Contents

1.Introduction 5
1.1.Welcome 5
1.2.Meet everyone 7
2.0 Introduction to Business Angel Investing 9
2.1. Background 9
2.2 Business Angel Investment in Europe 12
2.3 Female Business Angels 14
2.4 Female Entrepreneurs 16
2.5 Females Investing in Females 18
2.6 Section Summary 20
3.0 General Investing Overview 21
3.1 Investment Basics 21
3.2. Risk and Return 24
3.3 Security Analysis 27
3.4 Risk Assessment 29
3.5 Asset Investment Planning and Management 31
3.5.1 Asset Investment Planning and Management 32
3.5.2 Strategic Investment Management 33
3.5.3 Diversification 36
3.5.4 Asset Management Tools 37
3.5.5 Asset Management Tools 38
3.6 Section Summary 41
4.0 Start Ups and Business Angel 42
4.1 Start Up Stages and Types of Investment 44
4.2 Business Angel Investment 49
4.3 Is Business Angel Investing for You? 52
4.4. Solo and Group Business Angel Investment 55
4.5. Establishing an Angel Group 57
4.6 Female Business Angels 61
4.7.Section Summary 63
5.0 Business Angel Investment Process 65
5.1 Finding Deal Flow and Initial Screening 65

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5.1.1 Finding Deal Flow 66
5.1.2 Deal Flow Management 69
5.1.3 Initial Deal Screening 71
5.2Detailed Screening Coaching and Presentations 73
5.2.1Detailed Screening 73
5.2.2 Coaching 75
5.2.3 Presentations to Investors 78
5.3 Due Diligence, Term Sheets and Valuation 81
5.3.1 Due Diligence 82
5.3.2 Term Sheet 89
5.3.3 Valuation 92
5.4 Legal Agreements 94
5.5 Section Summary 97
6.0 Follow-on Finance, Post Investment Monitoring and 99
Mentoring
6.1 Follow On Finance 100
6.2 Post Investment Monitoring 103
6.2.1 Purpose 103
6.2.2 Board Seats 105
6.2.3 Information 107
6.2.4 Danger signs 108
6.3 Mentoring 109
6.4 Exit 112
6.5 To Invest…Or Not To Invest 113
6.6 Section Summary 115
7.0 Next Steps 116
7.1 Thank You 116
6.2.3 Resources 117
7.3 Keep in Touch 119

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7.4 Evaluation 119
7.5 References 120

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 1.Introduction
1.1.Welcome

Hello, I’m Lynne Cadenhead, Chair of Women’s Enterprise Scotland,

entrepreneur and business angel investor in Scotland. Welcome to our
introductory programme on how to be a business angel investor.

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If you have any issues navigating through the course, please contact us or
leave a comment on the relevant page.

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 1.2.Meet everyone

Please introduce yourself to other course participants in the comments

box below. Only share what you feel comfortable sharing publicly with
others.
You might like to include:
A bit about yourself – your name, where you are based, any specific
interests
About your business – its name, what you do, links to your website

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Why you are here – anything you would like to share about what attracted
you to this course, why you are thinking about becoming a business angel
investor and what you are hoping to get from the course.

Find out more about Women’s Enterprise Scotland here and find out more
about the SEEWBAN project here.

We have embedded additional links to further information throughout the

programme. Please note that you do not need to read this additional
information unless you want to – all that you need to get started as a
business angel is provided in the main programme.

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 2.0 Introduction to Business Angel Investing
2.1. Background
We are delighted you are joining us on this Business Angel development
course. It is necessarily a brief introduction to angel investment, but by
the end of the course, you will understand what a Business Angel is, the
fundamentals of investing in entrepreneurial companies, and be able to
make an informed decision as to whether or not becoming a Business
Angel is appropriate for you.
Let’s start with some basic definitions:
• What is angel investing?
o Angel investing is when individuals invest their personal money
(capital) in an early stage company – often known as a start-up
• Who are angel investors?
o Angel investors are typically individuals who invest their own
money, typically in small amounts, and typically very early in the life cycle
of a company
(From “Angel Investing” by David S Rose, 2014)
Business angel investors are generally High Net Worth Individuals (HNWI)
who provide small amounts of finance (typically €25,000 to €500,000) at
an earlier stage than venture capital funds are able to invest.

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In the UK, 88% of angels invest under £100,000 per investment and
investments usually start at £5,000-£10,000 per individual, with the vast
majority of group investments being in the £100,000 to £2million range.
The UK Business Angel Association has some useful reports on the UK
business angel market and trends, as does the European Business Angel
Association.

Angels may invest on their own or in groups/syndicates and they may have
a focus on a particular sector, stage or size of investment. All however will
focus on high-growth, scalable opportunities with a strong management
team.
Business Angels usually contribute much more than money to a young
business, acting as mentors and helping with both contacts and
industry/management insights. They will often take Non-Executive
Director (NED) board positions in the companies in which they invest.

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Over the past ten years, formal angel investing organisations have moved
from being a mainly US and Western European phenomenon to being
active and visible around the world. Much of this expansion has been
driven by the financial crash of 2007: less institutional funds were
available to young companies to fuel their growth and Business Angels
stepped in to fill the funding gap.
This article explains a little more about early stage angel investing.
This is a useful video introduction to business angel investing.
And have a look at this video to see what a typical angel investor looks for
in an investment.

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2.2 Business Angel Investment in Europe
The importance of business angels to the equity capital industry in Europe
has grown significantly in recent years, and in 2016 business angels
invested two-thirds of all early stage investing across Europe. Whilst most
investors still generally prefer to invest close to home (75% of angel
investments are made in regional or national companies), this local
investment approach seems to be changing and cross-border deals are
becoming more frequent.

The United Kingdom is the largest and most well-established European

business angel market with €98 million of investment in 2016, followed by
Spain, Finland and Germany.

Amongst the members of the SEEWBAN consortium, 2016 business angel

investment in the countries is as follows, with all countries showing a
gradual but substantial growth in business angel investing:

• Italy, €14 million

• Hungary, €5.5 million
• Bulgaria, €5 million
• Slovenia, €3.3 million
• Greece, €3.2 million
• Cyprus, €0.8 million

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The main sectors in which European business angels invest are in ICT,
healthcare and media, with the majority of investments being made in
pre-seed and seed stages of a company (broadly defined as research and
conception) and during the start-up phase (broadly defined as product
developed and revenue being generated).
One other key characteristic of European angel investing is in the creation
of business angels’ networks, which grew 17% per annum from 2003-
2012. Whilst the growth rate of has slowed to 1.3% per annum as
networks become more consolidated and formalised, as of 2016 there
were over 470 Business Angel Networks in Europe. This trend of investing
through groups and syndicates, as opposed to solo investing, appears set
to continue.
You can learn more about the European business angel market here.
Some countries have tax breaks and incentives to encourage people to
invest as business angels. Check the conditions in your own country.

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2.3 Female Business Angels
Although it is estimated that half of the world’s net wealth is in female
hands, very few women are active in business angel investment.

In the USA-based angel networks, 26% of their members are women. A

2010 survey of European Business Angel Network (EBAN) members
indicated that on average less than 11% of European business angel
network members are women. However, there are significant differences
between European countries with Central and Eastern Europe showing the
highest ratio of women investing as business angels (30%), compared to
11% in Western and Southern Europe.

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You can read more about female business angels in Europe here and also
in USA here.

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2.4 Female Entrepreneurs
Starting and growing your own business is hard for any entrepreneur.
Resilience and persistence are pre-requisites to survive and thrive through
the entrepreneurial journey. But it can be even harder for female
entrepreneurs as they face additional challenges when starting and
growing their businesses.
These challenges include gender-based discrimination, unconscious bias,
societal expectations, juggling caring commitments… all factors which
hinder the true economic empowerment of women in our global
entrepreneurial society.
As of 2016 in Europe, women are 52% of the population, yet only 30% of
start-up entrepreneurs. In SEEWBAN countries, the 2016 ratio of women
to men in entrepreneurship is as follows:
• Bulgaria 0.8

• Greece 0.7
• Italy 0.6
• Hungary 0.5
• Slovenia 0.5
• UK 0.5
Some stark statistics reinforce the challenges faced by female
entrepreneurs:
• Only 9% of all capital raised goes to female-led businesses
• Females are 50% less likely to receive venture capital funding than
male-led businesses

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 • Females start their businesses with one third of the capital than
men do
Yet positive female gender-based characteristics such as advanced risk
awareness and diversity of thought make females excellent
entrepreneurs, leading to more sustainable businesses in the longer term.
And despite starting their businesses with less capital than males and
being less likely than males to seek angel investment, on a like-for-like
basis female-owned businesses perform just as good – if not better – than
male-led businesses.
And the very same positive gender characteristics make females insightful,
thoughtful, considerate and savvy investors!
Here is a useful video that defines what an entrepreneur is.
And here is a recent report on female entrepreneurship.

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2.5 Females Investing in Females
Taking these factors together, there is a significant global economic
opportunity waiting to be realised by more females starting up their own
businesses…and by more women investing in female-led businesses, giving
them the patient capital and gender-specific support they need to grow.
In Scotland for example, a country with just over 5 million population, if
women started up businesses at the same rate as men, there would be an
additional £7.6 billion contribution to the economy.

As Christine Lagarde, Managing Director of the International Monetary

Fund (IMF) recently said:
•

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 “Promoting equality in opportunities can be an economic game
changer. Increased financial access means more economic activity
by women, including as entrepreneurs. This translates into higher
economic growth and productivity, a more equal income
distribution, higher profits for businesses, and greater economic
stability.”
• More female business angels investing in female-owned
businesses plays an absolutely crucial role in realising the
significant economic opportunities available to all and in our
society benefiting from a more gender balanced economy. By
participating in this course and subsequently investing in and
supporting other women in business, your pioneering approach
will help to drive positive change and economic growth in the
world for many years to come.
• However, before you actually make your first investment, there is
quite a bit to learn about business angel investing. Before we do
that, it is useful to start with a brief overview of the principles of
more mainstream investment. This will help to put angel
investment in context as a diversification option for your overall
personal investment strategy. If however you are comfortable
with the general principles of mainstream investing, you can easily
skip Module 3 and go directly to Module 4 on angel investing.

