Tag Archives: Golden Seeds

Angel Investing – Inside the Brain of an Angel

Power Of The MindIn a recent post, I published an excerpt from a new book called “What Every Angel Investor Wants You to Know” by Brian S. Cohen and John Kador.

I had the opportunity to read the book en route to the Angel Capital Association (ACA) Summit and would highly recommend it to both entrepreneurs and angel investors alike. Written in the first person and filled with anecdotes, war stories and wisdom gained from Brian’s many years of angel investing, this book is both a fun and insightful read.

Having started investing in this space back in the late 90’s (yes I was only 14 at the time!!), I have learned that when all is said and done, for me angel investing is all about investing in great people and helping them build great companies.

Thank you Brian for sharing your wisdom and insights in your new book! I am looking forward to the next one!

Angel Investing – Term Sheet “Control” Provisions

teamwork rowingIn a recent post I discussed the “economic” aspects of a term sheet. In addition to laying out the economics of a proposed transaction, the term sheet also provides a road map to various issues revolving around “control”.  As angels, although we are not involved in the day to day management of our portfolio companies, we need to have a voice in strategic issues that impact our portfolio companies. Typically this “control” is exercised either through: Continue reading

Angel Investing – Investing in Women Entrepreneurs

successful word cloudIn their soon to be released book –  What Every Angel Investor Wants You To Know  – An Insider Reveals How To Raise Smart Money For Your Billion Dollar Idea (McGraw Hill, 2013), Brian Cohen, Chairman of New York Angels, and John Kador, demystify the process of Angel investing.

Of particular interest to me is Brian’s experience with investing in early stage companies that are either founded by women or where women serve on the senior leadership team. There is lots of buzz these days on how women should or should not position themselves to excel in the corporate ranks. In the excerpt from his book below, Brian provides us with some great DATA as well as opinion on the case for investing in women. 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 – Term Sheets and Country Western Music!!!

Hank WilliamsProbably one of the things I have found that many of my fellow angel investors enjoy even less than analyzing the financial model of a company they are contemplating investing in (see my last post ) is diving into the Term Sheet. A  term sheet is a document that lays out the key terms of a proposed investment. Once those key terms have been negotiated and the term sheet is executed by both parties, it serves as the basis for drafting the other documents which comprise the legal closing documents in a transaction.

At a recent meeting, one of colleagues made the comment that term sheets are like country western songs – you know those soulful ballads that bemoan the difficult breakup, the secrets never shared, the soulmate you trusted who walked away and left behind a pile of debt……  When you make an angel investment you are not only entering into a financial transaction, you are entering into a relationship with the CEO/founders/management team. If you have been investing in this sector for awhile, it is likely you have made at least one investment that did not turn out as planned!  Another way to think about the term sheet is a kind of “pre-nup” for angel investing. Clearly if you don’t really believe that a particular investment has the potential to be a good partnership over time, you probably shouldn’t make the investment. 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

Angel Investing – Diligence: to “due” or not to “due”…….

Investment StrategyDue Diligence is defined by Merriam Webster as “research and analysis of a company or organization done in preparation for a business transaction (as a corporate merger or purchase of securities)“.  When it comes to Due Diligence in Angel Investing, there are many schools of thought. With the advent of Angel List and other online platforms as well as a myriad of crowdfunding sites, it is possible to make investments in early stage companies without ever actually meeting the entrepreneur.  Conversely there are Angel Groups like Golden Seeds, of which I am an active member, whose members conduct a rigorous due diligence analysis of potential investment opportunities. And there is every variety in between. Continue reading

Angel Investing – What it’s all about

Collaboration concept in word tag cloudLast week I had the opportunity to attend the Golden Seeds Innovation Summit. During this annual event, CEOs from the Golden Seeds Portfolio Companies, Golden Seeds Members, LPs in the Golden Seeds Funds and guest speakers come together for two days in NYC. It is a venue for the CEOs to update current and potential investors about their companies and also to interface with one another, a powerful networking opportunity. In addition to hearing about the progress of our portfolio companies, members are able to attend sessions on topics including; positioning for exit, brand building, trends in various industry sectors, and many others.

To me, angel investing is so much  more than just writing a check, as I discussed in an earlier blog post. The ability to interface with our dynamic CEOs and to collaborate on investment opportunities with a great group of investors, like my colleagues at Golden Seeds, is “What it’s all about“. Each time I participate on a deal team, in addition to sharing my own expertise, I always learn something new. I follow my companies on Twitter and other social media venues and try to be a supportive “angel” (which means not trying to micromanage but being strategic with both advice and input). I feel extremely privileged to be a part of the Golden Seeds national network and look forward to investing with them in 2013.

Angel Investing – Rules for Investing

stockpile 05There are many screens that angel investors employ when trying to decide which investment opportunities make sense for them. Selection criteria often include:

  • The “big” or “disruptive” idea
  • Quality Management Team
  • Large addressable market
  • Significant barriers to entry
  • Plausible Exit Strategy & “reasonable” valuation Continue reading

Angel Investing – Valuation Methods

Question Gold Dollar CoinsFor those of use entering the world of angel investing with a background in evaluating publicly traded equities, the valuation process for this investment class can be a real challenge. PE multiples and comps are very difficult to apply to companies that are not only pre-earnings but in many cases pre-revenue. The earlier the life cycle of the company, the less data points exist to determine a reasonable valuation.

In this post, I will outline some of the valuation methods you may want to consider for evaluating these early-stage investments (Note: please click on the title links to learn more about these methods): Continue reading