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While the merits of each investment will vary, we evaluate your
venture according to the following criteria:
Management team.
We look for teams of high-quality entrepreneurs with a track
record of leadership and performance - either in the company's
specific industry or in prior entrepreneurial ventures. We also look
at your team's passion for and commitment to the new business idea,
and your ability to inspire confidence among future stakeholders,
including employees, potential customers, and investors. As we will
be working together as partners, your team's credibility is
essential. In addition, your team must be open to and comfortable
with receiving input provided by angel investors.
Market opportunity.
We invest in solutions that address major problems for
significantly large target markets (i.e. a $100+ million market).
Your company must demonstrate a strategy to claim significant share
of this market (i.e. 20%+). There are plenty of great business ideas
- but not all businesses will generate returns that justify angel
investor and venture capital financing. Therefore, providing a
solution to a problem with a large potential market is essential.
Use of proceeds.
Funds must be used to accelerate your company's achievement of
key milestones that increase the company's value. We often fund
activities that include research and product development, building a
sales and marketing infrastructure and hiring key executives.
Growth potential.
We look for companies that can grow quickly and manage the
scale necessary to succeed. Your company must demonstrate a plan to
generate significant profits beyond the initial product idea. Do you
have a strategy to achieve multiple sources of revenue? We also
require well-conceived financial projections, based on sound
assumptions, demonstrating consistent profits and cash flow growth.
Competitive advantage.
Your company must have some proprietary features that
distinguish you from potential competitors or provide barriers to
entry that prevent other companies from capturing your customers
with a similar offering. Attributes that convey competitive
advantage include intellectual property protection, exclusive
licenses, exclusive marketing and distribution relationships, strong
brands, scarce human resources (i.e. knowledge and skills), and
access to scarce raw materials.
Fit.
Our group members - all accredited individual investors - have
significant executive experience in a variety of fields. One of the
benefits of working with angel investors is the active coaching and
contact network that such investors can provide. As such, there must
be a fit between members of our group and your idea.
Technology.
We prefer to invest in first-of-a-kind new ideas, rather than
incremental enhancements to common products and services. Is this a
nice-to-have, or a need-to-have product or service? However, we
approach highly complex, esoteric technologies with caution. The
concept behind the technology must be proven and verifiable.
Further, we avoid science projects that don't demonstrate a clear
path to commercialization. Any breakthrough innovation must be
accompanied by a strong business plan.
Exit strategy.
Our members typically seek returns of at least ten times their
initial investment, within 3-5 years. This level of return on
investment is essential due to the high risk and likelihood of
failure among early stage ventures. Thus, a clearly articulated exit
strategy - how angel investors will extract such returns - is
essential. For example, do you plan to sell the company to an
established corporation in your industry? Or will your exit be
through subsequent rounds of financing - venture capital or the
public markets? Angel investors are not just interested in the
strategy you select, but more importantly in the how - the
operational strategy that shows specific steps you will take to
achieve the exit.
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