Angel investing: the Gust guide to making money and having fun investing in startups PDF
Preview Angel investing: the Gust guide to making money and having fun investing in startups
Praise for Angel Investing “AsanangelinvestorandalongtimefanofDavidS.Rose,Iwasdelightedtohear thathefinallycapturedhiswitandwisdominthepagesofabook.Davidisaborn teacher—clear-minded,witty,andprovocative,withamazingstoriestoillustrate everykeyideaandinsight.Thosegifts—aswellashisunsurpassedknowledgeof hisfield—areteachingmesomuchmoreaboutinvestingthanI’velearnedover theyearsdoingit!ReadeverypageofAngelInvesting.” —BarbaraCorcoran Realestatemogul,SharkTankstar,angelinvestor “Fromthesecreteconomicsofangelinvestingandthebestmethodsforfinding andpickingtomorrow’sbigwinnerstoproventechniquesforaddingvaluetoany businessyouinvestin,AngelInvestingprovidesreaderswitheverythingtheyneed toknowtogetstartedinthisfascinating,fun,andlucrativebusinessarena.” —DavidBach #1NewYorkTimesbest-sellingauthorofTheAutomaticMillionaire andStartLate,FinishRich;angelinvestor “Thisisthemostcomprehensiveandreadableguidetoangelinvestingeverwrit- ten. The chapter on valuation and expectations lays out a clear framework for understandingoneoftheleast-knownpitfallsintheangelworld.Anditsempha- sis on creating a win-win relationship with the entrepreneur is at the heart of being a long-term successful angel—and continuing to see the best deal flow. Irecommendthisbooktoanyoneeventhinkingaboutmakingorreceivingangel investments.” —HowardL.Morgan FoundingPartner,FirstRoundCapital “Theworldofentrepreneurial start-upsiswherethemostexcitingandcreative action is happening in today’s business world, which is why I was a strong sup- porter of the JOBS Act of 2012. No wonder millions of people are wondering howtheycangetinvolvedasinvestors.There’snobetterplacetostartthanby readingDavidS.Rose’sAngelInvesting.” —U.S.SenatorCharlesE.Schumer SenateFinanceCommittee “David S. Rose’s Angel Investing is the best book on early stage investing ever written. His method of step-by-step explanation is better than any I have read in 20-plus years of professional angel investing. I will recommend this to every seriousentrepreneurseekinginvestmentasrequiredreadingbeforetheeffort.” —DaveBerkus ChairmanEmeritus,TechCoastAngels; authorofBerkonomics “Onlyanangelwhohasbackedmorethan90start-upscouldpossessthemastery toprovidesuchilluminationintoourcraft.David’scandorandinsightswillattract moreinvestorstothisentertainingandlucrativeactivitysoessentialtoeconomic growth.” —JohnHuston FounderandManager,TheOhioTechAngelFunds “AngelInvestingisanengaging,easyread,fullofrealstories,hardnumbers,actual cases, and a whole lot of good advice. David S. Rose brings tons of real-world knowledgetothesubjectthatmakesthisrequiredreadingforeverynewangel.” —TimBerry AuthorofBusinessPlanPro; entrepreneurandangelinvestor “DavidS.Roseisoneofthemostinsightfulthinkersabouttheangelandventure investmentmarkets.It’srarethataninvestmentleaderwithsomuchexperience and success takes the time to share (systematically!) his knowledge so openly. Whetheryouarenewtoangelinvestingorsomeonewithlotsofexperience,you willlearnatonfromreadingthisbook.” —MarcBodnick Cofounder,ElevationPartners “DavidS.Rosehasdistilledhisvastknowledgeintoaneasy-to-readyetcompre- hensiveguidetoangelinvesting.Itisamust-readforallangelinvestorsaswellas forentrepreneursseekingangelfinancing.” —JeffreySeltzer ManagingPartner,PierceYatesVentures; FormerDeputyChairman,CIBCWorldMarkets; angelinvestor “Anyonewithacheckbookcanbeanangelinvestor,butittakesinsighttodoit