ishay green angel vs vc

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Talk to an Angel Tuesday, October 28, 2008

TRANSCRIPT

  • 1. Angel VS. VC Ishay Green

2.

    • Angel
    • VS.
    • Venture Capital
    • (And some tips about both)

3. Disclaimer

    • Entrepreneurship is a game of imagination The following are my opinions

4. TERMINOLOGY 1 5. Terminology

    • Valuation
    • Shares
    • Dilution

6. ANGEL VS. VCMONEY 2 7. Angel VS. VC Money

    • VCs are professionals who invest other peoples money

8. Angel VS. VC Money

    • Angels are private people investing their hard earned money

9. ANGEL VS. VCPROFIT EXPECTATIONS 3 10. Profit Expectations

    • VCs look for double digits profit multipliers
    • (10 Times)

11. Profit Expectations

    • Angles would usually be happy in low end of a single digit
    • (3 Times)

12. ANGEL VS. VCINVESTMENT RISKS 4 13. Investment Risks

    • The Angel is risking their own money

14. Investment Risks

    • The Angel is usuallyless knowledgeable than a VC in most aspects

15. Investment Risks

    • The Angels tend to follow their gut feeling
    • (So you better be damn sure youknow what youre doing)

16. Investment Risks

    • The Angelknows whereyou live

17. Investment Risks

    • The VC risk is divided through a larger portfolio

18. ANGEL VS. VCEXCEPTED HOLDINGS 5 19. Excepted Holdings

    • VCs expect a minimum of 20%-25%share holdings
    • (They will ask for much more)

20. Excepted Holdings

    • Angles are agnostic.

21. TIMING 6 22. Timing

    • Angels can afford investing in the scenarios of:
    • Seed
    • Down-round
    • *Angels will usually not execute their preemptive right

23. Timing

    • VC will usually require a more mature company, and even a proof of concept before investing

24. Timing

    • Angel money is faster
    • (For most Angels a meeting or two is sufficient to decide)

25. Timing

    • Some VCs will yes you to death
    • -Adi Pundak-Mintz

26. WHY DO ANGELS EXIST? 7 27. Why do Angels Exist?

    • Potential for large multipliers on their investment outside of the stock markets

28. Why do Angels Exist?

    • The investment is not liquid When it is gone it is gone

29. Why do Angels Exist?

    • The Google Facebook The Marker Effect

30. Why do Angels Exist?

    • Tax Benefits

31. Why do Angels Exist?

    • Its Fashionable
    • & Cool

32. VC TYPES ENTREPRENEUR POV 8 33. VC Types Seed Funds

    • Invest small amount of money in early stage, with no promise for recurring investment

34. VC Types Israel Top Five

    • - Has more then $100M fund
    • - Known for its smart and beautiful partners*
    • * Yaron from Giza VC is a great example

35. VC Types International

    • Enables you to tell everyone you now have direct access to Steve Jobs, Balmer and God

36. VC Types Famous

    • Proven winners - Index Ventures investedin

37. VC Types Top Tier

    • Sequoia
    • Draper Fisher Jurvetson

38. ANGEL TYPES ENTREPRENEUR POV 9 39. Angel Types I

    • Rich Industry Expert / Entrepreneur
    • (Eduardo Shoval)

40. Angel Types II

    • Super Angel
    • (Yossi Vardi / Paul Grahm)

41. Angel Types III

    • Richie Rich
    • Oil / Real-estate /
    • Diamonds / Weapons

42. Angel Types IV

    • The Gambler

43. Angel Types V

    • Family

44. BOARD OF DIRECTORS 10 45. Board Of Directors

    • The board represents the share-holders (investors)

46. Board Of Directors

    • The board devises tactics and strategies for the company

47. Board Of Directors

    • The CEO is responsible for executing board decisions

48. Board Of Directors

    • Entrepreneurs & CEO keep the board up-to-date

49. Board Of Directors

    • An effective board:
    • Smart and self-conscience members
    • One member+ is an industry expert

50. INVESTOR RIGHTS 11 51. Investor Rights

    • Voting Rights Are Dangerous
    • (Try to avoid them)

52. Investor Rights

    • Veto Rights Are Lethal(Unacceptable)

53. ANGEL-MAINTENANCE TECHNIQUES 12 54. Angel-Maintenance Techniques

    • Angel turns into Devil:
    • Conflict of Interest
    • Disappointment
    • Greenmail
    • Ignorant / Boarder Line Disorder

55. Angel-Maintenance Techniques

    • Proxy Mechanism -
    • Protect the company from its investors
    • Protect the investors from themselves
    • Protect the individual investor from himself

56. Angel-Maintenance Techniques

    • Define a board representative for the angels with past experience

57. ANGEL VS. VC VALUATION 12 58. VC

    • VC allocates ~$10M total for an investment
    • The money is divided between rounds
    • The VC needs to maintain 25% holdings in the company unless you go to huge valuations. (*)

59. Angel

    • The Tomer-Ishay Method
      • Find a prominent lead investor and then negotiate
      • Talk to the rest of the investors only after valuation was set
      • Raising money in chunks

60. Angel

  • What should you tell the Angels before closing
    • Make sure they understand the business plan
    • Tell them they need to consider the money as gone.
    • Say that you do not take money from widows and orphans.

61. SUMMARY & 62. Summary

    • There are not definite pros & cons
    • Angels are a great way to start
    • Do you believe in Angels?

63. I do 64. THANK YOU !#%

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