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Membership Overview: Making the Most of Angel Investing

Membership Overview: Making the Most of Angel Investing. To help the Boston-area's best entrepreneurs build successful technology companies and achieve venture returns for our capital through a professional, collaborative network. Benefiting from Membership.

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Membership Overview: Making the Most of Angel Investing

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  1. Membership Overview:Making the Most of Angel Investing To help the Boston-area's best entrepreneurs build successful technology companies and achieve venture returns for our capital through a professional, collaborative network.

  2. Benefiting from Membership • Saving time, reducing risk through our diligence, deal terms, and investment processes • Accessing high quality deals for venture returns • Making your own investment decisions • Diversifying risk through our co-investment fund • Networking, collegiality, and fun with a peer group • Staying current on new ideas, tech, markets • Giving back by mentoring entrepreneurs Annual dues are less than ½ of typical VC management fee

  3. Benefiting Across Investor Roles • Attract • Leading regional & national brand • High volume, quality deal flow • Assess • Share ideas, diligence with industry leaders • Test assumptions, elucidate risk as a team • Assist • Put best people on board & make investor plan • Share workload & aggregate sufficient capital • Have Fun • Social & networking events

  4. Differentiating from VCs • You pick the companies for investment • Decisions driven by members • Domain experts actively participate • Vote with own wallets • Actively recruit & evolve member base • Members join boards, actively participate We started CommonAngels in 1998 because the 'venture' had left 'venture capital' Looking back, were we ever on to something! If an early stage investment organization based on industry experience was needed then, it's needed even more today.—Rich Carpenter

  5. Member Locations Full Member Provisional Member Angel Groups Growing Nationally Founded 2004 by 46 groups; now 120

  6. Stage Pre-Seed Seed/Start-Up Funding Gap between $500,000 and $2,000,000/$5,000,000 (depending on region) Early Later Source Founders, Friends and Family Individual Angels Venture Funds Investment $25,000 to $100,000 $100,000 to $500,000 $2,000,000/$5,000,000 and up Seeking to Fill Capital Gap

  7. CommonAngels in Leadership Role • One of oldest; founded 1998 • Largest east of California by members, deals, investments, staff, funds under management • Co-Founding Group, Founding Chairman • Chairman, ACEFBacked by Kauffman Foundation(Spin out of ACA focusing on research, education of groups, individual angels)

  8. Drawing on Unparalleled Expertise • 68 Members: High Tech, Financial • Rich expertise in > 70 specific sectors • Founded >100 companies • CEO of >75  • >120 Sold, >45 IPOs as management • Business, technology thought leaders • Currently serve on ~100 public, private boards • Have shaped the technology sector

  9. Artificial intelligence Asset allocation Blade servers Biotechnology Business communications software Business performance management Business intelligence Collaboration Communications equipment Computer graphics software & hardware Consumer financial products Consumer internet applications Consumer software Data transmission Development tools Direct marketing EDA Educational publishing & on-line learning Electronic components Embedded Systems Engineering and science market Enterprise software Financial software Health care applications Intellectual property Interface Design Internet applications Investment and Insurance Industry/Products Materials science Medical devices Medical imaging software & hardware Medical supplies and devices Mobile devices Nanotechnology Networking & Network-System Management Packet switchers Payment Processing PC software applications Pharmaceuticals Portfolio Management Real time transaction systems Retail and franchise services Retail chain store operations Retirement Planning Satellite communications Security Semiconductors Separations technology Service applications Software development tools Software usability Specialized peripherals Storage Supply Chain Synchronization systems Telephony Transaction systems VOIP Water purification Areas of Expertise

  10. 1998 2000 2005 CommonAngels established Fund I Fund II Board of Directors & Managing Director CommonAngels, Inc Managing Director CommonAngels II, LP Investment Committee CommonAngels, LP Investment Committee $10M $30M $10M CommonAngels Fund I, LLC CommonAngels Fund II, LLC Members Funded Companies The Model: Members + Fund I + Fund II

  11. Investing Conservatively Fit: Must have expertise within CommonAngels membership People: Passionate entrepreneur with CEO capabilities Stage: Beta, working prototype, go-to-market Sectors: Innovative, scalable information technology such as software, telephony, semiconductors, RFID, medical devices not requiring extensive clinical trials Location: Boston Area Capital: Series A financing of $500K-$5M; total capital <$20M with emphasis on capital efficiency

  12. Submissions (~30 Plans Per Month) Diligence & Term Sheet Negotiations (Coordinated by Managing Director & Deal Lead) Screening Team Review (5 – 10 Plans Per Month) General Meeting Presentations (1 – 3 Plans Per Month) Manage Investment ENTER EXIT Screening team votes on which companies to invite to general meeting. Managing Director polls members for level of investment interest in deals, recruits diligence team, and facilitates selection of deal lead to begin term sheet negotiations. Managing Director pre-screens emailed submissions. Deal lead closes transaction and the sidecar fund invests in companies that attract at least $250K in investment from at least 5 members. Board member represents member interests and seeks an attractive exit. Making Investments

  13. Team Had Worked With one of our Members Most MIT CS/EE Nine Founders Breakthrough Video Compression Chip Their 3rd Company Identified Markets: DVD, PVR, High Def TV Example Investment: Sand Video • $8MM w/Baker Capital, Navigator, Oct 2002 • Sold to Broadcom for $77.5m, April 2004

  14. Security Appliance Catches Insiders Gone Bad Team from Bell Labs Good Relationship between Founder & our Experts Syndicated with 2 VCs $3m Series A, Apr 2004 $12M Series B, August 2005 Example Investment: Tizor

  15. Expectations of Membership • Attendance: 75% of the regular monthly meetings (meet 3rd Tuesday of each month; location varies) • Investment: $50K-$100K per year across 2+ deals • Participation: One diligence team per year • Membership dues: $3,500 per year

  16. Joining CommonAngels • Sponsorship – Prospective members must be nominated for membership by an existing member. • Meeting Attendance – Prospective members are encouraged to attend several meetings as a guest before pursuing a formal application for membership. Visits should be coordinated with the Managing Director. • Application – Formal applications for membership should be coordinated with the Managing Director and applicants will be asked to provide a biographical summary. • Review – At least one member of the CommonAngels board of directors meets with the applicant to discuss shared goals and interests. The board as a whole reviews and approves applications for membership. • Formalization – New members should complete an accredited investor questionnaire and pay their annual dues.

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