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FAN Investors Fund I, LP
Executive Summary
May 28, 2015
Confidential and Proprietary
Confidentiality and Recipient’s Undertakings
Confidential and Proprietary 2
THE INFORMATION CONTAINED IN THIS DOCUMENT HAS BEEN PREPARED SOLELY FOR THE CONSIDERATION OF PROSPECTIVE
INVESTORS IN THE INTERESTS, AND IS CONFIDENTIAL AND PROPRIETARY TO THE FUND. BY ACCEPTING DELIVERY OF THIS
DOCUMENT, THE INTENDED RECIPIENT (THE “INTENDED RECIPIENT”) IS DEEMED TO HAVE AGREED TO THE FOLLOWING: (1)
THE INFORMATION CONTAINED IN THIS DOCUMENT WILL BE USED BY THE INTENDED RECIPIENT SOLELY FOR THE PURPOSE
OF DECIDING WHETHER TO PROCEED WITH A FURTHER INVESTIGATION OF AND INVESTMENT IN THE FUND; (2) THIS
DOCUMENT AND INFORMATION DERIVED FROM THIS DOCUMENT WILL BE KEPT IN STRICT CONFIDENCE BY THE INTENDED
RECIPIENT AND WILL NOT, WITHOUT THE GENERAL PARTNER’S PRIOR WRITTEN CONSENT, BE REPRODUCED, DISTRIBUTED
OR DISCLOSED, IN WHOLE OR IN PART, BY THE INTENDED RECIPIENT EXCEPT TO ITS LEGAL, FINANCIAL AND TAX ADVISORS
FOR THE PURPOSE OF ANALYZING THE MERITS, RISKS, AND TAX TREATMENT AND STRUCTURE OF AN INVESTMENT IN THE
FUND (UNLESS MAINTAINING CONFIDENTIALITY EVEN IN SUCH INSTANCES IS REQUIRED TO COMPLY WITH APPLICABLE
FEDERAL OR STATE SECURITIES LAWS); AND (3) UPON THE WRITTEN REQUEST OF THE GENERAL PARTNER, THIS DOCUMENT
AND ANY OTHER DOCUMENTS OR INFORMATION FURNISHED TO THE INTENDED RECIPIENT AND ANY AND ALL
REPRODUCTIONS THEREOF AND NOTES RELATING THERETO, WILL BE PROMPTLY RETURNED TO THE FUND.
Forward-Looking Statement DisclosureTHIS DOCUMENT INCLUDES CERTAIN STATEMENTS PROVIDED BY THE FUND WITH RESPECT TO THE ANTICIPATED FUTURE
ACTIVITIES OR PERFORMANCE OF THE FUND. SUCH STATEMENTS REFLECT VARIOUS ASSUMPTIONS BY THE FUND WHICH MAY
OR MAY NOT PROVE TO BE ACCURATE. RECIPIENTS ARE URGED TO CRITICALLY EVALUATE SUCH STATEMENTS AND ANY
ASSUMPTIONS THAT UNDERLIE OR SHOULD UNDERLIE PROJECTIONS OF FUTURE RESULTS.
