To say I am not a fan of Convertible Notes or SAFE as a form of investment would be somewhat of an understatement. The big reasons I see for Convertible Notes being so damaging is that Angels using Notes rarely get their agreed terms of conversion. One of the most common cram downs on Angels…
Having seen many Angel investors be washed out by dilution and the preferences held by later investors into a company, particularly VC’s, I have adopted a stratey of looking for capital efficient investments (that won’t need VC to exit). These tend to be B2B business with some real IP. Its necessary to develop some sales…
Had a call from an investor friend whose angel group (not in the USA) were looking at a deal where the company had presented them with a SAFE agreement that they wished to form the legal basis if the transaction. This on the basis, according to the company, that “Its the way they do things…
There are three variable that drive the financial return for Angel investors (and founders): Pre-Money Valuation. Subsequent Dilution. Exit Amount. Instinctively founders seek as high a valuation as possible. It must be a ‘good thing’ to ‘give away’ as little equity as possible. Typically, founders will seek to find comparatives to justify their valuation proposals.…
According to the, the American Angel Survey[1] the typical angel investor has a portfolio of just seven companies. This despite a general perceived wisdom and ‘best practice’ requires that they should spread their money across at least ten different companies. The probability is that any one investment will result in a loss. Data suggests that as…
The biggest driver of valuation is not the quality of the management team or the size of the market. There should influence the investment decision in a binary manner – if you don’t have a good team, or a big market, you don’t reduce the valuation – you just DON’T DO THE DEAL! The biggest…
I was asked recently to provide some feedback on possible valuation benchmarks for a company raising its first external equity funding. Of course the funder has been looking at valuations from Silicon Valley. Largely one suspects because they are larger than the local ones in Latvia. The use of comparatives is a sensible way to…
I have received some comments from experienced Angel investors challenging whether the use of the word “training” is appropriate in the context of developing business Angel investment skills and knowledge. It is suggested that the use of the word may actually be off putting to individuals who regard themselves as extremely successful business people. However,…
Investment by LINC (the Scottish Angel Capital Association) members increased from £7.84m (41 deals) to £15.27m (58 deals) in the first six months of 2020 compared to the same period in 2019. In addition to the £15.27m invested in the period by LINC members, their deals attracted an additional £14.60m from private co-investors, and £11m…
The key role for “training” in emerging markets should be to provide nascent Angels with an understanding of tactics to deal with high risk, and thus confidence to join with others in making their first investments. Technical training (Valuation, Financial Modelling, Due Diligence etc.) is a necessary but insufficient component of building this confidence. More…
Nelson has been a Business Angel investor for over 20 years and is recognized internationally as a thought leader and public speaker.
Nelson’s extensive experience allows him to blend a practical application of investment and company growth with an understanding of public policy at an international level.