WHY BECOME AN INVESTOR IN EARLY STAGE COMPANIES?
The Florida Angel Nexus’ goal is for its members to achieve higher returns with less risk than typical angel investments by utilizing a model combining the business acumen of investors and entrepreneurs with Florida’s community resources – including the vast university system and regional economic development programs. For many angel investors, it’s also a way to diversify their portfolio, meet new people, give back to their community, help build successful companies, and participate in the satisfaction that comes from being involved in the entrepreneurial process.
INVESTORS SHARE SOME OF THE FOLLOWING ATTRIBUTES:
- Accredited Investor status (required)
- Experience in successfully running at least one company
- Entrepreneurial background or mindset
- Knowledgeable in a specific domain or expertise
- Connected with contacts for talent, technology, and subsequent funding
- Interested in the minimizing risk of angel investments as a member of an active investment community
- Understands the importance of supporting entrepreneurship and its impact on our economy
- Involved in NEXUS activities, including attending bi-monthly meetings
The Florida Angel Nexus looks for investment opportunities where mentoring, capital and member networks will take companies to the next level.
Angel Investors receive access to our private web portal which ties members, deal information, and advisors together. They can dive into the specifics of each company by viewing their application, supporting documents, and investment pitch. Within each application’s Q&A section, members can pose questions, give feedback, and communicate directly with entrepreneurs and other investors.
Members cooperate on due diligence, mentor companies, attend events, and work with our team to promote the NEXUS initiative. It is most helpful when NEXUS members contribute their domain expertise and general experience to evaluation of potential transactions. The NEXUS administrative staff is available to membership for guiding workflow and facilitating communication.
Applicants who successfully obtain angel funding typically demonstrate certain key traits, including:
A STRONG MANAGEMENT TEAM
An ideal management team has relevant experience and domain expertise. They understand industry dynamics, are coachable, and are fully committed to the business. Teams should have a focused plan and should be able to demonstrate that they have the ability to execute. Management teams should utilize pro forma financial statements to set realistic goals and benchmarks, and they display a history of achieving projections and obtaining critical milestones. Investors like to see that teams are realistic about their company’s critical risks and valuation. If the team is incomplete, it should recognize who is needed to complement their knowledge, skills, and abilities.
TECHNOLOGY OR COMPANY THAT SOLVES PRESSING NEEDS
Regardless of industry, teams must demonstrate market validation, ideally by earning revenue and identifying a strong sales pipeline. The company’s target customers’ adoption rate and feedback should be favorable. Teams should be realistic about their business concept and should have a plan to efficiently maximize growth.
Teams should be able to convincingly explain their plan to achieve a sizable market share in a well-defined niche. They should demonstrate a realistic vision of their market and a cost-effective sales strategy to scale the business.
HIGH GROWTH POTENTIAL
Businesses should have a large addressable market and a credible strategy for achieving growth including supporting data. Teams should understand their competitive landscape and barriers to entry. A strong supply chain is also required in order to cultivate a high growth business.
SUSTAINABLE COMPETITIVE ADVANTAGES
Ventures should demonstrate that they are unique and superior as compared to competitors – often by replacing or improving current offerings. The team should understand how to articulate their benefits and advantages to customers.
The company’s competitive advantage must be sustainable. Examples: a “blocking patent” (keeps out competition); a vanity number (1-800-WEDDING); a domain name (buy.com); “first-to-scale” advantage (can show they already are the first company to achieve some scale in a new niche).
EXCEPTIONAL RETURN ON INVESTMENT
The capital required should be in line with the potential for success and the reward for investors. Teams should be realistic about their company’s valuation and should understand potential exit strategies. Because angel investors assume a great deal of risk by investing in early stage companies, applicants should be able to make a compelling case for a 10x or better return on investment within 5 years. Ideal businesses lack capital structure issues and skeleton problems.
The company should be able to demonstrate that they have favorable timing and have the ability to make money.
USE OF FUNDS
The team should have a focused plan to maximize the investment’s impact on efficient growth. The mentoring, networking, and capital sought should propel the company to a critical inflection point and should materially increase its valuation.