FAN Investors Fund I, LP
Confidential and Proprietary 3
The natural evolution of a successful “pass the hat” model
Professionally managed & committed angel fund
Targeting $20 million capital raise
Seeking capital appreciation by: Investing in growth-oriented opportunities
Focusing on technology and life science sectors
Locating within underserved, capital efficient market of Florida
Allocating capital based on portfolio strategy
Hands-on approach with its pipeline and portfolio companies
Collaborating with members of the Florida Angel Nexus
Solid Returns for Angel Investments
Confidential and Proprietary 4
Due Diligence and Industry Expertise Matter
Confidential and Proprietary 5
“Anyone with a checkbook can be an angel investor, but it takes insight to do it well.” -
Fools Gold! The Truth Behind Angel Investing in America, Scott Shane
Source: Kaufman Foundation, "Returns to Angel Investment In Groups"
Angel Groups Evolving into Managed FundsExample: Boston’s Common Angels
Confidential and Proprietary 6
Consistent Due Diligence
Maximize Industry Expertise
Enable Portfolio Approach
Simplify Engagement Process
Portfolio approach is a key to mitigating
some of the inherent risk
We Invest in Early Stages
Confidential and Proprietary 7
Early Stage in Florida is an Opportunity
Confidential and Proprietary 8
• Large University System (> 10,000 STEM grads / year)
• Engineering services, space, defense, life science hub
• Home to the National Business Incubation Association
• Match funding from FICPR and many local groups
Underserved Market
Emerging entrepreneurial ecosystem in Florida
• Undercapitalized startups struggle to reach potential
• Out-of-state funding may require move
• Capital efficiency higher in FL than MA and CA
• Strong exit environment for mid-sized companies in FL
Arbitrage Opportunity
Investment lags deal flow
• Portfolio companies require company-building mentors
• Industry expertise is key
• Ability to pool resources and talent is key
• Fund better suited than an Angel Group to meet needs
Outsized Returns
Appropriate skills lead to opportunity for high
returns
http://flbog.edu/about/_doc/budget/2010-11_System_Annual_Accountability_Report_FINAL.pdf
Cassel Salpeter & Co. LLC and PitchBook Data, Inc.
Florida Ecosystem Fundamentals are Excellent
Confidential and Proprietary 9
• Home to 135 colleges - 78 public and 56 private
• 12 member state system produces > 10,000 STEM grads
• Powerful research institutions with billions of dollars of intellectual property ripe for commercialization
University
System
• 1st in computer training employment
• 2nd in space and defense manufacturing employment
• 3rd overall in engineering services employment
• Established mid-sized businesses serve as management talent pool and potential strategic alliances
Science
and
Technology
• Incubator, co-working space, and entrepreneur centers
• Public funding boosts early stage returns within FL• For example, Florida Institute of Commercialization of Public Research (FICPR),
for example, will match private funding to companies leveraging university technology
Public
Support
https://www.cappex.com/colleges/states/Florida
http://www.techamericafoundation.org/florida-ranks-5th-in-tech-employment-in-2012
http://www.floridatrend.com/article/17616/floridas-business-incubators--2015
Florida Angel Nexus (NEXUS) Advantage
Confidential and Proprietary 10
What is NEXUS? • Statewide network for angel investors
• In operation for 3 years
• Educates members so they may more effectively pool capital, expertise
and efforts in angel investment
NEXUS and the
Fund
• Fund Partners are all active NEXUS members
• Access opportunity funnel and deal pipeline
• Access to NEXUS’ network of subject matter experts / relationships
• Participation in NEXUS’ events and networks
• Easy syndication with NEXUS’ co-investors
Advantages • Leveraging NEXUS puts the Fund several years ahead in capabilities
• Deal sourcing: average of 15 – 20 deals enter pipeline a week;
universities incubators, economic development agencies shop
opportunities to NEXUS
• Due diligence and portfolio management: access to research experts
across a wide range of fields give the Fund industry expertise beyond
what’s directly within the principal’s command
Investment Considerations
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Technology or Life Science with operations in FL
Strategy includes multiple exit options within 3-7 years
Company can establish a sustainable market niche
Have an established product and/or service in $1B market
Have revenues of $0-10 million with known economic model
Are at a transition point in their strategic growth alternatives
Planned Capital Allocation
Confidential and Proprietary 12
Seed Stage
•10-20% of capital
•Majority of the deal volume
Early Stage
•30-40% of the capital
•Minority of deal volume
Strategic Allocation
•40-60% of Capital
•Follow-on capital & maneuvering
•No more than 15% in any one investment
•Defendable deal terms or mechanisms
Investment Approach
Confidential and Proprietary 13
•The Partner’s extensive personal networks
•Access to NEXUS pipeline
•Mentor and coach by participating in NEXUS events draws prospects
DealSourcing
•At least two Partners will look at every deal
•Win-win due diligence process ...