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2.6 Section Summary

In this section we covered an introduction to angel investing, the size of

characteristics of the angel market in Europe and some of the specific
issues facing female entrepreneurs is raising capital to grow their business.

Note your thoughts and comments on this in the comments section

below. And think about who you can speak to locally to find out more
about angel investment and female entrepreneurs.

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3.0 General Investing Overview
3.1 Investment Basics
Learning the basics of investing is like learning a new language and it’s
easy to be overwhelmed with all the different terminologies, so let’s start
with some basic explanations of key terms.

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Investing is defined as the “act of committing money or capital to an
endeavour with the expectation of obtaining an additional income or
profit”. The main goal of investing is to put your money to work in various
investment vehicles in order to spread your risk whilst maximising your
return.

The most common investment vehicles are in the financial markets:

• Stock Market (also called share or equity market), in which stocks

(or shares) of a company are bought and sold. Stocks are simply
shares of ownership in a specific company. For example, when you
own a share of Apple, you own a tiny piece of that company. Stock
prices fluctuate both with a company's fortunes, and the economy
at large.

• Bond Market, in which you can buy or sell a bond. Buying a bond
issued by a company means you're lending money to that
company, which it can use to grow the business.

• Mutual Funds, a diversified and liquid financial product, consisting

of stocks and/or bonds from more than one company. This
financial product is managed by a professional expert, working on
behalf of the investor. Mutual funds are good for beginner
investors.

• Real Estate, where an investor can purchase a security called a

Real Estate Investment Trust (REIT), which combines the benefits
of stocks with the tangible property of almost any kind of land
property (e.g. shopping mall).

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However, the entrepreneurial start-up phenomenon, with approximately
137,000 new businesses being started globally every day, is driving a new
field of investment opportunity. These young growing businesses often
need additional funding and support to help them grow and they turn to
Angel Investors or Business Angels for the resources they need. We will
come back to this later.

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 3.2. Risk and Return
Let’s turn now to the concept of risk and return, which is at the heart of
any investment you will undertake. Whether it is investing, driving or just
walking down the street, everyone exposes themselves to risk. Your
personality and lifestyle play a big role in how much risk you are
comfortably willing to take on.

• Definition of Risk

o Risk is defined as the chance that an investment's actual

outcome will be different than expected. This includes the
possibility of losing some or all of the original investment.

• Definition of Return

o Return is defined as the expected growth rate of an

investment. However, return is dependent upon on the
risk contained in the investing action and thus the actual
return may not correspond to the expected return.

When financial realisations correspond exactly to expectations, there is no

risk. This trade-off between risk and return is a basic premise in investing.
The more risky the investment is, the bigger the loss or gain will be.

For example, buying lottery tickets involves a very high risk of losing your
money but the possibility of an extremely high reward. On the other hand,
a savings account at your bank is low-risk, but you will not make a high
return as interest rates are so low.

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Various components cause variability in returns. These components are
known as elements of risk and they divide broadly into two groups -
systematic risk and unsystematic risk.

• Systematic Risk

o Businesses are part of a dynamic society. External

economic, political and social changes can influence a
company’s performance and hence their expected
returns. Such changes will affect all organisations to
varying degrees. Hence the impact of these changes is
system-wide and the portion of total variability in returns
caused by such changes is referred to as systematic risk.

• Unsystematic Risk

o A company’s returns may vary due to certain factors that

affect only that company e.g. raw material scarcity, labour
strike, management inefficiencies, etc. When the
variability in returns occurs due to such company-specific
factors it is known as unsystematic risk. This risk is unique
or peculiar to a specific company and affects it in addition
to the systematic risk.

Additionally, returns are also classified into two groups: expected return,
where you have taken into account the expected risk; and unexpected
return, where the outcome is attributable to unforeseen events. The sum

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of these two amounts, gives you the total or actual return of your
investmen

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3.3 Security Analysis
A “security” can either be a stock, bond, company equity or anything else
that can be traded in a financial market. Security analysis is the process of
estimating risk and return. It helps an investor to calculate the value of
assets and the effect of market fluctuations on these assets.

Security analysis can be done either on a market, industry or company

basis, or all three combined. This will help an investor to estimate a
security’s intrinsic value (the actual value of an asset based on an
underlying perception of its true value) and its future value.

There are two basic approaches of security analysis:

• Fundamental Analysis

o This is the study on a company’s qualitative and

quantitative aspects, using basic financial variables to
determine a company’s intrinsic value. Such variables
include sales, profit margin, depreciation, tax rate, sources
of financing and asset utilisation. Additional analysis could
involve the company’s competitive position in the
industry, labour relations, technological changes,
management, foreign competition and so on.

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 • Technical Analysis

o This is the search for identifiable and recurring stock price

patterns by using mathematical equations and ratios.

When evaluating securities, be aware that investments are made under

conditions of uncertainty. There is no magic evaluation formula which will
always work for any investment and the performance of investments
should be continually monitored.

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3.4 Risk Assessment

Risk Assessment is defined as the determination of quantitative or

qualitative estimate of risk related to a well-defined situation and a
recognised threat. Quantitative risk assessment requires calculations of
two components of risk: the magnitude of the potential loss, and the
probability that the loss will occur. Time spent on risk assessment is
extremely valuable and is important in determining your overall
investment strategy.

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Key takeaways from this section are to understand:
• there are different types of securities (e.g. stock, bonds)
• the concept of risk and return
• the importance of security analysis
Understanding these will help you determine which type of investor you
are:
• conservative (low risk/low return investments)

• moderate (medium risk/medium return investments)

• riskier (high risk/high return investments)

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3.5 Asset Investment Planning and Management

This section is an introduction to asset planning and management.

Understanding the principles from the broader financial markets will help
you determine if business angel investment should be factored into your
overall asset management plan. All of the concepts that apply in general
financial markets also apply to business angel investment in a broadly
similar way.
.

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3.5.1 Asset Investment Planning and Management
An investor’s main goal is to maximise profit and in order to achieve this
goal, she should make a solid investment plan with specific timelines and
expected profit. This is known as asset investment planning. It is about
creating and sticking to an investment plan and it factors in your risk
tolerance, diversification and asset allocation.
Before choosing your investments, you should first assess your risk profile.
Ask yourself some of these questions:
• What would happen if I lost some or all of the money I am putting
into investments?
• Are my goals short-term (less than five years) or long-term (more
than five years)?
• Am I willing to invest in something which is high risk?
• Will I feel comfortable making short and risky investment
decisions?
• Or would I rather be cautious and have low returns over a long
period of time?

Once you have identified how much money you intend to invest and what
type of investor you are or want to be (aggressive or conservative), you
can start to draw up your investment plan.

No matter what kind of an investor you are, one key way to minimise your
risk is to diversify via a well-maintained portfolio of investments.

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3.5.2 Strategic Investment Management
Strategic Investment Management is the process of planning, acquisition,
operation, maintenance, renewal and disposal of assets. Put more simply,
it is about the way in which an investor looks after her assets, both on a
day-to-day basis and in the medium to long term.
The components of most investment strategies include asset allocation,
buy and sell guidelines, and risk guidelines. Investment strategies can
differ greatly from a rapid growth strategy, where an investor focuses on
capital appreciation, to a safety strategy where the focus is on wealth
protection. The most important part of an investment strategy is that it
aligns with the individual's personal goals.
The most basic investment strategies and their purposes are as follows:
• Financial Plan
o A financial plan is a comprehensive evaluation of an
investor's current and future financial state by using
currently known variables to predict future cash flows,
asset values and withdrawal plans. Most individuals work
in conjunction with a financial planner in developing their
financial plans.

• Capital Growth Strategy

o An asset allocation strategy that seeks to maximise capital
appreciation or the increase in value of a portfolio or asset

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 over the long term. Portfolios with the goal of capital
growth consist mainly of equities.
• Capital Growth Investing
o Growth investing is an investment style and investment
strategy that is focused on the growth of an investor's
capital. Those who follow the growth investing style
typically invest in growth stocks or companies whose
earnings are expected to grow at an above-average rate
compared to its industry or the overall market.
• Conservative Growth Strategy
o An investment strategy that aims to grow invested capital
over the long term. This strategy focuses on minimising
risk by making long-term investments in companies that
show consistent growth over time. Conservative growth
portfolios feature low asset turnover, or a high percentage
of fixed assets on their balance sheets, and should employ
a buy-and-hold investment philosophy.
• Conservative Investing
o Conservative investing is an investing strategy that seeks
to preserve an investment portfolio's value by investing in
lower risk securities such as fixed-income and money
market securities, and often blue-chip or large-cap
equities. Conservative investors have risk tolerances
ranging from low to moderate.

• Cash Neutral Strategy

o An investment strategy that requires no net cash in order
to enter perform the transaction. In general, cash neutral

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 strategies require simultaneous buying and (short) selling
of instruments. These strategies are popular with hedge
funds, since they do not require money to be tied up in
order to earn returns.
• Defensive Investment Strategy
o A conservative method of portfolio allocation and
management aimed at minimizing the risk of losing
principal. A defensive investment strategy entails regular
portfolio rebalancing to maintain one's intended asset
allocation. Such strategies are meant to protect investors
against significant losses from major market downturns.
• Offensive Investment Strategy
o With an offensive or aggressive investment strategy an
investor tries to take advantage of a rising market by
purchasing securities that are outperforming the market
for a given level of risk and volatility. Both offensive and
defensive investment strategies require active
management, so they may have higher investment fees
and tax liabilities than a passively managed portfolio. A
balanced investment strategy combines elements of both
the defensive and offensive strategies.
Regardless which strategy an investor decides to follow, there is one
common key factor which will make an investment better: diversification.

