Tag Archives: Exit

Angel Investing – Ringing in the New Year 2014

??????????????????????????????????????????????????????Yes, it’s that time of year once again when we  think about resolutions for the New Year. In last year’s New Year’s post, I suggested that you think about the composition of your investment portfolio, taking into consideration the amount you want to commit to this sector overall as well as the diversification goals that make the most sense for you.

Here are my three tips for 2014:

Know your co-investors:

If the three most important criteria in real estate are location, location, location, then the top three for angel investing would be alignment, alignment, alignment. Not only is it important for investors and portfolio company CEOs to have alignment in terms of their vision for the company, it is just as critical for the co-investors to be aligned. When the business needs to shift direction, there is a follow-on round required,  or an exit on the table, having conflicting objectives among your co-investors can be quite problematic. The advent of funding platforms has made knowing who else is in the deal somewhat more challenging. Entrepreneurs will oftentimes do some due diligence on potential angels, I would suggest you do the same on potential co-investors.

Get your investment dox in order:

Whether there is a follow-on round contemplated or a potential exit on the table, it is also very important that you know both your rights and your obligations as an investor. Where did you file those stock certificates? Do you have pre-emptive rights? Know your options and obligations before a follow-on round or a potential exit.

Look at the world through the lens of an entrepreneur:

Whether it’s negotiating a term sheet or evaluating a major strategic shift, it is always helpful to put yourself in the other person’s shoes. When I review a term sheet for a potential investment, first I read it as an investor, then I read it as though I am the CEO receiving the term sheet. I also enjoy reading books and blogs directed at entrepreneurs. Here are a few of my picks:

If you have a great resource, let me know in the comment section below!

Have a very Happy New Year!

Angel Investing – Term Sheet Liquidity Provisions

Gold Guys With MoneyIn previous posts, I have described how certain term sheet provisions impact the Economics, Control, and Value Protection in a proposed investment. In this final post on Term Sheets, I will discuss some provisions that impact the Liquidity of the investment. Continue reading

Angel Investing – Term Sheet Economics

RechenschieberIn my last post, I listed four areas that Term Sheets cover. This week, I thought I would focus on some of the “Economic” terms. The terms below apply to Convertible Preferred Stock, although there are clearly other types of securities used to fund early stage companies.  These “economic” terms outline who gets what and cover such concepts as:

Valuation: For a Preferred Stock Offering, this represents the per-share price that you will be paying for the investment as well as the “pre-money” company valuation that this price implies. In addition, the term sheet will typically indicate the “post-money” valuation which includes in the company valuation the new funds being invested. Continue reading

Angel Investing – Financial Models

Gold Guy With Business Reports“I am a serial entrepreneur with a business idea that will generate $100 million in sales in 3 years!!!!” , sound familiar? As an angel investor, I meet many passionate entrepreneurs who present a very optimistic outlook for the future of their business concept. Building financial projection models is a very difficult process for the CEO of an early-stage company and an even more difficult process for the investor to believe in.

So, is there any real value in financial projections? Continue reading

The Jockey or the Horse?

I am frequently asked the “jockey or the horse” question – whether it is the team or the idea that is most important when considering an early stage investment opportunity. The real answer for me is that both are critical in the decision process. That being said, although I may invest in a company where the “idea” is not 100% formulated, I will always walk away from any opportunity where I am not completely convinced that the right team is in place and more importantly it is one that I want to be in partnership with over the long term. Continue reading

Are You Ready to Be an Angel Investor?

The term “angel investor” is used to describe a wide variety of investors in early stage companies. From the reality-show world of Shark Tank where entrepreneurs are grilled in front of a prime-time audience to established professional networks of angel investors including Tech Coast AngelsNew York Angels, Golden Seeds and others, it is clear that there is more than one type of angel. Continue reading

Angel Investing is similar to playing golf…

OK, so you are looking at the title of this post and asking yourself, “what in the world is she thinking; how can you possibly compare angel investing to playing golf”?

Let me explain… Continue reading