A really good primer on Angel investing equally applicable to angels and entrepreneurs. This was found at http://bluewaterangels.com/resources/.
ACCESS TO CAPITAL
2
What’s Inside this eBook?
Chapter 1 : Historical Overview………………………………………………………4
Where are the jobs?………………………………………………………………………4
No startups, no jobs……………………………………………………………………….5
No funding, no startups…………………………………………………………………..6
Only winners count………………………………………………………………………..7
Bring forth the gazelles…………………………………………………………………..9
The policy dilemma………………………………………………………………………10
What we need……………………………………………………………………………..11
Chapter 2: Angel Foundations………………………………………………………12
What is angel investing?……………………………………………………………….12
What is Seed Capital?………………………………………………………………….13
Why is seed important?……………………………………………………………….13
Organized Angel Clubs…………………………………………………………………14
Angel club processes……………………………………………………………………15
Membership and Membership Dues………………………………………………..18
Investment Requirements and Expectations……………………………………18
Management & Administration of the Angel Group………………………….19
Club Meetings…………………………………………………………………………….19
Deal Flow……………………………………………………………………………………19
Selection/Screening Process…………………………………………………………19
Due Diligence Process………………………………………………………………….20
Follow-up………………………………………………………………………………21
Syndications………………………………………………………………………….21
Investment Approaches………………………………………………………………..22
Deal Terms…………………………………………………………………………………22
Expected Returns………………………………………………………………………..23
Regulation D or “Reg D”………………………………………………………………..243
Chapter 3: Risk Mitigation Strategies And Term Sheets…………………25
Risk Mitigation Strategies…………………………………………………………….25
Mistakes that increase the risk profile and limit returns………………………25
Term Sheets……………………………………………………………………………….28
Items Needing Coverage in a Term Sheet………………………………………..29
Term Sheet Detail………………………………………………………………………..30
Chapter 4: Due Diligence…………………………………………………………….36
What is due diligence?…………………………………………………………………36
What does it consist of?………………………………………………………………..37
The Need for Due Diligence…………………………………………………………..37
Defining the Risk of the Investment Opportunity………………………………38
When to do Due Diligence?…………………………………………………………..39
Chapter 5: Due Diligence Process………………………………………………..41
Creating a due diligence plan………………………………………………………..42
The Non Disclosure Agreement (NDA) Requirement………………………….42
Deal Rejections……………………………………………………………………………43
How much detail is required for due diligence?…………………………………45
Exit Strategies…………………………………………………………………………….46
Types of Exits………………………………………………………………………………47
Valuation………………………………………………………………………………..49
Liquidity – Exploring possible strategies for investor exits……………….49
Tools and References……………………………………………………………………51
Sample Due Diligence Checklists……………………………………………………51
Term Sheet Samples ………………………………………………………………52
References……………………………………………………………………………53