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3.5.3 Diversification

Diversification is a risk management technique that mixes a wide variety

of investments within a portfolio. A portfolio constructed of different
kinds of investments will, on average, yield higher returns and pose a
lower risk than any individual investment found within the portfolio.
Maintaining a well-diversified portfolio of 25 to 30 stocks yields the most
cost-effective level of risk reduction. A broadly similar principle of
diversification applies to business angel investment – we will return to this
later.

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3.5.4 Asset Management Tools
As an investor you will need to keep track of your traded funds, individual
stocks and bonds. You will want to examine your investment returns, fees
and asset allocation.

This can be done by hand or on an Excel spreadsheet but there are also
some excellent investment portfolio management software solutions
available. Some useful options to consider are Personal Capital, Mint,
Ticker or Morningstar.

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 3.5.5 Asset Management Tools
Short-term investments are designed to be made only for a little
while, and hopefully show a significant yield, whereas long-term
investments are designed to last for years, showing a slow but steady
increase.

• Advantages of Short-Term Investments

o The main advantages to short-term investments are the
potential for fast growth and that the term may only last a
few weeks to a few months.
• Disadvantages of Short-Term Investments
o There tends to be more fluctuation in short-term
investments and they are therefore riskier. Whilst there is
a good chance that you will make money with a short-
term investment, there is also a chance that you'll lose
money. This is especially the case when trading on the
stock market as many of the short-term investments
involve precision timing when selling.
• Advantages of Long-Term Investments
o These have the potential to gain small amounts of money
over a longer period of time. The slow but steady pace
allows for a much greater degree of stability and a much
lower risk than short-term investments.
• Disadvantages of Long-Term Investments
o They increase in value slowly and can take years to
mature. For those individuals who need a high yield in a
short period of time, long-term investments are not

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 appropriate. Additionally, there are usually penalties or
fines for early withdrawal.
An essential component of risk determination and investment
planning is influenced by your liquidity requirements in the short-
term (1-5 years), together with your need to provide for retirement,
hence long-term growth in investment values. The process of dividing
assets into short/long term investments mitigates the prospect of you
having to sell growth assets to meet immediate needs too soon after
the initial investment
Considerations such as need for cash retention, health, life
expectancy, future spending expectations, amount of initial
investment capital, preferred investment returns, past exposure to
investment products, and other personal issues will all impact on your
investment preferences.
However, your personal tolerance to risk and investment time
horizon are probably the most important determinants in shaping
your investment strategy and portfolio structure.
A cautious person may develop a conservative approach to investing
and will have a low tolerance to risk and intuitively a lower
expectation of return. The opposite would be true of a business angel
investor who would have a more speculative, higher risk investment
portfolio.
Your investment time horizon will also have a significant impact on the
nature of your investments. For example, property is generally unsuited
as a short-term liquid investment. Business angel investors have long-term

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investment horizons - hence the name “patient capital” - holding
investments for 5 or more years…and in many cases much, much longer.
According to the 2016 European Business Angel Network (EBAN) Study,
69% of total business angels’ investments have a medium (5 to 10 years)
or longer time horizon.
To summarise, when it comes to investing, it is important to find the
right balance between risk and return for you and your individual
situation. Set clear goals, diversify your investments and, when
appropriate, work with a financial planner to help you balance your
portfolio.
If you would like to learn a little more about investment, have a look
at this video.

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3.6 Section Summary

In this section we covered some general principles of mainstream

investing. We considered the concepts or risk and return, how to analyse
securities and undertake a risk assessment, the difference between short
and long term asset management and the importance of diversification.

Note any comments or queries in the section below and consider how
these principles apply to your mainstream investment strategy and
potentially to a business angel investment – could this be an interesting
and beneficial diversification for you?

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4.0 Start Ups and Business Angel

Now you have a broad understanding of the general principles of

mainstream investing and feel comfortable with the concept of risk and
return we can look at angel investing in more detail.

Angels invest very early in a company’s development, but there are

distinct types and stages of fundraising associated with each growth
phase. It is useful to understand these to see where business angel
investment fits in.

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So in this section, we will cover:

• The different types of start up/early stage investment

• The difference between start-up accelerators and incubators

• How angel investors differ from venture capitalists

• The benefits of angel investment for entrepreneurs

• When angel investment is appropriate for a business

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4.1 Start Up Stages and Types of Investment
Before we look at the different types of investment, it’s useful to first look
at the start-up funding landscape which has changed significantly over the
past few years, especially in Europe. Certain types of investors appear at
certain fundraising stages which are:

• Early stage of a start-up:

o Pre-Seed Capital - when an entrepreneur has an idea,

maybe a working prototype and is looking for funding that
will allow her to focus on her project full-time

o Seed Capital – often described as the capital necessary to

start a company and to try and find product-market fit

• Growth Stage of a Start Up:

o Series A – usually when start-ups have figured out their

product and the size of their market, but need capital to
scale and improve distribution systems

o Series B – when a start up is successful with an established

user base and a business model that is working but wants
to grow even more

o Series C and following stages – when start-ups are fully

mature. The business model is working, whether the
company is profitable or not, the user base is expanding,
and acquisition may be in the minds of the executives
leading the company. Exits will be in sight, through

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 acquisition by a bigger company or via IPO (stock market
flotation).

Start-up companies have a variety of funding options available to them.

These are summarised as follows:

• Friends and Family – friends and family actually invest the most
money in start-up companies at the earliest stages, but it tends to
be in small amounts. For an entrepreneur, seeking funding this
way can be an ideal way to get their idea off the ground. These
types of investors tend to base their involvement in the business
more on trust in the founder, as opposed to belief in the actual
business concept. They are motivated more by loyalty and support
rather than by strict return on investment.

• Banks – a bank loan may be available to help start-ups. A bank will

want to see a detailed business plan and a thorough description of
the business and its prospects. Loan-seekers will usually be
required to produce proof of collateral or a revenue stream before
the loan application is approved. Banks are usually therefore a
better option for slightly more established businesses (in start-up
companies, during the growth phase).

• Venture Capitalists (VCs) – Venture Capital firms invest on behalf

of their clients and their sums of money are usually higher
(millions of pounds as opposed to thousands) than every other
type of early stage investor. They usually show interest after the
early stages of a start-up, when the business is growing and the

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 risk has been reduced somewhat. In return for providing capital
they secure an equity stake in a company (shares). They can
provide portfolio companies with exposure, connections to
customers and help establish partnerships.

In addition to the above types of investors, there are several other sources
of funding for entrepreneurs:

• Start Up Accelerators – these organisations can offer pre-seed

and seed capital in return for equity. Start-ups are admitted in
classes and work in groups. They are generally given deadlines to
complete intensive training programmes (1-6 months) and usually
finish with a demo day where they pitch to investors. These
accelerators can be a good source of investment opportunities for
business angels.

• Start Up Incubators – these organisations are established to

support the development of start-up companies in the early stage.
Usually this incudes 1-3 years of access to facilities (office and lab
space), resources and development programmes, potentially
including mentoring. These incubators can also be a good source
of investment opportunities for business angels.

• Incubators differ from accelerators in that accelerators focus on

acceleration of growth in a shorter defined period of time whereas
incubators develop the company and the product over a longer
time period. In both cases, the support and networking with peers
is very useful for the entrepreneur.

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• Peer-to-Peer Lending - Peer-to-Peer lending is a fast and
accessible way of getting a cash injection into a business.
However, it is really only suitable for more established businesses.
No equity is released – companies pay interest on a loan, much
like they would with a traditional bank.

• Crowdfunding – This is a relatively new concept. It is growing in

popularity but there are still risks associated with it for both
entrepreneurs and investors. As the name implies, the funds come
from the crowd. The financial support for a start-up is via many
smaller amounts from many investors (the “crowd”), rather than
large amounts from fewer investors. It is usually used after the
very early stages of a start up as the risk is lower. The most
successful crowdfundings normally have a very strong pre-
marketing and post-marketing campaign. There are two types of
crowdfunding:

o The “donation-based” or “reward-based” crowdfunding,

where sites like Kickstarter and Indiegogo are global
leaders. Users can back the projects they like and get
something material in return (physical or digital products
and services), receiving no equity or goods from the teams
or companies providing the goods.

o The “equity-based” crowdfunding, where investors in the

start up get equity in return, thus becoming shareholders
in the company and being able to benefit from future
returns the company may be able to provide to investors.

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 The leading platform in equity crowdfunding is
Crowdcube. It can be useful to explore crowdfunding
platforms to see what types of companies are being
created and get a feel for the entrepreneurial landscape.

Here is an additional useful video on various sources of finance for

entrepreneurs.

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 4.2 Business Angel Investment
As we already know, business angels are High Net Worth Individuals
(HNWI) with significant business experience who invest their own money
directly into promising entrepreneurial start up companies. HNWI is a
relative term that varies from country to country. In the USA, Canada and
UK most business angels have accredited status as defined by law,
although this is usually self-certified.

For example, in the UK, investors in unlisted companies are classified as

HNWI or Sophisticated Investors. A HNWI is defined as a person who has
£100,000 a year of more in income or £250,000 or more in relevant net
assets. There are no stated requirements for Sophisticated Investors but
individuals must be “a member of a network or syndicate of business
angels” or “have made more than one investment in an unlisted company
in the past two years”.

Check your own county for more information on HNWI and accreditation.

Business angels come from different backgrounds but mainly they are
either successful entrepreneurs themselves or corporate leaders/business
professionals.

The vast majority of business angels invest in the early stage of a start up
company. There are many online platforms which operate as bridges
between an entrepreneur and angel investors such
as Gust, AngelList and In4Capital. It is useful to look at these platforms to
see what types of investment opportunities are available globally.