well.DavidS.Rosehaswrittenaterrificnewbookthatwillhelpwould-beangels makemoney,ratherthanloseit.Fromexplainingthevalueofdiversification,to tips on evaluating deals, to offering up plans to attract good deals, Dave’s book willhelpyoumovefromamoney-losingamateurtoamoney-makingprofessional angel.Andifyou’reanentrepreneurlookingforangelmoney,youshouldreadthis book,too.Itwillhelpyouunderstandwhatknowledgeableangelsareseekingand howtheywillevaluateyou.” —ScottShane AuthorofFool’sGold?TheTruthBehindAngelInvestinginAmerica “Angelinvestingisanewglobalassetclass,withcross-borderinvestmentsinearly stage companies fueling worldwide innovation. David S. Rose’s Angel Investing shouldbemandatoryreadingforeverycurrentandprospectivebusinessangel.It bringsintoonereadablevolumeeverythingyouneedtoknowtojointhestart-up revolution,andclearlytakesitsplaceasthenewstandardtextbookforourindus- try.IalwaysrecommendDavid’sclassicTEDtalkon‘HowtoPitchaVC’toevery entrepreneur.NowIwillrecommendthisbooktoallexistingandpotentialangel investors!” —PauloAndrez President,EBAN,theEuropeanBusinessAngel andEarlyStageInvestorsNetwork “Lotsofbooksexplainfundamentaltheoriesofinvesting.DavidS.Rose’sAngel Investingdoes,too—buthealsodescribestheon-the-groundrealityofitsfrustra- tionsandexhilarations,andhedoesitwithcandor,intelligence,andflair.This bookisamust-readforanyoneinterestedinthisrapidlygrowingassetclass.” —JoanFinsilver FormerManagingDirector,BreanMurray&Co.; angelinvestor “I only wish I’d had a translated edition of David’s observations when training overseas angels about the art of mentor capital. David tells it like it is, shares real-lifestories,andpackagestheentireprocessinonebook.Iwillencourageall myemergingangelstoreaditbeforewritingtheirfirstcheck!” —JohnMay ChairEmeritus,AngelCapitalAssociation; coauthor,EveryBusinessNeedsanAngel “Angel Investing by David S. Rose is a how-to-invest book that is not merely informativeandauthoritative,butpracticalandenjoyabletoread.Basedonhis many years running a reputable, leading angel group and his own portfolio of over 90 angel investments, David tells it like is. He covers a great many things that other books don’t discuss, like ‘building your reputation’ and ‘the financial lifeofastart-up.’IespeciallyvaluedreadingChapter6andthe‘signsofaweak founder’:thelonglistof‘unrealistics’wasspoton!Readingthisbookislikesitting acrossfromDavidandlisteningtohimsharehislessonsfromhisstoriedcareeras anangel.” —CatherineMott CEO/Founder,BlueTreeAlliedAngels; PastChairmanoftheBoard,AngelCapitalAssociation “DavidS.Roseexplainsthemysteriesofangelinvestinginaclearlywritten,com- prehensiveguidefullofgreatinsightsandstories.Hehaspackedthisbookwith everythingyoucouldpossiblywanttoknowaboutangelinvesting,gatheredfrom his years of hands-on experience and research as one of the most active angel investorsandangelevangelistsinthecountry.Icanattestthatthisbookiswhat DavidhasbeenpracticingandpreachingsinceImethimin2002.” —ThomasBlum Partner,GCAndersenPartners;angelinvestor “Superb!AngelInvestingbyDavidS.Roseiswithoutadoubtoneofthebestbooks Ihavereadonthesubjectofangelinvesting,venturecapital,andentrepreneur- ship.Itiseasytoreadandcompletelycaptivating—David’sreal-worldexperience iscompelling.Heshowsfirsthandhowtotakethecasualsportofangelinvesting toawholenewlevel,andmakearealbusinessoutofit.Thereisaworldofdiffer- encebetweenmanagingasingleinvestmentandmanagingawholeangelportfo- lio.Thisuniquebookaddresseseverything,fromthestep-by-stepprocessofdue diligence, to negotiating win-win deals, to managing the most intangible—but most important—part