Accessing Capital From an Angel Investor Network

Your First Professional InvestmentWho, What, When, Where and

How?

ENTREPRENEUR WORKSHOP:

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Who Am I• I am Gerard Buckley

– Founder & CEO of Jaguar Capital an Advisory Practice for Growth Companies in Financial Management, Financial Structuring & Governance

– Chairperson of Board of Directors, Maple Leaf Angels Corporation & Investor in eight early stage companies

– Entrepreneur in Residence with Incubes (An Internet Company Accelerator)

– Member of SME Committee of The Ontario Securities Commission

– Investment Committee of MSV University, Halifax, NS– 32 yr. Career with Scotia Capital as a Financial Risk

Management Advisor to Fortune 200 Companies: Rogers, Irving Group, Empire Co., Four Seasons, Bruce Power, OPG, Province of Ontario, Ford, CAE etc.

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Agenda

• Who is an Angel Investor• Angel Network in Canada• NACO 2012 Survey• Halo Report – Q 2 - 2013• Maple Leaf Angels• Angel Investing is a changing• The Benefits for Entrepreneurs• Q & A

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Who is an Angel Investor

• A person prepared to invest their personal or family money

• A person who can add value to the company

• An accredited investor as defined by OSC

• A member of an angel network• The majority of angel investment in

Canada is completed by individuals >85%

• Estimate of Cdn Angel Investment is 916mm in approx 1500 companies (VC about 2b)

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Angel Network’s in Canada• NACO – National Angel Capital Organization• 32 Angel Groups in Canada• They have collectively about 1000 investors• Three large groups accounted for 58%• The majority have fewer than 50 members• 75% of groups set up since 2007• Vast majority do volunteer due diligence• 13 Angel Groups in Ontario• Keiretsu Forum & Golden Horseshoe Venture

Forum are Private For Profit Angel Groups

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Canadian Angel Group Investment Activity 2012• 139 Investments in 2012 totaling 40.5

million, an increase from 2011 of 134 investments and a decrease in investment from 82.4M

• Average investment is $314k down fr $614k• 50% of angel groups made over 6

investments in 2012, an increase of 20% over 2011

• 82% - Ont & Que, 16% West, 2% Atlantic• ICT (54%), Life Sciences (23%), Clean Tech

(10%)• Valuation – Median 1.55m, Mean 2.06m • 55% of transactions involved a co-investor

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Angel Resource Institute – Halo Report – Q2 - 2013

• Median Angel Round Size trends down to $590K from $680K

• Early Stage Pre-Money Valuations remain stable at $2.5M

• 72% of deals occur in angel groups’ home states• 74% of Angel Deals are Syndicated • Median Round Size $1.95M up from $1.4M when

co-invested• Share of Deals by Sector - Internet 31.9%(-),

Healthcare 20.9%(+), Mobile & Telecom 13.3%(-), Software (non-Internet/mobile) 4.5%(-)

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Angel Group Investment Distribution in USA

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Maple Leaf Angels Corporation• Toronto based and in existence since 2007• MLA has invested in 22 companies since

inception in 2007 for $9,600,000• Registered with the OSC as a Exempt Market

Dealer• Currently 45 members• MLA conducted a strategic renewal in Nov 2011

with a new business plan released in January 2012 and a new BOD elected March 2012

• Open and transparent – published funding process

• Continual Entrepreneur support: Curb Side Mentoring, Volunteer Mentoring, Entrepreneur Workshops etc.

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The Application Process

• Start with www.mapleleafangels.com• There is a full education section for

entrepreneurs• You apply using MLA’s Private

Platform• Investment Review Committee• Monthly Member Investment

Meetings• Due Diligence• Term Sheet

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Equity Capital Life Cycle

Cash flow

Sale

s a

nd

p

rofi

t

I ntroduction Growth Maturity Decline

Time

R & D Pre-Seed & Seed

Start-Up

Sales

Round 1 Round 2

Grants / Love Money

$

Angel $

VC $ VC $

Exit

Angel $

Concept and product

development

Profit

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Angel Group Benefits

• Qualified Opportunities• Opportunity referral• Increased Capital Diversification• Great Valuation and Favourable Terms in

comparison to VCs• Networking• Portfolio company mentoring or

engagement• Shared Due-Diligence• Advisory Board and Board of Director Roles

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What Angels Look For

• High anticipated growth rate• Experienced management team• Sustainable competitive advantage• Barriers to entry• Clear strategy for commercialization• Proof of concept or enterprise level

validation• Business model anchored in Reality• Investor exit strategy

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Selection Criteria

• The stage, quality of the management team, valuation and technology of companies are more important than the sector criteria

• Quality is more important than quantity• The best of the best should only present

and the number of companies presenting should be limited to one or two, introduced by someone who is willing to sponsor or lead the investment and due diligence process

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Selection Criteria

• Select the very best in seed and early stage

• Seed investment amounts should be from $250k to $500K and early stage investments should be from $350k to $1,500K

• Deal flow of members – both group investments and private or small group investments should be tracked and reported on, with clear communication on which investments went through MLA’s group due diligence

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Factors that appear to impact investor outcome

• Due diligence time: More hours of due diligence positively related to greater returns

• Experience: An angel investor's expertise in the industry of the venture being invested

• Participation: Angel Investors that interacted with their portfolio companies at least a couple of times per month mentoring, coaching, providing leads and monitoring performance experienced greater returns.

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Five types of Angel Investors

1. The Coach Angel Investor2. The Do’er Angel Investor3. The CEO of a Public Company

Angel Investor4. The Spectator Angel Investor5. The Boss Angel Investor

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Traditional Angel Network is Changing

• Currently Southern Ontario Angel Investment community has 13 Angel groups

• Government programs ( IAF, MaRS, OCE, IBI)

• Online - Angel List, Syndicates, The Funded, Gust

• Y Combinator, Tech Stars, 500 Start-ups, +110 Accelerators in Canada

• Incubators & Accelerator funds • Crowd funding such as kickstarter.com and

equity crowd funding will follow • Super Angels & Micro-VC’s

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Entrepreneur Benefits

• Large capital source• Broad pool of Knowledge & Contacts• Efficient Process• Capital Connections• In many provinces there is investor

tax credit• Leverage sources of funding (IAF,

IBI, BDC etc.)

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Target Investee Companies

• Companies who are in seed and early stage, two for each meeting if the quality can be found

• In technology, provided they are backed by a member who is willing to sponsor

• Great management team, valuation, technology .......

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Contact Information

Gerard Buckley, BBA, FICB, ICD.DPresident and CEO Jaguar Capital Inc.(C) 416-884-9522(W) 416-646-6789

g.buckley@jaguarcapital.ca

www.jaguarcapital.ca

Twitter: @jaguarcapital Twitter: @gerardbuckleySlideshare: Jaguar Capital