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ENTREPRENEURSHIP

“BUILDING YOUR  CAPITAL  RUNWAY”   Presenter:    Shirley  Gee

©Angel Plus,  LLC

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DO YOU  HAVE  BUSINESS WORTH  INVESTING  IN?

DUE DILIGENCE

©Angel Plus,  LLC


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

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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 • • • •

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COMPANY DOCUMENTATION • Checklist?   ü ü ü ü ü ü ü ü ü

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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

Entrepreneuership & Capital  

What do investors consider? Here are elements covered in their review prior to investing.