The better your deal flow – finding lots of high-quality companies that ask you for funding – the better your chances of picking good ones to invest in. The best entrepreneurs have many choices, so there is plenty of competition to invest in the best deals. Chapter 2 will help you Find Good Companies through good sources of deal flow, screening techniques and managing deal flow. Various examples of different practices across Canada by several Angel groups are described. The process to Pick Good Companies is referred to as due diligence, always a popular topic among Angels (e.g., NACO Academy Module 103). Chapter 3 guides you through assessing the character of the entrepreneur, looking for skeletons, identifying the crown jewels, validating key assumptions and risks, and building trust with the company executives before you give them your cash. Chapter 4 covers the nuts and bolts of how to Make Good Deals . This is the longest section of the book and includes big topics to which the book Age of the Angel devoted five chapters, namely: negotiations, term sheets, valuation, trust and deal syndication. Dozens of Angels generously provided sample documents that are available on the NACO website under NACO Online Sample Documents. Once the entrepreneur has your cash, how do you Grow Good Companies ? Chapter 5 discusses being on a board of directors, corporate governance, coaching entrepreneurs, sourcing talent and managing follow-on investments. Anyone can give their money to a company – the hard part is getting it back again! Chapter 6 discusses different exits that Angels achieve across Canada and gives advice on how to Create Good Exits . This includes knowing when to sell and how to maximize exit values. We also dig more deeply into the issues of the time value of money, dilution, multiples and rate of return. Don’t forget to check out the Appendix, where you’ll find references for this book, a list of NACO Academy Modules, and a list of NACO Online Sample Documents available on the website. The Role of Angel Investing in the Economy “No money – no company. It’s as simple as that. Without investment capital, there would be no new companies and no new jobs – our economy would be in the dumps!” (Carl Furtado, Golden Triangle Angel Network) Small to Medium-sized Enterprises (SMEs – companies with fewer than 500 employees) represent over 98% of companies in North America and Europe and employ over two-thirds of all workers (Lukács). A small fraction (around 4%) of these SMEs, however, are high-growth companies (called Gazelles) that create virtually all new jobs (estimates range from 50–100%) in the entire economy. (Littunen & Tohmo; Acs, et al.; Henrekson & Johansson)
How to Achieve Good Returns
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