
Becoming “Addicted” Changing Circumstances
So I’ve Got The Money, Now What?
Keep Your Angels Informed
• Frequent Updates • Set Expectations • Failure Scenarios
Keep Your Angels Involved
• Utilize Their Experience
Make Your Angels Money
• Reasonable Return Over Time • Success Breeds Success
Contact Info Blair Garrou DFJ Mercury Venture Partners
Tel: 281.250.9579 Fax: 832.553.2619 blair@dfjmercury.com (Subject: SXSW)
www.dfjmercury.com www.dfj.com
Contact Info Marc H. Nathan Bulldog Financial
Tel: 713-960-9900 Fax: 713-961-2940 mhn@bulldogfinancial.com (Subject: SXSW) www.bulldogfinancial.com