Funding and Expertise
Sydney Angels offers entrepreneurs an efficient path to capital, expertise and experience from its members, who are backed by the $10M Sydney Angels Sidecar Fund.
Sydney Angels considers early stage deals that are seeking less than $1m at valuations less than $5m. However, the typical investment round has been $300k at pre-money valuations of $750k-$2m.
Funding Application Process
Applications for funding are made through our online deal room, Gust.com. Once you have created your Gust profile, you will need to share it with Sydney Angels and complete a couple more questions.
To assist with your application we have created a brief overview of the questions that you will be asked to complete in your Gust profile, it is available here.
Sydney Angels conducts an investment cycle every two months. Applications received prior to the deadline are reviewed by the selection committee and up to six are selected to present at a Screening Meeting. This consists of a ten minute pitch, followed by ten minutes of questions. Following the pitches, up to three businesses are selected for the Members Meeting. The format of the Members Meeting is a ten minute pitch, followed by ten minutes of questions and then you will have the opportunity to talk to individual Sydney Angels members.
Valuation of an early-stage business is more art than science. It is one of the key issues that divide investors and founder teams seeking funding. Although our maximum valuation accepted at Sydney Angels is $5m, the typical angel investor looks for valuations under $2m and many are negotiated to under $1m. The high risk, likelihood of dilution and typical time to exit, combine to drive valuations to a level that gives the investor the chance of a realistic return.
The rule of thumb that is often applied is that only exceptional opportunities are worth more than $2m. A business that has customers, for a differentiated product, with an exciting growth trajectory, in a very large market, run by a team that has shown it can execute, could be valued at $1m-$2m. Businesses worth under $1m, are those that are still in concept stage or prototype, probably need additional skills in the team to drive the business and/or need further market validation.
In order to maximise your chances of getting investment, you need a clear, concise pitch that captures the essence of the opportunity and excites investors enough to ask for more information. There is a wide range of information available about what is required to create a good pitch. We have summarised some of our thoughts below and made a video on the subject – How To Pitch To Angel Investors.
If you are invited to pitch to Sydney Angels, you should consider the following structure for your presentation:
- Problem and solution
- Market and opportunity
- Business model / sales & marketing strategy
- Investment Proposition
When addressing the above areas you might like to consider the following questions:
- What problem are you trying to solve? Why does the world need this? (how painful is the problem?)
- What is the solution you are offering to the market? What are the customer benefits?
- Who are the target customers with this problem? How many of them are there? What price would they pay for your solution? How do you know?
- Who is the competition? What are the substitutes? Why will customers choose your solution over the alternatives? How do you know?
- Who is the team responsible for the solution and achievements to date? What are their skills and experience relevant to success moving forward?
- What is the plan and milestones for the next 3-5 years, including providing an exit for investors?
- How much capital is required to implement the plan? What activities would funds be used for? What milestones can be achieved with this funding? Is any additional funding required to achieve breakeven or the exit timeframe?
- Cash flow projection for the next 3-5 years from today, assuming funding asked for is provided and the plan is implemented successfully. If available, also include actuals for most recent full financial year and year-to-date, including previous capital raised.
- Structure of the deal and terms offered to investors in this round. Specify pre-money valuation, total amount of capital sought this round, amount sought from Sydney Angels, and cap table before and after this round is closed.
We also suggest that you use no more than 10 slides and that keep the presentation at a high level. Greater detail can be discussed during Q&A to suit the audience. Remember the objective of the presentation and Q&A is to get the angels sufficiently interested that they want to continue the conversation with you and start due diligence.