Angel Investing Gary Kravetz Director, Central Coast Network Tech Coast Angels

Angel investing is not new

What is an angel investor?  Anyone who makes a private investment in a company, typically a start-up  Typically, but not necessarily, accredited:  $1 million in investable assets (not including value of primary residence) OR  $200K in income ($300K joint)  Often are entrepreneurs themselves  Angel groups provide a forum for evaluating investments and sharing risk  Friends, family & founders can be non accredited  Crowd sourced investor are new category of non accredited investors.

How many potential accredited angel investors are there? Source: Angel Capital Association, Cap Gemini/Merrill Lynch World Wealth Report 2001 Only ~7,000 members of angel groups (2009)

EXAMPLE: Tech Coast Angels  Largest angel investing group  Invests in Southern California companies (mostly)  Group negotiation, individual investment  deals per year  TCA Invests in more than tech  Hardware/Software  Life Science  Digital Media  Consumer Products/Services  CleanTech/Industrial  Financial Services  Other local angel networks include Maverick Angels. Pasadena Angels & Golden Seeds 5 TCA Networks

Typical Angel Investing Process Find Networking Events Quick Pitch Competitions Industry Group Meetings Mentoring Filter Review Funding Application Pre-Screen (online meeting) Screen (Local x5) Fund Due Diligence Write check from investors to company Follow up Board Participation Personal Networking Plan for Next Round (TCA or VC)

If you first meet an Angel at your screening, then you waited too long.  Entrepreneurs & Small Businesses need a network to thrive.  Get mentorship from local angel investors  Local networking groups  805startups:  SBStartups:  TCA-sponsored events  Quick Pitch (San Diego) & Fast Pitch (LA & OC)  Meetup Group (OC):  Mentoring opportunities  Small Business Development Center (SBDC SCORE

A good PP pitch covers all of these…  The problem you solve  Market size  Your company & products  Business model (how you make money & grow)  Team ( employees and advisors)  Competition (and why you win)  Barriers to entry  Financial projections: sales, gross margins & EBITDA, to 5 years  Amount you want to raise & use of funds  Valuation  Exit price, similiar exits & potential acquirers

Other initiatives from angels  Syndication  Cooperation among angel groups  Angel Capital Fund for Entrepreneurs (ACE) Fund  Invests where only whereTCA members invest  Don’t have to be a TCA member to invest  Seed Track  For early stage companies with a missing piece  Investors commit up to $100K on the spot  30 day close.  Will come back for a larger TCA investment if successful

Other Investment Funding Sources Friends & family can invest if rules are followed. Angel networks looking for $100M+ sales potential Venture capitalist looking for $1B+ sales potential. Equity crowd (non-accredited) funding is new Strategic partners (suppliers, etc.)might invest

TCA deals  Funded in 2012 (18)  Active Life Scientific, Inc. – (SB Panesis, $100K) Active Life Scientific, Inc. – (SB Panesis, $100K)  Cadence Biomedical, Inc. - ($75k, Berkus) Cadence Biomedical, Inc. - ($75k, Berkus)  Cashie Commerce - ($650k, Moss) Cashie Commerce - ($650k, Moss)  Deal Current - ($100k, Lapin) Deal Current - ($100k, Lapin)  Emerald Logic - ($279k, Harbison) Emerald Logic - ($279k, Harbison)  Gemmus Pharma, Inc. - ($214k, Glezer) Gemmus Pharma, Inc. - ($214k, Glezer)  Gridtest Systems - ($105k, Palter) Gridtest Systems - ($105k, Palter)  Health In Reach, Inc - ($70k, Sangster)  Lucirix Inc. - SaaS licensing model with annual software contracts to hospitals (LA, Green, $110k) Lucirix Inc. - SaaS licensing model with annual software contracts to hospitals (LA, Green, $110k)  mSIGNIA, Inc. - ($395k, Kleist) mSIGNIA, Inc. - ($395k, Kleist)  Nanoogo - ($125k, Chan) Nanoogo - ($125k, Chan)  PageWoo - ($100k, Lapin) PageWoo - ($100k, Lapin)  PetPlay - ($20k, Jordan) PetPlay - ($20k, Jordan)  Sign Now - ($200k, Berkus)  Social Annex, Inc. - SaaS based Platform for Online Retailers to monetize social media (Lapin, $750k) Social Annex, Inc. - SaaS based Platform for Online Retailers to monetize social media (Lapin, $750k)  TranscribeMe - ($250k, Babajov) TranscribeMe - ($250k, Babajov)  trueRSVP Inc (dba Planana) - ($80k, Sangster) trueRSVP Inc (dba Planana) - ($80k, Sangster)  ViroPan, Inc. ViroPan, Inc.  Wasatch Microfluidics, LLC - ($275k, Israel)Continental Wind Power - Mid-sized wind turbine (SB, Pikover, $1.25M)Continental Wind Power - Mid-sized wind turbine (SB, Pikover, $1.25M)  Agilenano - Nanotechnology Based Energy Absorbing Material (SD, $200K) Agilenano - Nanotechnology Based Energy Absorbing Material (SD, $200K)  Phone Halo - Track your belongings (SB, Panesis, $90K) Phone Halo - Track your belongings (SB, Panesis  Make it Work (SB ) Make it Work (SB )