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Monday, 24 July 2017

Anatomy of an Angel Investing Pitch session and meeting: Part III The Devil in the detail: Due diligence (documentation and legals)

In terms of garnering immediate interest to engage investors in the due diligence leading to placement of actual funds (after the documentation is complete, Shareholder Agreements signed etc), there is some element of a binary process going on that isn't always justified by the eventual end result at exit. The hot ticket business which has 80% of the room signed up to and quickly mentally filling its allocation and (on the other side) the 'jane-no-mates' scrabbling for interest may be following on direct from one another in the running order. 

The beginning of what can be an incredibly searching due diligence process begins there and then in the pitching room. First questions come direct to the founder, immediately after the pitch itself: Where are your revenue projections from, why such a high valuation, who in your team is the marketer? 

This process continues amongst the investors with the business founder and/or team members no longer in the room (perhaps waiting and wondering next door), as the degree of interest in the room and immediate issues are rapidly unveiled amongst the potential investor group and therefore quite quickly apparent to all and sundry. At that point one investor may likely be asked or offer (based on previous sectoral experience or investment) to be a co-ordinator for the round or rather lead 'cat-herder' of what can often be a geographically dispersed and very busy group of angel investors.



If it's a follow-on round with the group, including previous investors, the status of existing group investors in the business and their opinion can be highly significant in coalescing and heightening collective interest in the round, at least if they remain positive about the business's trajectory and especially if they are also themselves following on again in this round.

After all is said and done, expressions of immediate interest to join the due diligence process in subsequent days, weeks and sometimes months via group communications over Doodle, Skype, or PowWowNow are logged and everyone can get down to the remainder of the evening's fun of networking, swapping business and investing war stories, recent holiday experiences and all the other subjects that like-minded, and entrepreneurial folks on both sides of the investing equation as investors or early stage founders and co-founders love to share with one another. 

Many cross the divide either way on multiple occasions.

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Sunday, 2 July 2017

Anatomy of an Angel Investing Pitch session and meeting: Part II The heart of the matter - The business pitches and questions

After the introductory niceties, and required disclaimers such as PS 13/3 statements on HNWI etc or perhaps news of recent rounds, exits and so on, the drama of the pitch and Q&A sessions begins, perhaps the most familiar to external onlookers or newbies.. Up to that point, the businesses have often not had contact on the evening with the syndicate members, perhaps waiting in an adjacent room to get their chance to pitch, to preserve a level playing field. 

It is often under-appreciated how much it takes even to get to pitch to many syndicates. Seeding calls, checklists from the syndicates for staff, and the work to produce a business summary or seeking a formal business plan may whittle as many as 100 potential pitching businesses down to just three-five to present, and even then there are no guarantees. They may have as little as 10 minutes to present, with 5 minutes for questions, although I've seen even shorter pitches in some large "website to live" events with 10-12 businesses.
If you are pitching with an especially strong cohort you may shine a little less brightly than some, or if first up and followed by very strong businesses further along in the progress to profitability ( its rare to see one without at least 12-18 months of revenue at least) suffer the same fate. Some may be relatively better defined or pitched by their respective founders.

In those cases, those angels who showed early interest for due diligence may quickly be distracted by even more alluring prospects of early multiple exits, recent comparable IPOs or such like. Angels have a degree of herd mentality too, or may tend to be influenced by a more experienced angel who has the luxury of an already diversified portfolio or one which is yielding exits as well as more investing opportunities. A little judicious use of the 'scarcity' lever works with even these sophisticated individuals if there is a hint with rapidly growing business that this will be the last angel round before a VC process next time, or that there is a capped investment level at this valuation.


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Saturday, 27 May 2017

Anatomy of an Angel Investor Pitch Session Part I

Ever wanted to be a fly on the wall at a real 'Angels Den'..

If you haven't attended an Angel investment pitching session or meeting, this is how it looks.
Clue: its not like a certain famous TV programme (No one is going to be offering 40% of their business for £30k, and I've never been to a meeting with fewer than 20 angels; 20-30 is perhaps more typical, at least in London).