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Business angels are an ideal fit for young companies. Based on their own
experiences of successes (and failures) in business they bring “smart
money” to companies – cash complimented by hard-won experience and
business contacts. This smart capital and mentoring is invaluable to
entrepreneurs and the external scrutiny provides for better discipline and
decision-making in the company due to diversity of thought and
experience. Business angels are vitally important in filling the funding gap
– the so-called Valley of Death - between friends and family funding and
Venture Capital or Private Equity

This video de-bunks some of the myths you may have heard about Angel
Investors.

https://youtu.be/1b8YLBFQy44

This video explains the key differences between Angel Investors and
Venture Capitalists.

https://youtu.be/Pnvg1Jgh_dk

And these videos below are useful to see what other angel investors look
for in investment opportunities.

https://youtu.be/0ONPfJjEjhk

https://youtu.be/41yPPkibJqo

It can also be useful to consider angel investment from the entrepreneur’s

perspective. If you have time, you may wish to also quickly look through
our separate training program for female entrepreneurs. It can be found

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here and provides much more detail on entrepreneurship, business
planning and pitching.

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4.3 Is Business Angel Investing for You?

Ask yourself again some key questions before you start investing:
• What are your overall investment goals?

• What is your attitude to risk and potential returns?

• How long do you want to invest for?
• How much money do you want to invest?
• Do you want capital growth or income, or both?
• How much time to do you want to commit to this investment?

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 • Are you confident enough to choose investments on your own, or
do you want to work with others?
And with specific reference to business angel investment:
• Can you act as a mentor?
• Will your business experiences and skill set benefit companies you
wish to get involved in?

• Can you accept new roles and incorporate them into your business
life?

• Can you resist the temptation to micro-manage your portfolio of

investments?
• How much are you willing to learn in order to become a capable
Angel?
Answering these questions will help define what type of an angel investor
you want to be and help you to develop your angel investment strategy.
You may want to be a relatively passive investor – providing capital but
not time. Or you may want to be an active investor, providing both time
and capital. Or a combination of both, depending on your sectoral
interests and experience: you may have a lot more relevant contacts and
experience for Investment A, but not for Investment B, therefore you
allocate more time to Investment A.
When you are investing in a company as a Business Angel, investments are
made at a very early stage in the company’s growth, therefore the risk is
very high. As an investor you must be acutely aware of the key risks you

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are taking with your investment. Only by understanding the risks can you
provide additional support to help mitigate them and ensure the
company’s long term success.
Be aware and remember:
• Most start-up companies fail – 9 out of 10 fail
• No-one knows which ones are going to fail
• What eventually wins was probably once failing
• Investing is a ‘Numbers Game”

• You only really need 1 out of 10 investments to succeed and yield

10x your investment
• All start-ups always need more money than planned

• Trust your own experience and instinct

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4.4. Solo and Group Business Angel Investment
Business angels are typically interested in more than just receiving a
financial return. Personal interest, giving back, the thrill of being involved
with innovative companies, meeting new people – all are powerful
motivations and just a few of the reasons people become business angels.

Whilst individual angels are very important, there is only so much one
person can do alone. By pooling resources and knowledge, groups of
angels can overcome the many limitations of solo investing and access a
higher number of deals. Some benefits of group investing are as follows:

• Aggregating resources to secure staff and facilities to enhance the

deal process

• More efficient deal screening process

• Making larger investments

• Making more investments to spread risk through diversification

• Syndicating with other groups to spread risk

• Sharing learning between established and new investors

• Enhancing negotiation terms of investment

• Influencing policy and regulatory issues with governments

• Camaraderie and friendships between investors

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For these reasons, although you can of course be a solo or “lone-wolf”
investor, the vast majority of investors nowadays choose to join an
established angel group or create a new one of their own. According to an
EU 2015 study, only around one sixth of angels now follow a solitary
investment approach.

Do some research to see what angel groups are established in your local
area and attend a few meetings to get a feel for them. If there are no
groups in your area, or for some reason they don’t feel suitable for you,
you may choose to start up a new angel group. This will however take
considerable time and effort and needs a highly committed group to make
it happen.

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 4.5. Establishing an Angel Group

A summary of the key steps involved are as follows - use personal

networks and entrepreneurial organisations to gather information:
• Angel Community Assessment
o Is there a champion to lead the group?
o Do you have sufficient wealthy individuals?
o Are there experienced investors who can help?

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Be aware you may face some challenges with finding the right people, low
risk tolerance of other individuals, lack of trust and individuals not wanting
to be visible. Ongoing education re investment process will be required for
everyone and at all times, be careful to manage expectations for
everyone.
• Assess the Entrepreneurial Pool
o Are new companies starting up in your area?
o Do you have research centres and universities?
o Do you have accelerators and incubators?
• Assess the Entrepreneurial Infrastructure
o Are there networking events?
o Are there trade associations?
o Are there experienced mentors for companies?
o Are there start up business support programmes?
• Assess Service Providers
o Is there a solid pool of accountants, lawyer and marketing
professionals?
• Assess Follow-on Funding
o Can you support entrepreneurs’ investment needs?
o Are there others you can work with?
o Are there other grants and support available?
o Are there any VC or PE funds locally?

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 • Assess Regulatory Environment
o Is there an appropriate legal environment?
o Do investment laws provide shareholder protection?
o Are there any tax incentives?
o Are Intellectual Property laws consistent with international
law?
o Are there any immigration issues?
Reviewing the above will give you a good idea if a business angel group is
sustainable locally. Be aware that for an angel group to be successful, all
members must be personally interested in giving back to the local
community as financial returns will not be immediate.
The most common reasons that angel groups fail are:
• No committed champion
• Lack of deal flow
• Lack of successful exits
• Personality clashes
• Unsustainable business model
• Burn out of volunteers
• External factors (recession, political instability)

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If you do decide that your community is ready for a business angel group,
whilst you do not need a large group to get started – two or four people
can be ideal - you do need patience and persistence to stay the course and
for all to understand the risks involved.
You will need to define your group culture, determine the geographic
location of members, size of group, member expertise, meeting
requirements, fees, legal structure, individual/group investments,
pooled/pledged funds, etc. Some groups will be member-led, other groups
will fund an appoint an experienced person to manage their deals – often
referred to as a gatekeeper.
If you do decide to start up a new business angel group, the infoDev and
Kauffman Foundation Guide to Creating Your Own Angel Group is a highly
comprehensive and very clear guide. If you only have time to read one
additional resource from this development programme, please read this
one!

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4.6 Female Business Angels

With regard to encouraging more females to become business angels,

diversity of expertise and perspectives can reduce risk and generate better
returns for angel groups. Research from EBAN shows that female angel
investors help widen a group’s focus beyond technology and tap into new
sources of deal flow. Females also approach diligence differently to males,
often asking more questions and digging deeper into financial projections.

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And as mentors, women bring a different set of experiences and contacts
for the entrepreneur, all of which help to minimise risk in the investment.

Ensure that your group structure and requirements are compatible with a
woman’s schedule – many women have family duties and require flexible
options to attend meetings. Think about having meetings at different
times (e.g. lunch), allow virtual participation and record pitches so that
women can watch them later at a time more suitable for them.

Now you are ready to think about making investments, let’s move on now
to reviewing the business angel investment process in more detail. For
ease we will assume that you are investing as part of a group of angels,
but of course the same principles apply to solo investors as well as group
investors.

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 4.7.Section Summary

In this section we covered the different stages of a start up company and

the different type of funding available to these companies. We covered
the benefits of being a group investor as opposed to a solo investor, how
to establish an angel group, and looked at some issues facing female angel
investors.

Note your comments and queries in the section below. Consider if you
would like to be a business angel and how you will do that. Who do you

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need to contact locally and what information do you need to find out
next? Create a plan of next steps

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5.0 Business Angel Investment Process
5.1 Finding Deal Flow and Initial Screening
In this module we will investigate how to find deals for you to invest in,
how to manage deal flow and how to undertake initial screening of
investment proposals.

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5.1.1 Finding Deal Flow
A deal is accomplished when both the buyer and the seller agree to
the terms of a transaction. As we indicated earlier, lack of deal flow is
one of the main reason that investor groups fail, so finding a good
source of deals is critical part of the investment process.
So, where do deals come from? Where can you find them in your
area? What are your deal sources?
80% of business angel investments come from the following sources
and in the early days you may need to be quite proactive in seeking
deal flow until your reputation as an investor is established. Consider
the following options and establish a strong deal sourcing strategy to
ensure good and consistent deal-flow:
• Members – from the individual members of angel groups (yours
and other groups). The more active you are in the general
business investment community, the more deals will flow to you.
• Word-of-mouth - a large percentage of deals come via word-to-
mouth from reliable personal connections
• Professional Advisers – lawyers, accountants and other service
providers
• Direct Application - through your angel group website
• Incubators and Accelerators - good source of high growth
opportunities

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• Universities and Colleges – good source of high growth, high-tech
scalable opportunities

• Investment Forums, Start-up Conferences, Launch - at these

events you will be able to see deals pitched directly to an audience
and be able to discuss deals and network with other investors and
entrepreneurs. These events are every useful for expanding your
contacts and experience
• Meetings – various other business meetings, conferences and
events
• Social Media – e.g. LinkedIn. You can create a profile and search
for business matches
• Internet Platform Offerings – These platform offerings operate as
a bridge between the entrepreneur and the investor. Have a look
at platforms such as Gust, AngelList and Crunchbase. There are
many others – investigate these in your own country. They
facilitate global deal discovery and networking and can also offer
useful deal flow management tools and e-mentoring capability.
It is best to try and use one uniform method for receiving applications
– that is usually an investor group website. This helps to maintain
consistency and allows you to share information with entrepreneurs
about your information requirements and types/sizes of investments
you will consider. If you have a group website, think carefully about
what personal information about members you want to share online –
many angels want to keep their investments quiet and have a low
public profile.

