OAA Wireless Cluster Feb 10

Slide1: 

Ottawa Wireless Cluster February 10, 2005

Agenda: 

Agenda Why OAA ? Alliance Overview Process Q & A

What is the problem?: 

What is the problem? Seed stage companies typically require $0.5 M to $2M to reach cash flow positive or progess to become VC financeable Typically requires a number of Angels to pool the required amount of seed financing Finding the ‘number’ of Angels willing to invest is extraordinarily inefficient Finding the investable companies is extraordinarily inefficient for individual Angels

Entrepreneur View: 

Entrepreneur View Angels typically invest $25K per deal Company needs $0.5M to $2M Need to find 20 to 80 angels

Investor View: 

Investor View Approximately 600 hours of effort to close a deal Studies show that portfolio should have at 7 - 10 companies 40 Business plans reviewed 80 hours 10 Detailed screening 120 hours 3 Detailed due diligence 300 hours 1 Deal creation 100 hours

Our Experience: 

Our Experience Groups like Purple Angel and Band of Scoundrels work, but still need to leverage a larger pool of Angels Significant effort to de-risk investments Deal flow Due diligence Deal construction Ongoing advising and helping Entrepreneurs spend too much effort raising capital not focusing on their core business

OAA Solution: 

OAA Solution The OAA will address 5 risk factors: Size and structure of seed round Due diligence Company formation, guidance and governance VC partnerships Portfolio diversity

Structure: 

Structure The Ottawa Angel Alliance is a “Not for Profit Corporation” Not a fund Angels / VCs invest directly into companies

Managing Angels: 

Managing Angels Laurie Davis Rainer Paduch Irving Ebert Rod Anderson

Board of Directors: 

Board of Directors Irving Ebert Managing Angel Ken Lawless CEO Ottawa Life Sciences Council Rick Norland Finance, IT, Life Sciences Jeffrey Dale CEO OCRI Laurie Davis Angel Member

Membership: 

Membership 26 Paid Up Angel Members Handful of others ‘committed’ ~30 others ‘interested’ Venture Capital Members BCE Capital Vengrowth Ventures West

Angel Roles & Responsibilities: 

Angel Roles & Responsibilities Good faith effort to do 2 X $25K investments Due diligence expertise (2 per year) Attendance at 50% of meetings Refer deals Participation in governance Alliance Investee companies Trustee of voting trust

VC Roles & Responsibilities: 

VC Roles & Responsibilities Participation in seed rounds “Letter of Intent” level of commitment to Series A Access to research to support due diligence Attendance at 75% of meetings Refer deals

Mgmt Roles & Responsibilities: 

Mgmt Roles & Responsibilities Detailed management of deal flow Detailed due diligence Find and manage subject matter experts Deal structure & terms Company guidance and governance Links to other angel organizations Administration of the alliance

Compensation Model: 

Compensation Model Active angels are entitled to compensation Source – investee company (after closing) 3% cash, 3% warrants Use of funds (guideline) 1% cash, 1% warrants to Champion 1% warrants split among very active angels Remainder split among Managing Angels Compensation to angels is structured as a consulting agreement between the angel and the investee company.

Compensation Model (con’d): 

Compensation Model (con’d) Administration of the alliance Source - dues and sponsorship Use of funds Administration Managing Angel expenses (max $1000/month)

Investment Process: 

Investment Process New Prospect

Investment Committee: 

Investment Committee Decisions whether a company proceeds to Member presentation Makeup 4 Managing Angels (Permanent) 1 VC Member (6 month rotation) Marc Wickham 2 Members at Large (6 month rotation) Scott Simpson Rick Norland

Voting Trust: 

Voting Trust Objectives Collect shareholder votes into one larger voice Provide greater visibility into investee company by the minority shareholders Speed up shareholder decision making Simplify shareholder voting to meet the needs of later VC investors

Prospect Funnel: 

Prospect Funnel

Target Company: 

Target Company Not rigidly formulated Ottawa area preference in geography Life Sciences / IT / Telecommunications Management Team Important

What we look for: 

What we look for Management Domain Expertise Problem / Pain Market / Size / Share Product / Offer / Road Map Differentiation / Barriers to Entry Target / Lead Customers Business Model / Pricing / Margins Channels / Path to money Competition / Positioning Financials Total Financing Requirements Use of Proceeds Valuation Exits for Investors

Thank-you: 

Thank-you Questions ?