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Angles & Demons - a quick foray into start-up funding

My off-the-cuff perception of deals that fit within an angel investor's sweet spot.

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Angles & Demons - a quick foray into start-up funding

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  1. ANGELS & DEMONS a quick peek at the logic of start-up financing https://www.flickr.com/photos/xubangwen/

  2. The goal of this deck is just to present a typical scenario from my perspective. Obviously all businesses are as unique. That said, they are not as unique as each entrepreneur thinks 

  3. why finance? All businesses go through phases in their life cycles. During some phases, financing helps a company cross a chasm. There are 4 chasms that financiers typically help with….

  4. why finance?

  5. why finance?

  6. why finance?

  7. why finance?

  8. lies, damn lies, statistics, and spreadsheets Behind the scenes, the previous slides were driven by a pro-forma projection that would need to look something like the following…. Funding is needed to fill a hole that is not covered by sales revenue. Usually, that means growing ahead of revenue, either start-up, or fast growth. An angel needs to understand what you are spending her money on…. An angel is primarily interested in understanding/validating your assumptions about revenue (price times volume) and cost (people, production, promotion, and place). You need to be able to explain why your business can deliver these numbers.

  9. exhaustion warning One other thing… Each round of fundraising will take 6-9 months to close So you need to start the next round soon after you close the current round.

  10. where does financing come from? SALES FRIENDS & FAMILY SELF BIZ PLAN COMPETITIONS LOAN SELF OVERDRAFT $ PUBLIC EQUITY BANK PRIVATE EQUITY INCUBATORS ANGEL INVESTORS CROWD VENTURE FUNDS

  11. when would you source from angels? • Angels are useful early on (ideation & POC) • Don’t get greedy at this stage. You are much higher risk than you might think • Don’t expect too much from angels. They may be as new as you • Angels may not even know they are angels, you need to prospect!

  12. Who to stalk in 2013… • There are many Managing Directors who have been retrenched from banks after the sub-prime collapse. These guys have lots of play money and think associating themselves with the start-up world makes them sexy • 1st generation entrepreneurs who made it in Singapore before • Brick and mortar 2.0 – by 2013, the children of family businesses who are now budget deciders are about 40 years old…they were the first generation of cyberians, so they get it. Up till now, they have been too young and inexperienced to be trusted with big family businesses. In the next decade, they will be able to allocate play money and innovation for their big businesses

  13. useful links

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