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 Whether you are a solo investor or a group investor, you may also
want to raise your public profile in the field of investment in order to
gain more deals (equally, you may want to stay private – this is a very
personal decision).
If you do want to raise your public profile and enhance your investor
reputation, consider undertaking some of the following activities:

• Create and keep relevant current profiles on online business

networking platforms.
• Participate as a judge in business plan and pitch competitions.
• Become a mentor. Working with entrepreneurs from an early
stage puts you in a preferred position when they are ready to raise
money.
• Attend start-up events and provide helpful advice.
• Write blogs and newspaper articles about areas of investment you
are interested.
• Speak at events and share your experience.
Here are some more tips on finding deal flow.

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5.1.2 Deal Flow Management

You do however have to consider how many deals you actively want to
encourage, factoring in how many deals you can realistically afford to
invest in and your time available. Active angel investment groups will
typically receive dozens of business plans monthly and only tend to fund
1-2% of all deal proposals received…but that still means substantial initial
research has to be undertaken before deciding which deals to invest in.
VCs can receive hundreds of business plans a month, and many
established angel groups receive hundreds of plans a year. Start slowly.

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Deal flow is the rate at which you receive business proposals and/or
investment offers. Strong, vibrant economies will usually generate healthy
deal flow: a recession and sluggish equity markets will generate fewer
deals.
You can manage deal flow and information with simple Excel spreadsheets
or CRM systems, but there are also tools such as DropBox, Slack, Podio,
Zapflow and Pitchbook. Have a look at them and see what option suits
you best. You are looking for a tool which will help you:

• Organise a flood of deal information to help save time and reduce

errors
• Enhance investor collaboration
• Maintain a history of deals considered (be aware of data
protection laws and GDPR requirements)
• Help with reporting on trends, deal flow, investment progress,
etc.

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5.1.3 Initial Deal Screening
Often referred to as Pre Screening, this is the first part of the screening
process of deciding proposals to invest in. An efficiently designed pre-
screening process allows investors to cut through a large number of deals,
saving time and money and selecting those which meet their investment
criteria and warrant closer consideration. A uniform matrix should be used
for analysis – the infoDev/Kaufmann Guidebook provides a sample tool. It
is not an intensive or exhaustive due diligence process at this stage.

According to the Angel Capital Association, only one in four deals that
enter the first (pre-screening) phase make it to the second (screening)
phase and one in three deals that made it to the screening phase go on to
the final (due diligence) phase.

It is important to try to signpost to alternative sources of help and

guidance for businesses that are not selected for further investigation.
Please remember you have an entrepreneur’s dreams in your hands –
even if you cannot support them financially, try to help them in another
way. Research shows that one negative early interaction can put off an
entrepreneur from starting their company for up to 10 years.

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Confidentiality agreements usually pop up at this stage. Most investors do
not sign them this early, they do not need to have any proprietary
information for pre-screening. If an entrepreneur insists, they are perhaps
not right for this stage of investment.

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5.2Detailed Screening Coaching and Presentations
5.2.1Detailed Screening
Once you and your other investors - or the investment group manager
(often referred to as a gatekeeper) - have selected companies for detailed
screening you are ready to move onto the next stage. This is often a
screening group, made up of a small group of business angels. Its main
purpose is to analyse the business plan provided by the entrepreneur.
Again, this is not detailed due diligence, but you can refer to due diligence
checklists for guidance on what to look for just now.
Some groups distribute Executive Summaries of business plans to all
investors for review at this stage. These Summaries are usually one or two
pages maximum, prepared by the entrepreneur and which succinctly
summarise their business proposal (hence the need to reinforce to all
entrepreneurs the importance of a concise and well-constructed Executive
Summary at the start of their business plan).
If the group reacts positively to the business plan or executive summary,
then a meeting is usually scheduled with the entrepreneurial management
team to get to know them a little better and ask more questions about the
proposal. This is one of the most important steps of the screening process
- fundamentally you are making a decision on whether or not the
entrepreneur and her team have the relevant skills, attributes and
entrepreneurial mindset to execute their business plan. Listen carefully,
look out for passion, commitment and determination as opposed to

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simply looking at the technology, product and financial forecasts. Focus
more on the market opportunity and the management team.
After the meeting, if there is again a positive impression, the proposals will
either be sent to a screening committee for final filtering and review, or
companies may be directly selected for a coaching process before they
finally make an investment pitch and presentation to the wider group of
business angels.

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5.2.2 Coaching

Selected entrepreneurs should present to the angel group as effectively

and efficiently as possible. Coaching businesses can make a significant
difference in ensuring that companies present the right information, in
the right way, in order to maximise their chances of securing investment.
Some groups give presenting companies exact instructions on what to
include in their presentation and meeting handouts. Sponsors (such as law
or accounting firms) are often keenly interested in providing these

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coaching services at no cost and, in fact, as a benefit of angel group
sponsorship. These service providers see the opportunity to coach
presenters as an opportunity to promote their services and possibly obtain
new clients. Most entrepreneurial companies also see coaching as a
benefit.
You may find that the entrepreneur needs help with their business plan. If
so, have a look at these useful resources for a business model canvas and
for a business plan. And here is a useful video on business model
fundamentals. You can also have a look at our separate training package
on pitching for investment for entrepreneurs and direct them to it here.
As with other steps in the investment process, the manager of a manager-
led angel group may take on the responsibility of coaching companies
along with other aspects of deal screening and investment. The allocation
of these various responsibilities will depend on member preferences,
interest in participating in various steps of the process, legal structure,
time availability, etc. But to sum up, the coaching process has one
principal purpose - helping entrepreneurs to present a confident and clear
proposal in an efficient and effective way and ensure investors have the
right information upon which to base their investment decisions.
During the coaching phase the gatekeep/manager of business angels will
help the entrepreneur to develop their presentation and/or challenge
some assumptions that have already been made, as well as giving
guidance as to some questions that may be asked of them.
The presentation (pitch) is an overview of the business plan and usually
consists of 10-15 slides which include certain key pieces of information. A
common structure would be as follows:
• The mission - who is the company and why they are here?
• The problem or pain - what problem are they trying to solve?

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• The solution - how their product or service will solve the problem?
• The target market - how big is the target market?

• The business model - how are they planning to make money?

• The traction - have they already some revenues?
• The marketing and sales strategy - how will they market and
position their product and what will their sales process look like?
• The management team - who are the key people and what skills
do they have? What gaps are there?
• The financial projections - what are their sales forecast, profit and
loss statement for the next three years?
• The competition - what are the alternative solutions to the
problem you are trying to solve?

• The investment - how much money are they looking for and how
will they use it?
• The exit strategy - what and when is their exit plan?
• The contact details - the company’s phone numbers, e-mails, etc.

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5.2.3 Presentations to Investors
It can often take many months to get from receipt of initial application to
the presentation stage. Do your best to keep entrepreneurs updated as to
progress and indicative timelines for next stages and, again, provide
contacts and signposting for those who do not make it through to the next
round.
Once the coaching phase is complete, it is time to proceed to the company
presentations phase.
Many angel groups have company presentations at regular group
meetings. Typically, two to four companies present for a limited period
(ten to fifteen minutes) with support of a presentation, followed by a
short question-and-answer session (five to ten minutes).
After the presentations, companies leave the room to discuss investment
interest. This investor-only discussion serves a greater purpose than just
making a “go” or “no-go” decision. Members have the opportunity to
share additional information they may possess about the market, product
innovation, and management, and to develop an effective message to
communicate to the entrepreneur, particularly if that business is not
selected for funding.
This investor discussion should center around the following key questions:
• Is this a good deal for our Angel group?
• Does it fit with our investment strategy?
• Is this the right team to execute this business?
• What gaps are there in the management team?

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 • Does this business have superior proprietary products?
• Do the products address a clear need in a large market?

• Is the requested investment sufficient for the company to achieve

key milestones?
• Has this company made a compelling case for the overall
attractiveness of the business opportunity?
• Is this an attractive investment opportunity?

• Really focus on the management team – do you believe in them

and their entrepreneurial vision and mindset?
These group discussions also provide an excellent learning experience for
new angel investors. The actual angel group structure will then dictate the
follow-up activities.
For instance, if a group is member-led and members make their own
investment decisions, the group may have a process in which those
members expressing an interest in continuing discussions with a company
form a due diligence committee to thoroughly evaluate the company. That
group could then divide up the duties, depending on expertise, with
investments still being made on an individual basis.

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At the other end of the spectrum, if the group is an angel fund and/or has
a manager/gatekeeper, the group may vote on whether to proceed with
due diligence and members may volunteer to support the diligence
process based on their background and expertise, often led by a manager.
It is not unusual to have dozens of opportunities come to a group, many
pass the screening stage, but only two or three are invited to actually
present to the group members, and only one or two proceed through to
due diligence and term sheet negotiations

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5.3 Due Diligence, Term Sheets and Valuation

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5.3.1 Due Diligence
Due diligence is a process that verifies and confirms statements and views
about a business and its prospects. Its main purpose is to reduce the risk
as much as possible. It can be the most complicated and time-consuming
part of the business angel process, but it is important take the time and
care to do it properly. Very few proposals reach this stage, but good due
diligence can make all the difference in achieving a positive return on
investment.
The approach to due diligence conducted by individual angels and angel
groups varies widely. Individual angels tend to have less stringent
screening criteria, rely on deal flow from known referrals and invest on
their instinct. Active angels who are formally affiliated with a group tend
to take a more proactive role in the company and typically have a well-
structured due diligence process. Whilst every angel group has variations
on the nature of the due diligence process, doing nothing or very little in
this area is not an option if you wish to avoid costly mistakes.
Some groups recruit local university or MBA students to support due
diligence through an internship programme. Other groups retain outside
experts to evaluate a company or give a briefing on cutting-edge
technology related to the potential investment (although most groups do
not have budgets to pay for outside consultants.) After due diligence is
complete, those who have undertaken the due diligence process present
their findings to the angel group, and members decide whether to fund
the company or not.

