Below is a checklist that will help you to decide if and when you should seek an angel investment from W2.

The W2 Fund invests between $25,000 and $250,000 in early stage companies.  We are seeking companies with an established proof of concept and are poised for scalability.  The Willamette Angels have invested across multiple industries but have a core strength in technology, consumer products, food and beverage, media, internet/web services and mobile.

While the merits of each investment will vary, we evaluate your venture according to the following criteria:

Management Team:

As angel investors, we invest in teams first and products/ideas second. Is your management team experienced, driven, coachable and willing to collaborate on decisions with outside investors and partners? We look for teams of high-quality entrepreneurs with a track record of leadership and performance – either in the company’s specific industry or in prior entrepreneurial ventures. We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. As we will be working together as partners, your team’s credibility is essential. In addition, your team must be open to and comfortable with receiving input provided by experienced angel investors.

Market Opportunity:

We invest in solutions that address major market problems for significantly large addressable target markets. Do you have an identifiable market segment? Is there a demonstrable and significant demand for your solution?  Have you launched an MVP (minimum viable product)? Is the projected spending in your product category large and growing?

Go to Market Strategy:

Do you plan to achieve widespread market penetration for your products and services? How will you do this as efficiently as possible? Will you create an internal, direct sales team, or will you rely on external channel partners? Have you conducted market research that backs your business development strategies?

Financials:

We are looking for well thought out, logical and reasonable revenue plans.  Most financial plans do not achieve their revenue projections, so we will evaluate plans under the assumption of a revenue shortfall.  Consequently, gross margin and cash positions are critical variables to manage.

Valuation:

We typically invest in pre-money valuations that are below $5 million. A key reason for this is that it gives the investor the potential for a nice return at a modest exit valuation. It also allows for some protection against future round dilution.  Additionally, it’s in the entrepreneur’s best interest to have the valuations of subsequent rounds increasing and avoiding bad will and anti-dilution ratchets.

Use of Funds:

Funds must be used to accelerate your company’s achievement of key milestones that increase the company’s value. We often fund activities that include research and product development, building a sales and marketing infrastructure and hiring key team members.

Scalability:

We look for companies that can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea. Do you have a strategy to achieve multiple sources of revenue?

Competitive Advantage:

Have you identified potential competitors? Do you understand your company’s differentiation points? Will true barriers to entry help your company to maintain a competitive advantage? Your company should have some proprietary features that distinguish you from potential competitors or provide barriers to entry that prevent other companies from capturing your customers with a similar offering. Attributes that convey competitive advantage include intellectual property protection, exclusive licenses, exclusive marketing and distribution relationships, strong brands, scarce human resources (i.e. knowledge and skills), and access to scarce raw materials. Have you protected your intellectual property? Have you performed an exhaustive search to be sure that you are not infringing on patents or trademarks held by others?

Technology: 

We prefer to invest in first-of-a-kind new ideas, rather than incremental enhancements to common products and services. Is this a nice-to-have, or a need-to-have product or service?  Further, we avoid science projects that don’t demonstrate a clear path to commercialization. Any breakthrough innovation must be accompanied by a strong business plan.

Exit Strategy:

Our members typically seek returns of ten to twenty times their initial investment, depending on the riskiness of the plan. This level of return on investment is essential due to the high risk and likelihood of failure among early stage ventures. Thus, a clearly articulated exit strategy – how angel investors will extract such returns – is essential. For example, do you plan to sell the company to an established corporation in your industry? Or will your exit be through subsequent rounds of financing – venture capital or the public markets? Do you have any comparables to show your potential acquirers are interested in your space?

 

SUBMIT YOUR VENTURE TO WILLAMETTE ANGELS “W2 FUND”

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