• ... Coaching, mentoring, advising, learning
ScreeningDue Diligence
•Milestone based investment tranches
•Active risk mitigation as prescribed by Deal Mentors
•Contingency deals such as key hires, licensing structure, etc.
DealStructuring
•Board seat or observer rights requirements in initial rounds
•Stepping into interim Chairman or CEO roles as necessary
PortfolioManagement
•Actively manage the companies’ exit path positioning
•Constantly cultivating acquisition relationships
•Keeping a pulse on macro exit environment and M&A trends
Exit PathManagement
Management Team
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Experienced team of principals and advisors with deep
investment, executive leadership, finance, and technology
operations expertise
Comprised of founders, entrepreneurs, angel investors, and top executives at
multiple technology, technology services, and life science companies
Experienced and successful private equity / venture capital / angel investment
managers, advisors, and operators
Collectively, more then 100 years of relevant industry and investment experience;
many of those years jointly
Principals are investing their own money
Principals
Confidential and Proprietary 15
Mitchel Laskey - Founder, Entrepreneur, Strategic Advisor, Venture Investor,
Corporate Governance, CPA, Executive Leader developing technology companies
Michael O’Donnell - Founder, Entrepreneur, Angel Investor, Chief Technology
Investment Officer, University Executive Office of Innovation and Entrepreneurship
Kathy Chiu - COO Angel Network, Venture Capitalist, Research Analyst,
Consultant & Advisor, Masters Electrical Engineering - MIT, MBA Stanford
Ben Patz - Founder, Entrepreneur, Technologist, Principle Investigator SBIR
grants, Masters Electrical Engineering, Ernst & Young Entrepreneur of the year award
Marcelo Chao - Founder, Entrepreneur, Managing Director Private Equity Fund -
$6 billion invested in 120 companies, Strategic Consultant, CPA
For additional history, backgrounds,
and capabilities see appendix
Advisors
Confidential and Proprietary 16
Gregg PollackFounder of Envy Labs & Code School
Founder Starter Studio
Orlando, Florida
Jamie GroomsCEO, Florida Institute for the
Commercialization of Public Research
Gainesville, Florida
Donna MackenzieExecutive Director, Starter Studio
Orlando, Florida
Ronald HammondPresident/CEO, Ronin Associates
International St. Petersburg, Florida
Jackson Streeter, M.D.CEO Banyan Biomarkers
Gainesville, Florida
Sherrick (Rick) WasselManaging Director, IQ Orlando
Executive Director, Florida Hospital Adventist
Health System
Orlando, Florida
Richard BernsteinOf Counsel at Greenberg Traurig
Miami, Florida
Randy FieldsOf Counsel at Gray Robinson
Orlando, Florida
Fund Terms
Confidential and Proprietary 17
Partnership Fund FAN Investors Fund I, LP
General Partner FAN Investors I GP, LLC
Manager FAN Management Partners, LLC
Target Raise $20 million
Minimum Raise $5 million
Principals’ Investment Minimum $1,000,000
Profit Split 80% Limited Partner / 20% General Partner after return of capital
Investment Period 4 Years
Management Fee 2½% of committed capital during investment period,1½% thereafter
Minimum Commitment $100,000 with 40% of commitment due at subscription = $40,000 down
Expected Distributions At portfolio company exits
Targeted Returns 3–5x over life of investment or 40% annualized IRR
Subscription Escrow Agent CNL Bank
Independent Auditors Cross, Fernandez & Riley, LLP
Legal Counsel Burr & Forman LLP
Summary of FAN Investors Fund I, LP
Confidential and Proprietary 18
Natural evolution of the “pass the hat” model for angel investing
Following a trend for “pooled angel investing”
Professionally managed committed angel capital fund
Opportunity to invest in seed and early stage utilizing a portfolio approach
Angel capital as an asset class provides highest historical returns
Located and investing in Florida’s emerging market
Focused on growth oriented technology and life science opportunities
Unique and leveraged relationship with Florida Angel Nexus
Talented, experienced, and successful General Partners and Advisor team
“Hands-on approach” to the investment process and risk mitigation
Participate with management on exit alternatives to maximize returns
Questions and Answers
Confidential and Proprietary 19
Appendix
Principals and Advisors History, Background, and Capabilities
Confidential and Proprietary 20
Confidential and Proprietary 21
Mitchel J. Laskey, Managing Director of MJL Advisors, Inc.; Co-founder and Board of
Directors of CNL Bank; Past Chairman of the Board of IZEA (OTC: IZEA); Co-founder and
CEO of Dynamic Healthcare Technologies (NASDAQ: DHTI) a leading health care information
systems company – merged with (NSADAQ: CERN). Held other senior executive
management and leadership positions for public and private companies (including 4
positions of CEO), developing entrepreneurial technology companies in healthcare,
electronic manufacturing, physical security, and transportation industries. Has served as a
member of the board of directors for numerous non-profit, private, and public companies.