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There are numerous samples of due diligence documents available. The
best places to find them are at business angel association websites such as
The Angel Capital Association (ACA), the European Business Angel
Network (EBAN) and the Angel Resource Institute (ARI). Through this due
diligence process you are looking to get comfort in the following areas:
• Corporate structure and governance
• Financial assumptions and revenue source
• Market assessment
• Competitive landscape

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• Management team (especially gaps)
• Technology assessment
• Operations
• Comparable companies (for exits)
Above all you need to have confidence and belief in the entrepreneur and
her team. Not every skill will be in place, but if you feel that they are
coachable, willing to learn and have an entrepreneurial spirit with drive,
purpose and passion, you are a big step forward in minimising risk. It
cannot be emphasised enough that the key to angel investment is
believing in and having a good relationship with the entrepreneur and her
team.
Consider too that the way an entrepreneur responds to the due diligence
process is in itself due diligence on the entrepreneur: do they answer
questions in appropriate timescales, do they respond to questions
positively (i.e. they are not overly defensive), are their answers clear and
well-constructed, do they clearly state when they don’t know the
answers?
A due diligence checklist may include the following elements (not all will
be applicable to start-ups but they should be at least considered):
General Background
• A simple declarative statement outlining the pain or problem in
the market and the company’s solution that addresses the need
• The company’s unique advantage
• A brief history of the company
• An outline of the company’s financial needs

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People
• Organisational chart
• Resume of each member of the management team
• Significant gaps in the senior management team
• Professional advisors – lawyers, accountants, bankers, etc.
• References
• Disclosures (any legal issues, conflict of interest, etc. that might
hinder the company)
• Compensation for all key personnel, including options
• Employment contracts, partnership agreements, non-competes
and IP assignments
Market
• Market Opportunity - size of market, addressable market niche,
expected market penetration
• Market geography and industry trends
• Barriers to entry
• Market maturity and where the product fits into the business
maturity cycle

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Product
• Product description (focusing on what it does, not how it does it)
• Stage of development
• Pricing structure and unit sales forecast per year
• Unique features/USP. What is the product advantage over the
competition?
Sales and Marketing
• Sales and marketing strategy
• Sales pipeline
• Direct and channel sales model and distribution plans
• Price and price history
• Product description
• Brand positioning
• Sales force required
• Target market
Competition
• Details on the major competitors
• Competition’s strengths and weaknesses
• How are the major competitors growing?
• Plan and strategies to deal with direct, indirect, and alternative
competitors
• Assessment of how competitors will react to the entry of the start-
up

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• List of major customers who are buying from the competition
Financials
• Historic financial performance
• Cash flow projections to the next round of financing, breakeven
timing, and profitability forecast
• Current financial position
• Financial model and projections
• Tax: all taxes (corporation tax, VAT, employment taxes, rates,
stamp duty, import duties, etc.)
• Pensions: adequate provision in balance sheet
IP (Intellectual Property) ownership
• Chain of title – legal documents that prove ownership
• Copies of all patents and status of filings, especially patents
pending, trademarks and copyrights
• Clearance to operate – releases from prior agreements, past
employee contract, non-competes etc.
• Regulatory issues identified
• Licensing agreements for IP and their financial impact
• Other IP activity
• Copies of material contracts (including license agreements, if any)

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• Employee Agreements
Here is a short video on due diligence and a more comprehensive due
diligence webinar. And here is a video on analysing financial statements.

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5.3.2 Term Sheet
An essential part of angel investing is setting and agreeing to the terms of
the deal. Many angels recognise the importance of deal terms, but often
wonder which components of the term sheet to prioritise. The term sheet
outlines the terms and conditions of the investment deal.
The term sheet is a letter of intent, created by the Angel or the Angel
Group and presented to the company. It spells out the proposed terms
under which an investment will be made. The term sheet is not a legally
binding document, but rather a mechanism that summarises the key
financial and legal conditions under which a deal could be done.
Most importantly, it serves as the base document for negotiations and
focuses both parties on the major items that must be resolved before a
deal is finalised. Most conditions (conditions precedent) will require to be
resolved before an investment, but some conditions (conditions
subsequent) may be satisfied after the investment.
The following topics usually need to be covered in the term sheet. Keep it
short – the purpose is simply to lay out a framework that helps agree and
protect the angel investment. Angel Associations can provide templates
for term sheets.
• Financial structure of the investment: debt or equity; common shares,
preferred shares, convertible debentures, etc.

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• Pricing/parties investing: what is the size of the deal; what is the price
per share; and who will participate in the Angel round? Will the Angels
invest individually or in a voting trust or group?
• Use of funds: what will the investment be used for? Without this
provision an entrepreneur could use the proceeds inappropriately.
• Downside protection: terms and conditions under which a measure of
protection is provided to the angel if he/she is willing to participate in
future rounds of financing or in the case of the liquidation or sale of the
start-up.
• Expenses: what are the acceptable expenses in negotiating and closing a
deal and who will absorb these expenses?
• Exclusivity/no shop/closing date: Angels may need assurance that this
deal is not being shopped around to other investors, and that the start-up
is not trying to create a bidding war. A firm end date for the deal needs to
be set early.
• Milestone and tranches: Angels are advised not to invest in one lump
sum. Rather, milestones are created up front, usually tied to such things as
completion of software development; signing customers; gaining
significant revenues; or achieving some form of positive cash flow. The
funds are tranched out upon the completion of each milestone at a pre-
determined percentage of the deal. These milestones should be stretching
but achievable for entrepreneurs.
• Exit Priority: It is also worth asking for some form of
priority on exit, such that you receive back your
investment before the founders receive any proceeds.
This covers the negative scenario where the company
fails or has to be sold for less than you paid at the time
of investment.

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• Redemption rights: These rights can help angels to achieve liquidity by
selling their shares back to the company, if management wants to
continue running the company but investors want out.
Here is a short video introduction to term sheets.

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5.3.3 Valuation
The final - and often most contentious part – to be included in the term
sheet is the valuation.
You should deal with valuation during term-sheet negotiation rather than
postponing it to some later date and leaving the decision in the hands of
subsequent investors. Postponing the valuation only leaves the you
vulnerable to the decisions of others.
The valuation of a company is a critical component as to whether the deal
occurs or not. How the entrepreneur approaches the valuation is very
revealing about the management and can make or break the deal. The
tone of the relationship between the angel investors and the
entrepreneurs is frequently established early on and if there is no mutual
consent to the valuation then there is a good likelihood that a deal will not
proceed.
Be fair. Leave enough equity so the entrepreneur and her current and
future team are suitably incentivised but ensure sufficient equity to
support a good return on investment for all angels. There are no rules of
thumb for valuation at such an early stage. It basically comes down to
what you are prepared to pay and what the entrepreneur is willing to
accept.
Negotiating investment term sheets is a bit like negotiating a pre-nuptial
agreement prior to marriage. You want to protect the long-term
relationship, but you want to clearly document certain details related to
ownership, governance and exit payouts. If either party negotiates in bad
faith or demands unrealistic terms, then the marriage never takes place or
breaks down soon after the agreement is signed.

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If properly executed, the negotiations can help build mutual respect,
understanding and the lasting foundation for a successful long-term
relationship. It can be a very emotive process, so do your best to keep
everything calm and focused on the long term result.
Here is a short video on valuations.

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5.4 Legal Agreements
Once the term sheet is complete, it is essential that the terms of the
investment are outlined in appropriate legal agreements. The principal
legal agreements are as follows and will be prepared by lawyers in the
country of investment:

• Investment agreement (sometimes called a shareholder’s

agreement)

• Articles of association

• Directors’ service agreement

Angel financing can range from a couple of thousand pounds to several

million. Complicated deal structures and legal agreements make no sense
for small financings, but larger financings with multiple syndicate partners
can be more complex. Prepare what is appropriate for the stage and size
of the investment but do take the time to ensure appropriate warranties
are in place. Always take appropriate legal and professional advice.

Angel investors are often first outside money in a company so you need to
be aware of follow-on funding needs and possible sources for this
additional capital. Do not make deal terms so complicated or onerous as
to effectively prevent attracting follow-on financing, which is as
undesirable for the company as it is for the angel investor.

If angel group members make independent investment decisions, there

should also be a strong disclaimer of organisational liability. This
disclaimer should indicate specifically that each member makes his/her
own investment decision and that the organisation is not recommending
any particular company for investment.

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It is all a negotiation process and important that both parties treat the
other with mutual respect. Some of the most important fundamentals for
a successful negotiation are as follows:

• Separate the People from the Deal Terms. It is vital to ensure that
the negotiations do not damage the long-term relationship.

• Focus on Interests, Not Positions. Position-based negotiators

often find themselves locked into their positions.

• Create Options for Mutual Gain. The ability to uncover interests

and discover which issues are most important to each party is key
to achieving win-win outcomes where both sides feel they have
negotiated a good deal.

• Use Objective Criteria and Fair Procedures. There are currently

few objective standards for angel investments so it is particularly
important to engage in fair and reasonable procedures.

The purpose of this module is not to delve into the intricacies of

investment terms and negotiations. The Angel Capital Association provides
free, detailed operating documents on its website as do various angel
networks such as the European Business Angel Network and the UK
Business Angel Association.

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This article from Hyde Park Angels provides a list of terminologies used in
negotiating an investment.

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5.5 Section Summary

In this section we covered ways to find and manage deal flow and whether
or not and how to create a personal public profile for investment. We also
covered how to screen and select deals and how to coach companies for
presentations. Then we considered how to undertake due diligence,
prepare term sheets, agree valuations and finalise legal agreements.

Note your comments and queries in the box below. Think about how you
will find your first investment and the first steps you will take to meet with

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an entrepreneur. Also consider who to contact locally to create the legal
documents you will need.

