“BUILDING YOUR CAPITAL RUNWAY” Presenter: Shirley Gee
©Angel Plus, LLC
DO YOU HAVE BUSINESS WORTH INVESTING IN?
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FUNDING STAGES • SEED STAGE (FAMILY & FRIENDS) -‐ $100K-‐$250K • SERIES A (ANGEL INVESTORS) -‐ $250K-‐$5M • SERIES B (SUPER ANGELS, PRIVATE EQUITY FUND MANAGERS, 1ST TIER VENTURE CAPITALISTS -‐ $5M-‐$20M) • SERIES C (TOP TIER VENTURE CAPITALISTS, INSTITUTIONAL MANAGERS) -‐ $10M-‐$100M ©Angel Plus, LLC 3
DUE DILIGENCE BASICS • Different Approaches: Angels, VC’s, Fund Managers? • Are You Ready for Due Diligence Review? • What Are the Topic Areas? • Who’s Leading DD Review? Easy grader vs. hard grader? • Is there enough factual information upon which to make an investment decision? ©Angel Plus, LLC
DUE DILIGENCE TOPICS MANAGEMENT TEAM (Depth & Breath of Team and Serial vs. First Timer) FINANCIALS (Financial History, Use of Funds, Capitalization, Capital Runway) PRODUCT REVIEW – (Push/Pull Product, Long vs. Short Tail, Unique or “Me Too”?) MARKET – Size of Market, Ease with Which to Access Market, Revenue streams from market) • MARKETING & SALES STRATEGIES (Sales/Market Team, Self Placement vs. Strategic Partners, Cost to Enter Market0 • MANUFACTURING & PRICING (Point when Unit price is reduced, pricing strategy, control over manufacturing chain) • QUALITY ASSURANCE (Domestic vs. international quality control, stringent or relaxed, in-‐ house/out sourced) • INSURANCE AND RISK (how is risk mitigated) • REGULATORY CONSIDERATIONS (cost to acquire regulatory approval and timetable for approval) • PATENT REVIEW (Barriers to Entry, likelihood of having patent issued, cost of patent journey) • KEY MILESTONES (milestones associated with funding round) • DEAL STRUCTURE (good deal for investors?) • EXIT STRATEGY (How do investors get money back? When?) • COMPANY DOCUMENTATION VERIFIED (legitimacy as a corporation, contracts in place, debt contracts) ©Angel Plus, LLC • • • •
COMPANY DOCUMENTATION • Checklist? ü ü ü ü ü ü ü ü ü
• • • • •
Corporate Structure/Organization; Funding/Ownership; Proposed Deal; Financial Structure; Financial Model; Product/Service; Customers; Suppliers; Marketing)
Exist? Verifiable? Can documents be reconciled? Independent audit needed? What’s Missing? Why? When is Void to be filled?
©Angel Plus, LLC 6