of angel investing: your reputation. From every perspec- tive,thisisthebookthateveryprospectiveangelshouldreadbeforewritinghis orherfirstcheck.” —DavidFreschman ManagingPrincipal,InnovationVentures; CEO,EarlyStageEast;FoundingMember, ARCAngelFund “DavidS.Rose’sbookisgreatfunandamust-readforangelsandwould-beangels. Fornewbiesitgivesaveryclearandsimpleexplanationofthedynamicsofangel investing, with a number of real-life anecdotes that drive the points home and makethemunforgettable.Forallinvestors,itgivesagoodsenseofwhetherthis assetclassissomethingworthpursuingandwhetheronehastherightskillsand attitude for making angel investments. Whether you are already an investor or arelookingtobecomeone,thisbookcoversindetail—andinanonintimidating fashion—allyouneedtoknowtostartputtingmoneytowork.Readitandstart investing!” —AlessandroPiol CofounderandPartner, AlphaPrimeVenturesandVendantaCapital; President,TiENewYork “Whether you are an angel investor or an impact investor, this riot of informa- tionandstorywillelevateyourgame.Davidtakesusonasometimesscary—but oftenhilarious—rompthroughtheinsandoutsofangelinvesting.Readitwith caution,asthisbookisaddictive!” —LisaKleissner Cofounder,Toniic,andCofounder,Social-ImpactInternational President,KLFelicitasFoundation “AsDavidS.Rosepointsout,angelinvestingcanbe‘asmuchfunasitispossible tohavewithyourclotheson.’Butitisn’tforthefaintofheart.Rose’sterrificbook providesasweepingguideforanyoneinterestedinmasteringtheartoffunding start-ups.” —JeffreyBussgang AuthorofMasteringtheVCGame “David S. Rose’s Angel Investing is a must-read for successful businesspeople on whytheyshouldbeangels:yougettouseyourexperiencesandcapitalformaxi- mumeffectandhaveablastdoingit.Itisalsoamust-readforentrepreneurson whyangelsareimportantandwhattolookforfromangelinvestorsthatgoeswell beyondthefunding.” —BradHiggins ManagingPartner,SOSVentures FormerCFO,U.S.DepartmentofState “Early stage investing involves both art and science, and David S. Rose’s Angel Investing brings together the best of both worlds. I’ve known and coinvested withDavidformanyyears,andhe’soneofthemostknowledgeableandstraight- shootingpeopleI’vemetinthebusinessofearlystagefinancing.Hisbookisthe ultimatehow-toforthisrapidlyexpandingfield,writtenbysomeonewhoreally knowswhathe’stalkingabout.” —ChrisFralic Partner,FirstRoundCapital “DavidS.Rosehaswrittenacomprehensive,practicalguidetoangelinvesting. Itisanexcellentresourceforanyoneinterestedintheworldofstart-upfinance. AngelInvestingdistillsthetumultuous,esotericworldofstart-upinvestingintoa clear,paint-by-numbersguideforwould-beparticipantsandinterestedobservers.” —ThatcherBell ManagingDirector,DraperFisherJurvetsonGothamVentures “For newly minted angels, Angel Investing is a must-read; for existing angels, a greatrefresher;forthoseinneedofinformationandentertainment,DavidS.Rose packagesthearcaneintoaccessiblelanguage—andwithasenseofhumorthatwill haveyoureadtheentirebookinonesitting.Thanksalot,David—nowexisting angels will have more competition sourcing great deals. Where were you seven yearsagowhenIneededtoreadthis!?” —JosephFerrara Founder,ApparelGroupInternational,angelinvestor “DavidS.Rosehaslongbeenastapleintheangelworldwithareputationforthe highestintegrity.Whilemanywillconcludethistobeamust-readbookforthose consideringangelinvesting,I’dalsorecommendthisbooktoeveryentrepreneur before going out looking for capital. For the entrepreneur, David will bring you into the mind of potential investors and help you fashion the content of your pitchandthebestwaystobepersuasive.” —AndrewWeinreich