Membership Overview: Making the Most of Angel Investing To help the Boston-area's best entrepreneurs...

Membership Overview:Making the Most of Angel Investing

To help the Boston-area's best entrepreneurs build successful technology companies and achieve venture returns for our capital

through a professional, collaborative network.

Chris Sheehan James [email protected] (781) 274-9124 [email protected]

Benefiting from Membership

• Saving time, reducing risk through our diligence, deal terms, and investment processes

• Accessing high quality deals for venture returns

• Making your own investment decisions

• Diversifying risk through our co-investment fund

• Networking, collegiality, and fun with a peer group

• Staying current on new ideas, tech, markets

• Giving back by mentoring entrepreneurs

Annual dues are less than ½ of typical VC management fee


Benefiting Across Investor Roles

• Attract Leading regional & national brand High volume, quality deal flow

• Assess Share ideas, diligence with industry leaders Test assumptions, elucidate risk as a team

• Assist Put best people on board & make investor plan Share workload & aggregate sufficient capital

• Have Fun Social & networking events


Differentiating from VCs

• You pick the companies for investment

• Decisions driven by members Domain experts actively participate Vote with own wallets Actively recruit & evolve member base

• Members join boards, actively participate

We started CommonAngels in 1998 because the 'venture' had left 'venture capital' Looking back, were we ever on to something! If an early stage investment organization based on industry experience was needed then, it's needed even more today.—Rich Carpenter


Angel Groups Growing Nationally

Member Locations

Full MemberProvisional Member

Founded 2004 by 46 groups; now 120


Seeking to Fill Capital Gap

Stage Pre-Seed Seed/Start-Up

Funding Gap between

$500,000 and $2,000,000/$5,000,000(depending on region)

Early Later

Source Founders, Friends

and Family

Individual

Angels

Venture Funds

Investment

$25,000 to $100,000

$100,000 to $500,000

$2,000,000/$5,000,000 and up


CommonAngels in Leadership Role

• One of oldest; founded 1998

• Largest east of California by members, deals, investments, staff, funds under management

• Co-Founding Group, Founding Chairman

• Chairman, ACEFBacked by Kauffman Foundation(Spin out of ACA focusing on research, education of groups, individual angels)


Drawing on Unparalleled Expertise

• 68 Members: High Tech, Financial Rich expertise in > 70 specific sectors Founded >100 companies CEO of >75 >120 Sold, >45 IPOs as management

• Business, technology thought leaders Currently serve on ~100 public, private boards Have shaped the technology sector


Areas of Expertise

Artificial intelligence Asset allocation Blade serversBiotechnology Business communications software Business performance managementBusiness intelligenceCollaboration Communications equipment Computer graphics software & hardware Consumer financial products Consumer internet applications Consumer software Data transmission Development toolsDirect marketing EDA Educational publishing & on-line learningElectronic components Embedded Systems Engineering and science market Enterprise software Financial software Health care applicationsIntellectual propertyInterface Design Internet applications Investment and Insurance Industry/Products Materials science Medical devices

Medical imaging software & hardware Medical supplies and devicesMobile devicesNanotechnologyNetworking & Network-System Management Packet switchersPayment Processing PC software applications Pharmaceuticals Portfolio Management Real time transaction systemsRetail and franchise services Retail chain store operations Retirement Planning Satellite communicationsSecuritySemiconductors Separations technology Service applicationsSoftware development tools Software usability Specialized peripheralsStorage Supply Chain Synchronization systems TelephonyTransaction systemsVOIPWater purification


The Model: Members + Fund I + Fund II

CommonAngels Fund I, LLC

Board of Directors & Managing Director

CommonAngels, LPInvestment Committee

CommonAngels Fund II, LLCMembers

Funded Companies

CommonAngels, IncManaging Director

$10M $10M$30M

CommonAngels II, LPInvestment Committee

Fund IIFund I

1998 20052000

CommonAngels established


Investing Conservatively

Fit: Must have expertise within CommonAngels membership

People: Passionate entrepreneur with CEO capabilities

Stage: Beta, working prototype, go-to-market

Sectors: Innovative, scalable information technology such as software, telephony, semiconductors, RFID, medical devices not requiring extensive clinical trials

Location: Boston Area

Capital: Series A financing of $500K-$5M; total capital <$20M with emphasis on capital efficiency


Submissions(~30 PlansPer Month)

Managing Director pre-

screens emailed

submissions.

Screening TeamReview

(5 – 10 PlansPer Month)

Screening team votes on which

companies to invite to

general meeting.

General MeetingPresentations(1 – 3 PlansPer Month)

Managing Director polls members for level of investment

interest in deals, recruits diligence

team, and facilitates

selection of deal lead to begin term

sheet negotiations.

Manage Investment

Board member

represents member

interests and seeks an attractive

exit.

Deal lead closes

transaction and the sidecar

fund invests in companies that attract at least

$250K in investment

from at least 5 members.

Diligence & TermSheet Negotiations

(Coordinated byManaging Director

& Deal Lead)

Making Investments


Example Investment: Sand Video

• Team Had Worked With one

of our Members

• Most MIT CS/EE

• Nine Founders

• Breakthrough Video

Compression Chip

• Their 3rd Company

• Identified Markets: DVD,

PVR, High Def TV

• $8MM w/Baker Capital, Navigator, Oct 2002

• Sold to Broadcom for $77.5m, April 2004


Example Investment: Tizor

• Security Appliance

• Catches Insiders Gone Bad

• Team from Bell Labs

• Good Relationship between Founder & our Experts

• Syndicated with 2 VCs

• $3m Series A, Apr 2004

• $12M Series B, August 2005


Expectations of Membership

• Attendance: 75% of the regular monthly meetings

(meet 3rd Tuesday of each month; location varies)

• Investment: $50K-$100K per year across 2+ deals

• Participation: One diligence team per year

• Membership dues: $3,500 per year


Joining CommonAngels

• Sponsorship – Prospective members must be nominated for membership by an existing member.

• Meeting Attendance – Prospective members are encouraged to attend several meetings as a guest before pursuing a formal application for membership. Visits should be coordinated with the Managing Director.

• Application – Formal applications for membership should be coordinated with the Managing Director and applicants will be asked to provide a biographical summary.

• Review – At least one member of the CommonAngels board of directors meets with the applicant to discuss shared goals and interests. The board as a whole reviews and approves applications for membership.

• Formalization – New members should complete an accredited investor questionnaire and pay their annual dues.

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