About Me• Co-Founder of Hyde Park Angels (www.hydeparkangels.com)• Blog at pointsandfigures.com• Tweet @pointsnfigures• On Facebook, Linked In, Pinterest, Instagram, Google+, YouTube, Yelp, Trip Advisor, Klout, Angel.co, Built In Chicago and any other social network you care to name. Friend me or follow me if you want• 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
What is An Angel Organization? Different Structures, different expectationsClassic definition is a group of investors that want tocome together to invest in seed stage companies for fun and profit Union League Angels?Imagine if 20 people wanted to invest $200,000 in companies over five years. That’s $4 million dollars. It’s enough to be a respectable angel group in Chicago.
Typical Angel Deals• Average Valuation 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)• Board seat or board observation rights• Usually, but not always, co-investors in the round• 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.
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• Network, network, network• Angels typically don’t run companies, nor do they replace management
What Do Angels Look For?• Solve a pain point, a problem• Big Market (Market Size)• Evidence the Jockey can execute• Ability to build a rapport with the Entrepreneur• Does the entrepreneur have integrity? Be honest-no Enron Accounting!• Does the entrepreneur want to build a blow out business, or lifestyle business?• Evidence the product works (no ideas, actual products)• Evidence there is some demand (some customers)• Disruption-product should be a game changer in some way (Andy Kessler “Eat People”)• Potential Exit(Who’s going to buy you?)
Don’t Want to Be An Angel?Invest in a fund. I know where to make that happen! Put capital to work creating value
What Should Entrepreneurs Look For In An Angel?• Some industry expertise or focus• Some connections, a good personal network• Trustworthiness. Can you trust this person to be involved in your business?• Local. Long Distance Angels generally don’t work out.• No check writers. You want more than just money.
Create A Silicon Prairie?• NO!!!!• Create Something Unique• Let’s Knit a Midwestern Quilt
Power point presentation from ULC talk on April 16, 2012