Serialentrepreneur,inventorofsocialnetworking, FounderofSixDegrees,Joltage,IStandFor,MeetMoi,Xtify “DavidS.Roseisoneparticonicinvestor,oneparteccentricentrepreneur,and one part stand-up comic. Angel Investing is required reading for anyone who is thinking about becoming an angel or raising money with them. David answers allthequestionsaboutinvestingthateveryoneisafraidtoadmitthattheydon’t reallyget…insimple,straightforward,anddownrightdelightfulprose.Theresult is an oxymoron: an entertaining textbook that is actually understandable and jam-packedwithinformationyoucanreallyuse.” —PattyMeagher Founder,StamfordInnovationCenter “AsanentrepreneurinwhomDavidS.Rosehasinvested,Ihaveseenhimliveby theruleshesharesinthepagesofAngelInvesting.Fromaseedideatoaprofitable company,hehasprovidedinvaluablecounselandthoughtfulsupportduringthe oftenchoppywatersofastartupjourney,bringinghisuniquepassionandenthu- siasm,informedbyintegrityandexperience.Inthisbookhelaysouttherulesof theroadformakingsmartearly-stageinvestmentsandgiveswould-beinvestors the tools to define their goals in this emerging asset class. Whether you are an investororanentrepreneur,Davidisunquestionablytheguideyouwanttohave atyoursidethroughoutyourjourney.” —StevenRosenbaum FounderandCEO,MagnifyNetworks; Entrepreneur-at-LargeoftheCityofNewYork; AuthorofCurationNationandCurateThis! ANGEL INVESTING THE GUST GUIDE TO MAKING MONEY AND HAVING FUN INVESTING IN STARTUPS DAVID S. ROSE Coverimage:DavidNoles Coverdesign:EdDavad Copyright©2014byDavidS.Rose.Allrightsreserved. PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey. PublishedsimultaneouslyinCanada. Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinany formorbyanymeans,electronic,mechanical,photocopying,recording,scanning,orotherwise, exceptaspermittedunderSection107or108ofthe1976UnitedStatesCopyrightAct,without eitherthepriorwrittenpermissionofthePublisher,orauthorizationthroughpaymentofthe appropriateper-copyfeetotheCopyrightClearanceCenter,222RosewoodDrive,Danvers,MA 01923,(978)750-8400,fax(978)646-8600,oronthewebatwww.copyright.com.Requeststothe PublisherforpermissionshouldbeaddressedtothePermissionsDepartment,JohnWiley&Sons, Inc.,111RiverStreet,Hoboken,NJ07030,(201)748-6011,fax(201)748-6008,oronlineat www.wiley.com/go/permissions. LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveusedtheirbest effortsinpreparingthisbook,theymakenorepresentationsorwarrantieswithrespecttothe accuracyorcompletenessofthecontentsofthisbookandspecificallydisclaimanyimplied warrantiesofmerchantabilityorfitnessforaparticularpurpose.Nowarrantymaybecreatedor extendedbysalesrepresentativesorwrittensalesmaterials.Theadviceandstrategiescontained hereinmaynotbesuitableforyoursituation.Youshouldconsultwithaprofessionalwhere appropriate.Neitherthepublishernortheauthorshallbeliablefordamagesarisingherefrom. Forgeneralinformationaboutourotherproductsandservices,pleasecontactourCustomerCare DepartmentwithintheUnitedStatesat(800)762-2974,outsidetheUnitedStatesat(317) 572-3993orfax(317)572-4002. Wileypublishesinavarietyofprintandelectronicformatsandbyprint-on-demand.Somematerial includedwithstandardprintversionsofthisbookmaynotbeincludedine-booksorin print-on-demand.IfthisbookreferstomediasuchasaCDorDVDthatisnotincludedinthe versionyoupurchased,youmaydownloadthismaterialathttp://booksupport.wiley.com.Formore informationaboutWileyproducts,visitwww.wiley.com. ISBN978-1-118-85825-7(cloth);ISBN978-1-118-90121-2(ebk); ISBN978-1-118-90113-7(ebk) PrintedintheUnitedStatesofAmerica 10 9 8 7 6 5 4 3 2 1
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