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[email protected] Kopp
Co-founder, Committee Member &Sydney Angels Side Car Fund Investment Committee Member
Mathias KoppSydney Angels
2 May 2015
Angel Investing
University of Technology
Sydney
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An Angel is a person who invests his/her own money in anunlisted growth company as a personal decision with the
objective of realising a capital return in the foreseeable future.
Financial Capital + Intellectual Capital
An Angel Group is a collection of individual Angel Investorswho combine under a common brand with defined rules of
membership and conduct to collectively identify, review,select, evaluate, invest in
and exit from Angel investments.
What’s an angel and an angel aroup?
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What does an Australian angel look like?
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It doesn’t matter!
... Why?
Real Angels are handson.
Angels want to meet inthe flesh.
Sometimes they buythemselves a job.
Therefore
Angels only investlocally, usually within50kms of where theylive
What’s an American angel look like?
Healthy EarlyStage
VentureCapital
Ecosystem
Entrepreneurs
Later roundinvestments &Exits - trade
sales, VC, PE,banks & IPOs
IndividualAngels &
AngelGroups
Governmentpolicy -
innovation grants,funding, R&D tax
incentivesCo-investment Funds
& Sidecar Funds
Innovationculture, legal
system, IPprotection,
financial markets
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Angels are an essential part of the startup ecosystem …
… and the funding continuum
Later StageExpansion StageR
isk
‘3Fs’Angel Investors
Venture Capital
Private Equity &non-financialcorporations
Equity Markets
Banks
18,700 12,960 8,342 600
0-4 5-19 20-199 > 200
$200K $2M $20M $200M+Avg. Raising
# Raisings
# Employees
10x
5x
3x
2x
$50K $100K $1M $5M $100M$500K $10M $50M
Seed / Start-UpStage
Early ExpansionStage
Retu
rn
Ris
k
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Exit Multiples
% of Total ExitsOverall Multiple: 2.6x or IRR: 27%
Ø Holding Period: 3.5 yrs3 yrs
51% of angel deals do not return the initial investment
3.3 yrs
4.6 yrs
4.9 yrs 6 yrs
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DealDeal DealDeal DealDeal
DealDeal DealDeal
DealDeal DealDeal
DealDeal DealDeal
DealDeal
DealDeal
DealDeal
DealDeal
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DealDeal
Sydney Angels Sidecar Fund ($10m)(Early Stage Venture Capital Limited Partnership)
• An incorporated association whose75 members are active angel investors.
• Managed by an elected Committee.• On-line investment application process.
• Licensed manager of the $10m SydneyAngels Sidecar Fund.
• Investment Committee approvesco-investments in deals syndicates ofSydney Angels’ members want toinvest in.
• Early-stage deals in or near Sydney.• Pre-revenue to pre-profit stages.• Typically raising 1st round $100-600K.
Sydney Angels has rapidly grown to become Australia’slargest angel association
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DealSourcing
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DealScreeningMeeting
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Screening Deal Selection& Due Diligence
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EntrepreneursCoaching
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SyndicateLead
Appointed
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Term SheetDrafted
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Term SheetDrafted
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DecisionMade By Side-
car FundWhether Deal
Eligible
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Deal Managed& Monitored
2 4 6 8 10 12 14 16
MembersMeeting
SyndicateFormed & DD
Conducted
Syndicate &Sidecar Fund
Seek AttractiveExit
Pre-Selectionof 6 Deals
DealPresentedTo Sidecar
Fund
TermsNegotiated
Funding RoundClosed
Selection of3 Best Deals
Syndication, Negotiation& Investment
Management& Exit
EN
TE
R EX
ITIts deal investment process is highly structured androbust
1 month 1 month 2 – 3 months 3 – 5 years
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Applications reviewed by Sydney Angels’Management Committee.
Invited to pitch at nextDeal Screening Meeting (6 per year).
Invited to pitch at nextMembers’ Meeting (6 per year).
Founders apply online. Involvescompleting standardised application form
and answering all key questions.
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DealDeal DealDeal
DealDeal DealDeal
DealDeal
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DealDeal
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DealDeal DealDeal
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Invested by syndicates of Sydney Angels’members (after due diligence).
Sidecar Fund co-invests in eligible deals.
Sydney Angel’s investment ratio now outperformsventure capital firms in Australia …
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… and is a significant catalyst for co-investments
The Sydney Angels investment portfolio is heavilyskewed towards technology-based start-ups
Industry
Internet/ Mobile 69%
Software 10%
Retail 6%
Other 16%
Selected: 69% Internet/ Mob.
Valuation Sought
< $ 1.0m 23%
$1m - $2.5m 52%
$2.5 - $5.0m 20%
>$5.0m 6%
Selected: 52% - $1m - $2.5m
Capital Sought
$100k - $300k 31%
$300k - $500k 15%
$500k - $1m 42%
>$1m 13%
Selected: 42% - $500k - $1m
Revenue Stage
Pre revenue 68%
$0-$500k 26%
$500k - $1m 4%
$1m - $3m 3%
Selected: 68% - pre revenue
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To be successful business plan and pitch need tocover ten aspects
1. Problem in the market
2. Your solution & product/servicedescription
3. Market, trends, dynamics & size
4. Potential customers
5. Competitors & competitive advantage
6. Business & revenue model
7. Team – more than just the founder
8. Financials – financial model
9. Capital requirements
10. Valuation & shareholding
Generally, the pitch is a rare opportunity to create alasting impression
Pitch by Founder(s)
• Passionate.
• Founder is likeable.
• Radiates confidence anddemonstrates expertise.
• Never stumped during Q&A, domainexpertise evident, across all thenumbers.
• Involves key team members.
• Listens to suggestions and iscoachable.
• Is prepared to compromise.
Quality of Deal
• Convincing management team, hasworked together and can executeplan.
• Market opportunity big enough.
• Scalable business model.
• Customers and problem/needidentified, ideally proven.
• Solution much better than others, andnot easily imitated.
• Valuation and path to exit offerattractive returns for investors.
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Appendix
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To date Sydney Angel members have made close to 40investments to date
