We want to gauge the potential of every business quickly so that we can make sensible, prompt investment decisions that are respectful of the time of founders.
Your business plan needs to provide enough information to demonstrate the strength and appeal of your team, market and technology. We need to be able to understand your business model and detailed financial projections, as well as your capital requirements, how you will use the investment funds and the milestones you will reach with this investment. Use specific information on your customers, competition, market and your sustainable competitive advantage to establish the credibility of your ambitions.
Communicate all of this effectively and concisely, include all the critical details knowing there is plenty of opportunity for elaboration later in the process.
We typically ask the following questions of every founder so answering them in your submission is a good idea.
1. What is the business or life problem that you solve?
2. How do you solve this problem (i.e. what is the technical nature of your solution)?
3. Who has this problem (i.e. who are the potential customers)?
4. What is it worth financially to a typical customer if they could solve this problem?
5. How many of these prospective customers are there in Australia? The world?
6. What is the current annual market expenditure to solve these problems in Australia? The world?
7. What alternative solutions are there to these prospects’ problems?
8. What is/are your compelling attribute(s) that will ensure your growth in this segment?
9. How will you reach these prospects and service their needs (i.e. what are the sales and delivery models)?
10. What market successes have you achieved so far (i.e. number of customers, sales revenue, etc.)?
11. How much money do you seek and what proportion of the business will the investors own?
12. Why do you need the money (i.e. what precisely are you going to spend it on)?
13. How and when will investors reach an exit? Why will your business be acquired for a large multiple of its current value and by whom?
Since we receive so many plans our policy is not to sign NDAs (non-disclosure agreements) or confidentiality agreements. Melbourne Angels pride ourselves on our practice of the highest respect and care of the confidentiality of all information received; aiming to treat you as we ourselves wish to be treated. However, you should not forward unprotected proprietary information to us. Read this article for more information.
We recognise that every deal is different and we accommodate that in our process. That process does start with standard expectations of terms you can review in our standard Shareholders Agreement.
Our guiding principle is to align the interests and expectations of all shareholders towards the common goal of realising a high order financial return within a reasonable time frame. Founders must be motivated to make a hefty return for their investors and investors must ensure that founders are suitably rewarded for their continuing efforts. Investors and founders are both taking substantial risks, together, so investment terms should be considerate of those risks and proportionally and appropriately incentivise all parties.
Founders typically approach Melbourne Angels as much for our intellectual capital as for our money. Most ventures that receive investment from Melbourne Angels will get at least one of our members as a non-executive director. Our primary purpose for that appointment is to make a substantial and sustained contribution to realising the success of the company.
One of the core strategies of successful start-up investors is to co-invest with other, likeminded investors. This creates a stronger pool of financial support within the shareholder base and delivers a deeper, broader set of intellectual capital to assist the companies succeed. Melbourne Angels routinely syndicates with other Angel groups in Australia, New Zealand, the USA and elsewhere.