How do small businesses interface with startups?

1. Why Angel Investing is
Important To Small
Business

2. About Me
• Co-Founder of Hyde Park Angels (www.hydeparkangels.com) and West
LoopVentures (www.westloopventures.com)
• Blog at pointsandfigures.com Tweet @pointsnfigures
• Active investments in: KapowEvents.com, YCharts.com, Brilliant.org,
Alltuition.com, Desktimeapp.com, UICO.com, Supply-vision.com,
Tallgrassbeef.com
• Past Investments: Win Detergent, Noblivity, Shuffletech, FeeFighters,
Gradebeam
• Trustee at the National World War Two Museum
(http://www.nationalww2museum.org) in New Orleans, Louisiana
• married, two kids in college; traded for 22 years at the CME where I was on
the Board of Directors
• BS Univ of Illinois, College of Business; MBA University of Chicago, Booth
Graduate School of Business

3. WhatYou Do
• Small Business provides support for
Scalable companies
• Adds Character to a City
• Adds depth by providing income to
employees that become customers of
startups
• Become customers of startups

4. What StartUps Do
• Create businesses that make your business
better and more efficient
• Create customers for your business
• Become customers of your business
• Add jobs to the area, increasing your
business potential

5. 4 Ways To Participate In
Chicago Renaissance
• Talk about startups to your friends
• Make an introduction for them to a
potential customer
• Become a customer
• Invest in them

6. Lifecycle of an
Investment
• Investing is HARD WORK !!!!!
• Friends and Family
• Seed or Angel Round
• Series A and B round
• Venture Capital Round(s)
• Exit

7. Mistakes
• Take money-and that’s all they get
• Overvalue their companies
• Take too much money
• Take too little money

8. Friends and Family
• Small round of money, less than $100k.
Structured as Convert Debt. Gets
company going

9. Angel Round
• Convert Debt, or a priced round. Usually
less than $1M. Gives company 12-18
months of runway

10. Typical Angel Deals
• AverageValuation is $1-3M pre-money.
• Most seed rounds are between $300k and $1M
depending on the business
• Seed round should be 12-18 mo runway (company
is pre revenue, pre product)
• Angels looking for return. Average return for all
angel deals is around 27% IRR (Includes the ones
that went bust)
• Typical deal is 5-7 years in length.

11. What An Angel Does
• Invest Money
• Create Customers, Connections
• Mentor and Advise
• Help Find Talent for Firm
• Create Next Rounds of Financing
• Create Possible Exits
• Angels typically don’t run companies

12. Series A and B
• Bigger rounds, priced, more runway and
allows company to scale up and grow fast
• Usually post pivot-scaling in a market
segment and dominating

13. VC Rounds
• Big rounds of capital done at valuations of
$10M +
• More scaling, and diversifying business to
attack more segments
• Playing for big exit (Home Run)

14. Exit
• NOT an IPO
• Usually acquisition by another company or
a family office, or a PE firm

15. Why Investing Is Hard
• Finding, due diligence, structure, mentoring,
post investment management, raising next
rounds of capital, planning for exits
• Learning curve of investing

16. Alternatives
• Join an Angel Group
• Invest in a Fund (inefficient and scale tips to
the fund managers not you, asymmetric
deal choice )
• West LoopVentures (economic incentives
are aligned with GP and LP)

17. Q+A
• Ask me anything you would like