All angel syndicates have their own specific character; some have full time staffers, perhaps part of a larger fund or private equity structure, others linked to an (business) educational institution. Some may themselves be somewhat bootstrapped and sustained with love and sheer commitment as a second career, although increasingly there are annual fees to belong to what can be rather powerful and well-connected networks, plus a success fee for businesses sufficiently far along to pitch and attract investment money from investors.

Those cover costs, perhaps also providing legal and taxation support and training for potential and current investors, as well as curating deal flow and some early DD and information gathering of potential firms to invest in. Early stage business investing, despite the high risks, is very tax-efficient within SEIS and EIS wrappers.

Angel syndicates may also provide at least some support, pitch training and advice of a type to busy founders of early-stage business that you might associate more with accelerators or incubators, even before these syndicates have committed funds and charged their funding success fees.


The knowledge, contacts and advisory aspects of angels are sometimes under-appreciated by those not close to early-stage business or syndicates, but such help may bring some founders back to angels for repeat rounds beyond the point where you might think Series A or PE/VC rounds might seem more likely. At such times, multiple informally-connected syndicates may club together to absorb a hefty funding round, or work together with sympathetic and empathetic VC firms, family offices, Trusts or charities in suitable cases.
The quality of experience and real-life strategic and tactical advice available in some syndicates is highly attractive to founders, providing potential board members, detailed advice, seed investors at the beginning of their revenue stream, or simply contacts to find suitable recruits to fill gaps in small multi-tasking teams.

Copyright ©Mike Davis/ AskAnAngel Ltd 2017

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Friday, 3 March 2017

March Pitchery

10 things we learnt/were reminded about pitching to angels this week

  1. there is no 'right' pitch style: some may be rammed with content but the founder talks too much and gives long answers to every question, while another leaves a lot out but keeps the proposition simple and leaves masses of time for Q&A AND gives quick answers, so lots of angels get to talk - which would get you best connected to the business, would you prefer, on which side?
  2. sometimes a widget is the main story; what's the IP story, can it be hacked, how long before the large customer/competitor copies what looks like a simple model, or will they just acquire rather than build (most do!)?
  3. why is the firm paying its founders so much this early and need so many full time employees? 
  4. is it too early for this firm to be looking at a Series A next time, or why are they back for a relatively small top-up at this point?
  5. the apparently weakest proposition (to this angel) may have the most stellar supporters and the highest valuation; do you go with your gut, or follow the money?
  6. how much time and value is that silicon valley trophy VC really bringing - are they cosmetic or materially adding value to the business?
  7. follow-ons sometimes seem to be losing momentum as they grow; how do you help them up to the next level?; is it just money, or is there something else missing; is that nagging doubt about the diversified focus or marketing to sales conversion rate going to trip them up ultimately?
  8. where are the marketer founders?
  9. dont sweat every question at the pitch session; get the main issues into the early stage due diligence instead, the story has a way to run before anyone sees even a first draft SHA..
  10. pitch sessions are fun, sociable and highly addictive!
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Friday, 27 January 2017

Welcome to the newest Start Up and Early Stage Blog

Welcome to my new blog, and thank you for being one of my very first viewers! 

This is an unusual New Year start for me, but a very exciting one too.

My goal for this blog and the AskAnAngel.com website is to explain and de-mystify the inner workings of this diverse and fast-growing world of UK (so far) start-ups and financing from the perspective of someone engaged in it, to show that it doesn't resemble "Dragon's Den" too closely and to ask the questions at least initially of someone intrigued looking in, rather than as an insider. Fellow business angels, entrepreneurs and VCs are always very welcome of course, and the networks, feedback and shared insights in this space are hugely valuable.


We aim to and expect to throw a spotlight on the inspirational drive, passion and sheer talent of the individual personalities on the businesses and investing sides, amongst the networks shaping the world of start up businesses and its financing.

You can follow me in the meantime via @ask1angel on Twitter, and please sign up with your name and email (when you next return) to be certain of access to key information and insights into this exciting and fast changing world.

Leave a comment or message me what areas you'd love to hear more about, or which you're struggling to get a handle on; you'll be one of the first to AskAnAngel!

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