COMMON ANGELS

“Fools rush in where angels fear to tread”

Team -7 SUDERSHAN SHARMA -1226108251 LAWI ANUPAM K.S.SRINIVAS GITAM INSTITUTE OF INTERNATIONAL BUSINESS VISAKHAPATNAM -1226108221 -1226108132

Investment Stages
Most VC’s have a preference for a particular investment stage. Five Stages:
 Seed  Start-up  Early  Expansion  Mezzanine/Bridge

Valuation
Stage Seed Criteria - Mgmt. track record - Market size/growth - Competition - Investment to date - Market size/growth - Working prototype? - Team complete? Methodology Comparables, What's the “going rate” in the region Comparables Range $400K to$1.5MM

Start-up

$750K to 2.0MM

Contd……

Stage Early

Criteria - Market size/growth - Revenue run rate - Gross margin % - Performance to date

Methodology Comparables

Range $1.5 to $5.0MM

Expansion - Revenue run rate - 1X sales - Profitability ratios - EBIT multiple - Performance vs. plan

Varies

The Role of the VC
     

Board involvement Management recruitment Future capital raising Access to business network Strategy development Patience

How Do VC’s Make Money? Source of VC Income:
– Collect management fees

from L.P.’s - 2 1/2% annually – Share profits with L.P.’s 20/80 split on investment gains

How do VC’s earn their income?
5%

95%

Mgmt. Fee

Investment Gains

VC’s focuses
Venture capitalists tend to focus on five specific areas when evaluating a company: Areas of Focus:
    

Management Marketplace Competition Business Economics Risks

The Venture Capital Process
     

Business Plan First Meeting Second Meeting Term Sheet Due Diligence Negotiations

Exit Strategies
 Sale or Merger

 Most likely exit  Initial Public Offering Small fraction go this way  Redemption Least attractive  Management buy-out Generally not possible

Introduction

Common Angels was founded in June 1998 and is headquartered in Lexington, Massachusetts
 Common Angels is a venture capital firm specializing in early stage

investments.

The firm seeks to invest in software, telephony, semiconductors, RFID, and medical devices not requiring extensive trials.

 It primarily invests in companies based in Boston Area.  The firm typically invests in series A between $500,000 and $5 million with

the total investments less than $20 million.
 The firm prefers to have a seat on the company’s board of directors in its

portfolio companies.

Three Exceptional Rules
Attract High Quality opportunities & Entrepreneurs

1.

2. Able to access those opportunities & decide to allocate

scarce resources
3. Assist Entrepreneurs in building companies that enable

them & common Angles

FACTS about COMMON ANGELS
• Invested in more than 23 billions in more than50000 venture. • It had network of 70 accredited private investors.

• Helped more than 115 companies. Out of which 100 were sold & 34

went for IPO.
• It had 70 members part time & full time members.38 limited

members.
• All the members where interested in investing capital for the firms.

Turning Point………..
 In 2000 due to dot com crash IT industry came to halt.  In April 2001 – 2002 360 companies where shut down.  Common Angels business also decreased from 2000 deals

to 700 deals & from $28.4 billions to $5 billions.
 Then they thought of focusing on non-IT technologies