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6.0 Follow-on Finance, Post Investment
Monitoring and Mentoring

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6.1 Follow On Finance
Most start-up companies have a continuous need for funds to help grow
the business. A common refrain among angels is that “it takes twice as
long and twice as much money as you think it will to be successful”. The
vast majority of companies require multiple rounds of finance over many
years – anything from three rounds upwards. So, when you initially invest
in a company, also think ahead about its future funding requirements.

For example, you invest £20,000 in two agreed tranches of £10,000, and
the company meets most of its milestones e.g. prototype created. It is
growing well, but in order to grow faster and bigger, it needs more money
to fund e.g. customer acquisition. Another round of £20,000 is required.
The company again achieves its key milestones but needs yet another
round to fund further expansion. You invest again for more equity. In total
you have now invested £60,000 in one company over three years. This
happens in the vast majority of investments – it is rare for start ups to
achieve their forecasted projections early on and there are always
problems to overcome. In reality, when you first think about investing
£20,000, you should think about whether you would be willing and able to
invest £60,000. (This is an example – it could be a lot more money or a lot
less.)

You will often hear one investor say to another “are you planning on
following-on in this round”? Simply put, the investor is asking if you will
invest additional funds in the company. If you believe in the entrepreneur
and the business potential, you will most likely follow-on. If not, you
won’t, but if others do provide follow-on investment, your equity stake
will be reduced. Plan ahead for the provision of follow-on funding.

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A major aspect of angel relationships with start-ups is securing follow-on
financing and planning for eventual exit by investors. Even when angels
plan to bring in new funding from other sources, such as venture capital
funds, it is a good idea for angels to allocate funds to invest alongside new
investors. This allows angels to secure better deal terms and encourages
new investors to participate as they can see that existing investors believe
in the company and are willing to “follow their money.”

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Honest dialogue amongst all stakeholders about timing and amount of
both tranched investments against milestones and subsequent follow-on
financing is therefore key. It is the collective responsibility of both angels
and the company to work together on future funding options (such as
other angels, banks and VCs), whether funding should be equity, debt or a
combination of debt/equity, until the company reaches cash break-even.
The range of experience and contacts within the angel group should
facilitate the best available financing options.

Venture Capital firms (VC’s) are the major players in later funding rounds
of a potentially successful scalable high growth businesses. Some angel
group managers speak with VC contacts weekly, staying up to date with
the VC funds’ investments and available capital. An angel group should
have several VC firms to choose from when looking for follow-on funds for
portfolio companies and match the company with the most appropriate
VC. Be aware that dilution of rights, stakes and board seats will occur with
VC investment.

Every investee company should update its business plan and spell out
future funding needs. Monthly meetings between investors and
entrepreneurs should include updates on funding and eventual exit
options…which leads us into the importance of Post Investment
Monitoring.

Here is a video on follow on finance.

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6.2 Post Investment Monitoring
6.2.1 Purpose
Once the initial investment has been made, the work has really only just
begun! This is when the “smart money” invested - i.e. money and
experience and contacts – really starts to benefit the company. But in
order to achieve this, there needs to be a close relationship with the
company: this is achieved through Post Investment Monitoring. It is the
way by which you can quickly move and work together to capitalise on
successes and breakthroughs…and equally get early warning signs when
things are not going so well.

It is important to stress to all, especially the entrepreneur, that monitoring

is not about control, but finding a way to work together in mutual trust
and respect to maximise the success of the company for everyone. Trust is
a key element here – it is human nature for people to want to hide bad
news – and you need to build a strong relationship so that the
entrepreneurs will share news openly with you in good times and bad.
Things can and will go wrong.

How much time should be devoted to post-investment monitoring? One

study from Germany shows that angels spend an average of 6.2 days per
month working with investees, which comes out to 1.34 days per month
on each investment. The answer really depends to a great extent on the
size of the investment, specifically the percentage of the round or the

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percentage of the company acquired by the investors. The more at stake,
the more support is likely required.

Firstly, determine who is responsible for the monitoring process and

ensure a key focus is maintained on monitoring achievements against
milestones, especially if these are linked to timings and amounts of a
tranched investment round.

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6.2.2 Board Seats
The key way in which to assist with monitoring is by having a seat on the
board, or board observer rights. Sometimes angels will appoint
experienced individuals as their representative on the board. Ensure that
the board member has the necessary skills to help the company and
remember that a board member has a duty to promote the best interests
of all shareholders of the company, not just one shareholder.

Board members need to complement other board members and they

should be aware of the increased time commitment, fiduciary
responsibilities and possible increased exposure and liability to them
before taking on the role. Ensure an appropriately diverse board of age,
gender and experience and a strong but not dominant chair. Keep the
board focus on strategy, managing risk and ensure good governance and
adherence to any compliance, GDPR and cybersecurity requirements.
There is also a certain amount of hands-on work and support required
from board members in start-ups, so members need to be prepared to
“muck-in”.

Monthly board meetings should be held with board pack of minutes,

financials and reports. Board packs are not legal documents (although
they can be used in legal proceedings) and are important documents for
current and future investors – future investors may ask to see past board
packs to get a handle on how the company is progressing.

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The board is really all about guiding the investment and the company
through this next stage of growth and sharing and communicating the
good, the bad and the ugly information. Be aware that one of the first
signs a company is struggling is when their board packs start to be late and
not arrive on time…or at all. Keep your eyes out for this happening.

Ensure that you feedback information to fellow investors and invite the
entrepreneur in to give updates as appropriate e.g. every 3 or 6 months.

Here is a useful guide to board packs and board meetings.

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6.2.3 Information
All investors should have access to information rights (achieved through
the shareholder’s agreement). These include access to financial
statements and annual reports, business plans, quarterly updates,
visitation rights, etc. The amount and type of information required
depends on your involvement with the company and what the company is
prepared to share with a minority investor. Again, if you focus on building
trust and strong relationships to help build the company together, the
company will be more open and honest with you.

Try not to overburden the company with reporting requirements though.

A small entrepreneurial team has a lot of work to do in so many areas.
Make requests appropriate and relevant for the size and stage of the
investment but have an eye on building a governance and reporting
structure that can evolve to meet future growth requirements.

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6.2.4 Danger signs
As indicated earlier, things can and will go wrong. That is the nature of the
entrepreneurial journey and nine out of ten investments will fail (but you
only really need one to succeed!). However, be alert and you will get early
indicators of when things are going wrong in a company.

Some danger signs to look out for are:

• Lack of communication

• Late board packs

• Late accounts

• Cancelled meetings

• Individuals putting personal needs ahead of company needs

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6.3 Mentoring
Mentoring is crucial for helping guide and grow the entrepreneur that you
have invested in. It is one of the key ways to make a difference to a
business and in many ways can be even more valuable than the financial
investment.

Sharing your contacts and experience (there are not that many mistakes in
business that haven’t already been made by someone else) and guiding
investees through the ups and downs of their business journey will reduce
overall risk and improve the chances of generating a return on your
investment.

However, many entrepreneurs “do not know what they need to know”
and pride/mistrust may prevent them from seeking help. It is key for you
to ensure that an entrepreneur is coachable from the outset and willing to
be mentored and act on advice given.

Mentorship can take many forms, but all angels should ensure they
address mentorship requirements in parallel with capital investment.
Mentoring can be formal or informal, and can be focused on strategic
connections, sponsorship, technical knowledge, local knowledge, general
business acumen, or a combination of all.

Ensure that entrepreneurs clearly articulate the gaps in their skillsets and
that they know how wiling you are to help. Some business angels start of
their angel investment journey by simply mentoring and getting involved

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with companies – it can be a good way to understand how you can help a
young business.

The most important part of a good mentor-mentee relationship is the

matching process to ensure a good match between skills and experiences
and of course a relationship fit. If it doesn’t feel right for either party, it
won’t work, so respectfully part and develop a different mentoring
relationship with someone else.

There are no hard and fast rules re the amount of time to spend
mentoring an individual, it will depend on your availability, and on the
needs of the individual and the stage of company growth – it may be half a
day a week or an hour a month. It can be done face-to-face or over the

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phone. Focus on quality over quantity and be sure to follow through on
agreed actions.

Sometimes investors will mentor or take a board seat on a company in

return for a small equity stake (e.g. 0.5-3%). Template agreements for this
approach are available from many angel associations – check your local
country.

Here is some information on mentoring.

What exactly is the mentor’s role and what is the mentee’s?

Everyone Needs a Mentor, by David Clutterbuck

https://www.amazon.co.uk/Everyone-Needs-Mentor-David-
Clutterbuck/dp/1843983664/ref=as_sl_pc_tf_til?tag=wescotland-
21&linkCode=w00&linkId=af41ab85bf07a7a19d34f544eb5d54bc&creative
ASIN=1843983664

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6.4 Exit
We know that most angel investments will fail (or be termed as the ‘living
dead” – alive but delivering very little). The failures should be prepared for
in contract negotiations, especially around who will shoulder
responsibilities. However, a positive exit is the ultimate goal for any angel
investment and again needs to be considered in all contract negotiations.
You may receive a substantial return on capital invested and can recycle
some of that gain for future investments. You may also receive dividends
and royalties.

The most common exits options are as follows:

• Trade sale/acquisition

• Acquisition by other funds

• Management buyback

• Initial Public Offering (IPO)

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6.5 To Invest…Or Not To Invest
When angel investing, start small, keep terms as simple as possible, invest
with others, tranche investments against milestones, be confident in the
management team, provide mentorship, expect to follow on, expect
failures…and be patient.