Testified before Congress regarding Homeland Securities issues and holds active Secret
Clearance with the U.S. Government; South Florida College of Business Administration’s
“Entrepreneur of the Year”, BA degree in both accounting and marketing from the
University of South Florida. Licensed CPA in Florida.
Michael J. O’Donnell, Sr., Executive Director of the Office of Innovation and
Entrepreneurship University of Central Florida and Director of the UCF Venture
Accelerator; Founder and Chairman of the Board of NEXUS; Founder and CEO of ALS, LLC, a
specialized industrial staffing company. Grew the company to over 6,000 employees and to
an exit through acquisition; Senior Executive and Equity Member, Sun Financial Group
(sold to GATX); Managing Director, Board Member, and Chief Technology Investment Officer
for GATX; Invested in over 60 seed, early, and growth stage deals; BS in Business
Administration from Central Michigan University; MS in Management from the University of
Central Florida.
Confidential and Proprietary 22
Kathy Chiu, COO of Florida Angel Nexus; Wireless venture capitalist at Denver-based
iSherpa Capital; Consultant to clients from startups to Fortune 500; Research analyst with
Boston economics consulting firm Cornerstone Research; business development, strategy,
product management at Level (3) Communications, Lefthand Networks, Compaq
Computers; Technical roles at Tektronix, MIT Media Lab, and Superconducting Supercollider
Lab, BSEE and MSEE from MIT; MBA from Stanford Graduate School of Business. Speaks
fluent Chinese and Taiwanese.
Ben Patz, Founder and CEO Coleman Technologies. Grew sales to $250M and exited in
2009; COO of Presidio until 2013, running operations and led the company’s M&A activities;
Principal investigator on a number of SBIR grants relating to the application of Fuzzy Logic
and Neural Networks to control systems; Led the UCF team to finals in DARPA Urban
Challenge, an autonomous vehicle competition; Specialty: computation, control systems,
and simulations; MSEE degree from the University of Central Florida; BSEE from Rensselaer
Polytechnic Institute; Ernst & Young’s Entrepreneur of the Year award for Florida in 2002;
UCF’s Professional Achievement Award in 2006.
Confidential and Proprietary 23
Marcelo G. Chao, Founder and CEO of Bondis Entertainment S.A., a brand development
and content distribution firm. Partner at Imagen Deportiva S.A. (2010-2012), which
produced sports events featuring the likes of Messi, Roger Federer, Pete Sampras, and
Andre Agassi; Managing Director at The Exxel Group (2000 to 2009), a private equity group
in Latin America that invested approximately $6 billion in 120 companies, over 50
acquisitions and 30 exits; Partner at Hermes Management Consulting (1995 to 2000), a
strategic consulting firm; VP at Citibank; served on the board of directors of Mako Surgical
Corp, Brijot Imaging, The Protective Group Inc, Latin American and the Caribbean Board of
MasterCard International, and Thingmagic Inc. Bachelor of Science in business
administration from Universidad Catolica Argentina, attaining honors; Certified Public
Accountant in Argentina.