A summary of Business Angel Decision Making By Andrew Maxwell, a PhD

Thesis.

11 2 3 4

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Market Potential

Product Adoption

Protectablity Business Experience

ProductStatus

Route to Market

Customer Engagement

Financial Projections

What are the key elements of a good business opportunity?

Research on 5 of Canada's top angel investors showed they looked for the following 8 elements

Is there a large market for this product or service?

A Large market potential (i.e. over $20 million)

B Medium market potential (i.e. over $5 million)

C Unable to predict – likely less than $5 million

1 Market potential

Will customers in target market easily adopt this

product?

A Customers will easily adopt product or service

B Benefits harder to identify, some adoption issues

C No clear benefits, or major adoption issues

2 Product adoption

How easy will it be for other people to copy the product

or service?

A Product patented or significant other barrier

B It will not be easy to replicate

C Anyone could copy it

3 Protectablity

Does management have direct and relevant

experience?

A Significant relevant experience

B Limited experience

C No evidence of required experience

4 Business experience

Product ready for market, or major work

required before it ships?

A Finished product

B Design complete all technical issues addressed

C Needs more research and development

5 Product status

Is there a realistic market plan and route to

market?

A Realistic marketing plan / distribution partner

B Options identified – no agreements in place

C Limited thought given to distribution issues

6 Route to market

Is the first customer identified? Does the

product meet a need?

A Customer in place, or committed to purchasing

B Customers engaged in development project

C No first customers identified

7 Customer engagement

Profitable and sustainable cashflow?

A Sound business model and cash management

B Unclear profitability and cash management

C No evidence of profitability and cash management

8 Financial projections

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