COMMON ANGELS

“Fools rush in where angels fear to tread”

Team -7

SUDERSHAN SHARMA -1226108251

LAWI ANUPAM -1226108221

K.S.SRINIVAS -1226108132
GITAM INSTITUTE OF INTERNATIONAL BUSINESS
VISAKHAPATNAM
 Investment Stages
Most VC’s have a preference for a particular
investment stage.

Five Stages:
 Seed
 Start-up
 Early
 Expansion
 Mezzanine/Bridge
 Valuation
Stage Criteria Methodology Range

Seed - Mgmt. track record Comparables, $400K to$1.5MM

- Market size/growth What's the “going
- Competition rate” in the region
- Investment to date

Start-up - Market size/growth Comparables $750K to 2.0MM

- Working prototype?
- Team complete?
Contd……

Stage Criteria Methodology Range

Early - Market size/growth Comparables $1.5 to $5.0MM

- Revenue run rate
- Gross margin %
- Performance to date

Expansion - Revenue run rate - 1X sales Varies

- Profitability ratios - EBIT multiple
- Performance vs. plan
The Role of the VC

 Board involvement
 Management recruitment
 Future capital raising
 Access to business network
 Strategy development
 Patience
How Do VC’s Make
Money?
Source of VC Income: How do VC’s earn
– Collect management fees
from L.P.’s - 2 1/2% their income?
annually
5%
– Share profits with L.P.’s -
20/80 split on investment 95%
gains
Mgmt. Fee Investment Gains
VC’s focuses
Venture capitalists tend to focus on five specific
areas

when evaluating a company:

Areas of Focus:
 Management
 Marketplace
 Competition
 Business Economics
 Risks
The Venture Capital Process

 Business Plan
 First Meeting
 Second Meeting
 Term Sheet
 Due Diligence
 Negotiations
Exit Strategies

 Sale or Merger
 Most likely exit
 Initial Public Offering
Small fraction go this way
 Redemption
Least attractive
 Management buy-out
Generally not possible
Introduction
 Common Angels was founded in June 1998 and is headquartered in
Lexington, Massachusetts

 Common Angels is a venture capital firm specializing in early stage

investments.

 The firm seeks to invest in software, telephony, semiconductors, RFID, and

medical devices not requiring extensive trials.

 It primarily invests in companies based in Boston Area.

 The firm typically invests in series A between $500,000 and $5 million with

the total investments less than $20 million.

 The firm prefers to have a seat on the company’s board of directors in its

portfolio companies.
Three Exceptional Rules

1. Attract High Quality opportunities & Entrepreneurs

2. Able to access those opportunities & decide to allocate

scarce resources

3. Assist Entrepreneurs in building companies that enable

them & common Angles
 FACTS about COMMON ANGELS

• Invested in more than 23 billions in more than50000 venture.

• It had network of 70 accredited private investors.

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

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

members.

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

 In 2000 due to dot com crash IT industry came to halt.

 In April 2001 – 2002 360 companies where shut down.

 Common Angels business also decreased from 2000 deals

to 700 deals & from $28.4 billions to $5 billions.

 Then they thought of focusing on non-IT technologies