Of course, there are reasons to invest…and reasons not be an investor…

Why You Should Not Invest

• You will lose money

• Companies will fail

• You will require to provide follow on funding

• It will take up a lot of your time

• Entrepreneurs will not execute properly

Why You Should Invest

• You can make a LOT of money

• You will have fun

• You will learn about different areas and sectors

• You will be a visible female role model

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 • It will help your personal growth and development

• You will stay up to date with innovations

• You will create stronger personal networks

• You will make new friends and contacts

And above all, as a female investor you will play a major role in inspiring
other females in business and angel investment, positively impacting the
gender imbalance in society for current and future generations to come.
We hope this course has inspired you to take action and support other
females in business.

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6.6 Section Summary

In this section we covered the importance of follow-on finance and post

investment monitoring through use of board seats and gathering
information. We also talked about the danger signs to be aware of and the
importance of mentoring, as well as the critical planning for exit.

Note your comments and queries in the box below. Let us know if you now
feel ready to become a business angel. If not, what else do you need to
know or whom do you need to talk to. Let us know and we can help.

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7.0 Next Steps

7.1 Thank You

Thank you for joining us on this programme. We hope it has provided you
with sufficient guidance and information to help you decide if becoming a
business angel is appropriate for you.

Create an action plan to keep track of the areas you would like to learn
more about and who to contact locally and nationally for more
information. Be patient and take time to understand your local investment
community, the entrepreneurial investment opportunities available to you
and your own risk appetite before you make your first business angel
investment.

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6.2.3 Resources
If you would like to explore further resources, we recommend the
following:

SEEWBAN Project

Women’s Enterprise Scotland

UK Business Angel Association

European Business Angel Association

Business Angels Europe

Angel Capital Association

Angel Resource Institute

Useful Books:

1 Angel Investing: The Gust Guide to Making Money and Having Fun
Investing in Start Ups, by David S Rose

2 https://www.amazon.co.uk/Angel-Investing-Making-Having-
Startups/dp/1118858255

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3 Angel: How to Invest in Technology Start Ups-Timeless Advice from
an Angel Investor Who Turned $100,000 into $100,000,000, by Jason
Calacanis

https://www.amazon.co.uk/Angel-Invest-Technology-Startups-Timeless-
Investor/dp/0062560700/ref=sr_1_2?s=books&ie=UTF8&qid=1529946083
&sr=1-2&keywords=business+angel

Fundamentals of Angel Investing, by Hambleton Lord and Christopher

Mirabile

https://www.amazon.co.uk/Fundamentals-Angel-Investing-Hambleton-
Lord/dp/1539346145/ref=sr_1_5?s=books&ie=UTF8&qid=1529946083&sr
=1-5&keywords=business+angel

Everyone Needs a Mentor, by David Clutterbuck

https://www.amazon.co.uk/Everyone-Needs-Mentor-David-
Clutterbuck/dp/1843983664/ref=as_sl_pc_tf_til?tag=wescotland-
21&linkCode=w00&linkId=af41ab85bf07a7a19d34f544eb5d54bc&creative
ASIN=1843983664

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7.3 Keep in Touch
Please keep in touch to hear about any local pitching event that you can
attend to hear investment opportunities, as well as all the latest news
from Women’s Enterprise Scotland.

Register your interest here to find out about local pitching events.

You can also subscribe to our newsletter here and please connect with us
on social media too:

Facebook

Twitter

LinkedIn

7.4 Evaluation
We hope you have enjoyed this eLearning course and that you have found
it useful. We would appreciate your feedback as it will help us improve the
experience for others.

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7.5 References
Here is a full list of references and links used in this programme:

2.0 Introduction to Business Angel Investing

• HNWI definition
https://www.syndicateroom.com/learn/glossary/high-
net-worth-individual-hnwi

• Impact of Angel Investing Across the UK

https://www.ukbaa.org.uk/wp-
content/uploads/2015/09/ERC_Nation_of_Angels_Full_R
eport.pdf

• European Early Stage Market Statistics

https://www.ukbaa.org.uk/wp-
content/uploads/2015/09/ERC_Nation_of_Angels_Full_R
eport.pdf

• Definition of NXD https://www.ukbaa.org.uk/wp-

content/uploads/2015/09/ERC_Nation_of_Angels_Full_R
eport.pdf

• Early Stage Investing https://www.ukbaa.org.uk/wp-

content/uploads/2015/09/ERC_Nation_of_Angels_Full_R
eport.pdf

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• Introduction to Business Angel Investment
https://www.ukbaa.org.uk/wp-
content/uploads/2015/09/ERC_Nation_of_Angels_Full_R
eport.pdf

• What does an angel investor look for?

https://www.ukbaa.org.uk/wp-
content/uploads/2015/09/ERC_Nation_of_Angels_Full_R
eport.pdf

• Statistics on European Business Angel Market

http://www.eban.org/wp-
content/uploads/2017/11/Statistics-Compendium-2016-
Final-Version.pdf

• Female Business Angels in Europe

http://www.eban.org/wp-
content/uploads/2017/11/Statistics-Compendium-2016-
Final-Version.pdf

• Female Business Angels in USA

https://goldenseeds.com/who-we-are/

• What is an entrepreneur?
https://www.youtube.com/watch?v=92ZmzD70sOU&fea
ture=youtu.be

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 • Female Entrepreneurship Report
https://www.babson.edu/Academics/centers/blank-
center/global-research/gem/Documents/GEM%202016-
2017%20Womens%20Report.pdf

3.0 General Investing Overview

• Portfolio Definition
https://www.investopedia.com/terms/p/portfolio.asp

• Asset Allocation Definition

https://www.investopedia.com/terms/a/assetallocation.a
sp

• Diversification Definition
https://www.investopedia.com/terms/d/diversification.as
p

• Asset Management Tools

https://www.personalcapital.com

https://www.mint.com

https://getticker.com

https://www.morningstar.co

• European Angel Statistics http://www.eban.org/wp-

content/uploads/2017/11/Statistics-Compendium-2016-
Final-Version.pdf

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 • Investment Principles
https://www.youtube.com/watch?v=WEDIj9JBTC8

4.0 Start Ups and Business Angel Investing

• Stages of Companies https://www.investopedia.com/exam-

guide/cfa-level-1/alternative-investments/venture-capital-
investing-stages.asp

• Peer to Peer Lending

https://www.fundingcircle.com/uk/investors/

• Crowdfunding

https://www.kickstarter.com

https://www.indiegogo.com

https://www.crowdcube.com

• Angel Investment Platforms

https://gust.com

https://angel.co

https://in4capital.com

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 • Angel Investors https://go-beyond.biz/Rising-Tide-Sources-of-
Financing-20160122

• Difference between Angels and VCs

https://www.youtube.com/watch?v=aqRBN7qvyxs

• What do Angel Investors Look for?

https://www.youtube.com/watch?v=ewTl4aRU--s

• Definition of Mentoring
https://www.investorsinpeople.com/resources/ideas-and-
inspiration/what-mentor-all-you-think-mentor-and-lot-more

• EU 2015 Statistics https://www.business-angels.de/wp-

content/uploads/2017/12/Final-Report_Understanding-the-
Nature-and-Impact-of-the-business-angels-in-Funding-Research-
and-Innovation_FV_Formatted_Revised1.12.2017.pdf

• infoDev/Kauffman Guide to Creating Your Own Angel Group

http://www.infodev.org/publications/angel-investor-guide

5.0 Business Angel Investment Process

• Tips on Finding Deal Flow

https://www.forbes.com/sites/mariannehudson/2015/12/16/hun
ting-for-deals-where-top-angels-find-great-
companies/#2795aeb968b4

• Definition of Deal Flow

https://www.investopedia.com/terms/d/dealflow.asp

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 • Project Management Tools

https://www.dropbox.com/business/landing-
t61fl?_tk=sem_b_goog&_camp=sem-b-goog-uk-eng-top-
exact&_kw=dropbox%7Ce&_ad=249602021162%7C1t1%7Cc&gclid=EAIaI
QobChMI1pL4q5nv2wIVbbftCh38NQhqEAAYASAAEgI0W_D_BwE

https://slack.com

https://podio.com

https://www.zapflow.com

https://pitchbook.com

• Definition of Executive Summary

https://en.wikipedia.org/wiki/Executive_summary

• Business Model Canvas https://strategyzer.com/canvas/business-

model-canvas

• Business Plan Templates https://www.bgateway.com/business-

guides/first-steps/business-plan-template/download-your-free-
business-plan-template

• Business Model Fundamentals https://go-beyond.biz/Rising-Tide-

Video-Business-Model-160201

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 • Angel Capital Association https://www.angelcapitalassociation.org

• Angel Resource Institute https://angelresourceinstitute.org

• Due Diligence Video https://go-beyond.biz/video/Rising-Tide-Due-

Diligence-1601

• Due Diligence Webinar

https://www.anymeeting.com/WebConference/RecordingDefault.
aspx?c_psrid=E952DB8787473F

• How to Analyse Financial Statements https://go-

beyond.biz/Rising-Tide-Intro-to-Financial-Statements-20160224

• Term Sheets https://go-beyond.biz/video/Rising-Tide-Intro-to-

Term-Sheets-20160229

• Valuation https://go-beyond.biz/Rising-Tide-Intro-to-Company-
Valuation-20160208

• Negotiation Terms https://medium.com/hyde-park-angels/how-

to-read-a-term-sheet-3c4204ab1c0f

6.0 Follow-on Finance, Post Investment Monitoring and Mentoring

• Follow On Finance https://go-beyond.biz/Rising-Tide-Intro-

Managing-Follow-on-Rounds-2016-08-02

• Board packs and Meetings

https://www.sequoiacap.com/article/preparing-a-board-deck/

0
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 • Mentoring https://hbr.org/2017/02/what-the-best-mentors-do

o Everyone Needs a Mentor, by David Clutterbuck

https://www.amazon.co.uk/Everyone-Needs-Mentor-David-
Clutterbuck/dp/1843983664/ref=as_sl_pc_tf_til?tag=wescotland-
21&linkCode=w00&linkId=af41ab85bf07a7a19d34f544eb5d54bc&creative
ASIN=1843983664

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