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Technology Transfer Value Chain: The Role of “Angel” Investing

Technology Transfer Value Chain: The Role of “Angel” Investing. December 10, 2011 By Elbruz YILMAZ Galata Business Angels Founding Member & Deal Screening Committee Member. Technology Transfer. Startup Funding Life Cycle. ANGELS. Size of Investment Round vs. Volume of the Group.

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Technology Transfer Value Chain: The Role of “Angel” Investing

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  1. Technology Transfer Value Chain: The Role of “Angel” Investing December 10, 2011 By Elbruz YILMAZ Galata Business Angels Founding Member & Deal Screening Committee Member

  2. Technology Transfer

  3. Startup Funding Life Cycle ANGELS

  4. Size of Investment Round vs. Volume of the Group

  5. Who are these angels? • Individuals with high networth • (SEC defines high network as $1M and more) • Willing to invest knowledge, network, time and capital in new startups • In most cases entrepreneurs themselves • Passionate about entrepreneurship, creating value and sharing results with their community • Choose to invest in what they understand • Sometimes working alone, sometimes in groups

  6. Quick Stats – US • US Angel Statistics • Estimated number of angels: 250,000 • Estimated Total Investment per Year: $20.1B in 2010 (CFVR) • Total Invested by VCs per Year: $23.2B in 2010 (PWC Moneytree) • Approximately 300 networks • Investment per round: $279,000

  7. Quick Stats – EU • EU Angel Statistics • Estimated number of angels: 75,000 • Estimated Total Investment per Year: €3 – 5 B • Total Invested by VCs per Year: €4B (EVCA) • Approximately 270 networks • Investment per round: €165,000

  8. Profile of Angels (US)

  9. Activity (US)

  10. Returns

  11. Impact of Due Diligence

  12. Mentoring

  13. Investment Size

  14. Investment Stage

  15. Investment Location

  16. Number of Investors per Investment

  17. New Trends University connected angel groups Green / Clean Tech Focus Women Angel Groups Co-Investment Cross Border Activity Communications worldwide Growing relationship with VCs

  18. Tech Coast Angels 250 members 5 network Invested in 170 companies since establishment Reviews 500 deals per month Invested $6.3M in 2010 Funded 31 companies in 2010 Launched an Angel Syndication Network

  19. Super Angel: Felicis Ventures Aydın Şenkut First Google Product Manager 60 investments 18 exits Ranked in Top 25 Tech Angels in the US Established own fund: Super Angel Fund

  20. Turkish Angel Scene • Galata Business Angels • METUTECH BAN • Mersin BAN • No clear statistics • Number of angels (?) • Amount invested (?) • Number of deals (?) • However...potential is there. • Wealthy individuals • Growing number of Entrepreneurs • Exits

  21. Advantages vs. VCs Able to make an investment decision quickly, e.g. in one or two meetings Able to invest without taking a board seat Not require control of subsequent funding rounds Not impose complex terms Availability from early stages of product development No exclusivity (until a certain period or the first investment) Mostly invest locally (2 hour drive)

  22. So What? Angels can bridge the gap between initial product development and building the company...can help TTOs commercialize technologies faster...

  23. TTOs & Angels • Understand what an angel is looking for • Not an R&D project • For ex: 10X returns in 3 years with a minimum of 20% equity • Leverage your Alumni network • Get organized and be systematic • Angels do not get paid like VCs, so efficient use of their time is critical • An accelerator / incubator program can provide the necessary platform • Invite angels to product / technology panels • Design Entrepreneur in Residence programs • Can help you define the commercialization path early on • Invite them to sit on advisory or company boards

  24. Things to Consider • Angels and universities share some goals but priorities and focus differ • Make money, participate as mentors and board members in the startups they fund, and foster development of new businesses and jobs in their communities. • Universities on the other hand • Support of basic research, faculty recognition, and satisfaction, educational aspect of getting students involved, giving them a real-life entrepreneurial experience, economic development , seek a financial return from licensing the intellectual property.

  25. A Good Example • Desert Angels & University of Arizona • Options fund to the angels and a research contract to the University • Arizona Enterprise Program • Structures angel involvement in University projects; • Provides an agreement and terms that fit the business models of both parties • Attempts to match business and technical risks before a company based on University technology is formed. • Desert Tech Fund • The fund invests the money to build proof-of-concept, proof-of-application, or prototypes with intellectual property coming out of the University. • The fund then has the option to create a company based on licensing technologies that prove successful and scalable. • Desert Angels manages the fund. Participation is voluntary at a target of $25,000 per unit

  26. Irish Angels & Notre Dame • IrishAngels - 265 members in 35 states • Accredited investors, but investing is an optional aspect of membership. • The primary mission is education and mentoring. • About 70 percent of IrishAngels members participate in educational activities; about 35 percent are investors • Members serve as adjunct professors and guest lecturers through the University’s Gigot Center for Entrepreneurial Studies. • Funding and advising the new tech accelerator the Innovation Park

  27. Galata Business Angels • Goal: • Increase awareness about angel investing and help grow number of angel investors in Turkey, help entrepreneurs through investment of capital, network and mentorship, contribute to development of entrepreneurial culture and help development of the entrepreneurial ecosystem. • Founded in 2010 • 22 Members and the number is growing • Focusing on Internet, Mobile and ICT deals • Investing in micro and seed stage ($25K - $500K) • 1 group investment in 2011, www.boatbookings.com • 34 deals reviewed in 2011 • Partnering with Girişim Fabrikası – Özyeğin Üniversitesi

  28. How to get Angels involved? • Accelerator program • Teaching • Entrepreneur in Residence • Business Plan Competitions • Co-Investment Programs • Technology Review Panels • Key is being systematic / structured • Sense of contribution and hope for return (intellectual and monetary)

  29. Conclusion Continuous interaction builds working knowledge between all sides of both groups and contributes to success. The main requirement is a framework where real people have real things to do together. The right matchmay be where the angel group understands that the university doesn’t necessarily speak with one voice And the university understands and is respectful of angel groups primary goal of return on investment.

  30. Thank You Elbruz Yılmaz elbruzyilmaz@gmail.com

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