2.2 Screening Opportunities OK – so you’ve met a prospective investee company and, regardless of whether this was a handshake or an email, they are now going to provide you with information about themselves. What form should the information take? A formal business plan and subscription agreement? a 20-minute presentation? a long, rambling email? a term sheet? a formal process with an application form?
The Funding Success Funnel
5,345
Applications
Presentations
Due Diligence
Funded
1,606
489
Source: Mason & Tjahjakartana , 2016 Report on Angel Investing Activity in Canada
418
Lone Wolf Angels tend to look at whatever the entrepreneur has and decide whether or not to proceed directly to deal negotiation and due diligence.
The Snap Decision I can say no to something in less than a minute 99% of the time because it’s not in a theme, they’ve raised too much money, or it’s too late-stage. Assuming that it gets through that, then my primary selection criteria for any investment is to first focus on the entrepreneur. Is the entrepreneur completely obsessed about their product? Not passionate – but obsessed . – Brad Feld , in Maher, Startup Wealth Rather than allowing for snap decisions, almost all Angel groups have a screening process that takes place before exposing their Angels to potential investee companies. In this process, most require the entrepreneur to complete a standard application that is used for screening. Last year, Canadian Angel groups received 5,345 formal applications from investee companies and 1,606 were selected to make a presentation to group members (Mason & Tjahjakartana). This phase of the screening process normally requires a meeting or phone call and an in-person, dry-run presentation to a screening committee, together with committee feedback, before being selected to present to the full membership. Some groups also check references during this phase.
38 A Practical Guide to Angel Investing
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