The Angel Capital Association engages in numerous data collection efforts to determine the rate of expected returns from angel investments. This course provides an analysis of angel portfolio strategies that are designed to maximize returns/exits and minimize losses. Data is presented regarding the factors impacting returns on investment and internal rate of return. Topics covered include the importance of diversification, time to exit, investing in specific business verticals, determining the need for follow-on funding, and the role of angels in down markets.

Since start-up companies have a high failure rate, a key component to success as an angel investor is to learn the best practices of evaluating the critical risk factors inherent in any potential early stage investment. This course provides an in-depth exploration of both the risks and rewards of investing in early stage companies. The course covers in specific detail the major risk categories and provides insights into the necessary strategies to potentially mitigate these risks.  A case study exercise utilizing a Risk Canvas template provides participants with hands-on experience to uncovering and addressing risks.

Due Diligence is a process undertaken by investors and/or investor groups to determine whether or not to invest in a particular startup organization and is critical for both investors and the companies are prepared for a collaborative process.  This course covers the essentials of both the process of conducting due diligence and the various due diligence components. Participants learn how to weigh factors such as the expertise of the founding team, product-market fit, potential market size, proposed business model, legal and IP protections, etc.  The course also explains what might be potential due diligence deal killers which angel investors need to avoid.

A term sheet is a document that specifically outlines the terms and conditions of the agreement between investors and the startup organization.  This course provides clear, practical information on early-stage term sheets, focused on defining the various terms and conditions that an angel might review in a term sheet. During the course, participants will be led through the formation of a publicly available term sheet, enabling them to understand the term sheet definitions and overall construction and intent of this highly important document. The course also explores the various scenarios of how early stage term sheet conditions can be modified for follow-on investors in later stages of financing.  

Negotiating the current valuation of seed-stage startups at the time of investment is a critical component of developing term sheets.  Getting valuation right establishes a fair percentage of ownership for both investors and entrepreneurs and optimizes returns for investing angels.  This course introduces participants to startup valuation and demonstrates multiple valuation methodologies.  In addition to valuation methods, participants learn insights into the impact of stage of development, geographic location, business sector and the global economy on startup valuation. The program leaves attendees with an exercise to help hone their newly acquired valuation skills by using these valuation methods in appraising a case study company.

Exit strategies may be one of the most misunderstood aspects of angel investing and this course sheds a light on how angels and their portfolio companies can work together to achieve the most successful exits.  Value creation for angel backed companies is different than for lifestyle companies and the primary difference lies in how angel investors craft the exit strategy.  This course covers the various kinds of exits that might occur as a result of investing in a start-up company and how to prepare for each.  Additional course topics include gaining a greater understanding of what the drivers are for high exit multiples and how companies can build in value from the very early stage.   The course also presents details of the “Exit Strategy Canvas” that walks participants through the six key elements of exit strategy.  The exit strategy canvas is designed to clarify the variety of exit scenarios and how angels and founders can work towards mutual optimal outcomes.

Serving as a Director of an early stage angel-backed company is a serious responsibility. This course reviews the smart practices of forming boards, managing board meetings and serving as a Director—all with the goal of creating an effective governance structure for startups. Key topics include the legal obligations and risks faced by Directors, how to deal with conflicts of interest and how to navigate trouble zones (such as managing M&A) that occur during a company’s journey from initial investment through exit. Participants engage in a case study exercise which illustrates the impact (both positive and negative) that a Board structure might have in determining the success or failure of a start-up.

Designed as a follow-up to the Startup Boards Basics course, this course discusses additional topics related to serving on a startup board. Concepts to be covered include: the fiduciary obligations of Board members, the Board’s role in supporting additional fundraising, and the Board’s role in determining an exit scenario. The application of case studies and critical lessons learned are shared by course instructors to identify Board trouble zones and highlight the best practices of working with a Board.

A capitalization table is a formal document that lists all the securities in a company (both debt and equity) and the ownership percentages held by the start-up founders, employees, and/or investors. This course provides a step-by-step analysis of a capitalization table, with a perspective on gaining a critical understanding of how cap table construction can impact potential returns from both current and future rounds of funding. Through a combination of presentations, exercises, and case studies, course participants are introduced to common cap table mathematics. Among the important topics included are the impacts of: valuation, liquidation preferences, anti-dilution terms, convertible notes, and employee option pools and vesting.