Press Release activities at Ystrategies Corp (YSTR). Shirley Gee is Senior Venture Partner with firm. Members on YSTR'sScience and Technical Advisory Board are referrals from Shirley Gee's network. See: www.ystrategies.com
Our friends from Shanghai toured Silicon Valley on November 2, 2016 bringing their business network TV to film. Here's feature on their visit broadcasted in Shanghai, Singapore and Hong Kong on January 15, 2017. See interview in Mandarin: http://mp.weixin.qq.com/s/Ehc2XQpke_XJlT6OlKM6vQ
For our friends at the Lawrence Livermore National Laboratory and iGate and our colleagues from the Taiwan’s Industrial Research Technology Institute and Taiwan’s Cornerstone Intellectual Property Foundation. Greetings also to the La Salle Barcelona students from the Executive Master of Business Administration Exchange Program at Saint Mary's College, Moraga, CA. We hope you found Lecturer Shirley Gee's presentation, "Entrepreneurship - Building Your Capital Runway" ©, informative and helpful. Understanding what investors want is the first step to successful entrepreneurship. Here are essential elements from the presentation for your review.
Shirley Gee joins Equal Rights Advocates
For an interesting insight into the Silicon Valley eco-system, take a look at Samir Kaji’s independent Blog: http://pevcbanker.com/author/samir-kaji/ . Mr. Kaji is a Senior Managing Director at First Republic Bank in Menlo Park and previously with the Silicon Valley Bank.
“RETURNS TO ANGEL INVESTORS IN GROUPS”
Robert Wiltbank, Ph.D., Willamette University, Wiltbank@willamette.edu and Warren Boeker, Ph.D., University of Washington, WBoeker@u.washington.edu
Highlights from Report:
Factors Impacting Angel Investor Outcomes
- 1. Due diligence time: More hours of due diligence positively relates to greater returns.
- 2. Experience: An angel investor’s expertise in the industry of the venture in which they invest also is related to greater returns.
- 3. Participation: Angel investors that interacted with their portfolio companies at least a couple of times per month by mentoring, coaching, providing leads, and/or monitoring performance experienced greater returns.
- 2.6x within 3.5 years.
- 27% of Internal Rate of Return IRR
- On exit, 52% returned original capital invested
- 7% achieved returns of 10X
- Between period 1997-2007, 2% of VC money went to seed stage companies.
Source of Report
Seed and start-up’s were source of conclusions. 45% of them had no revenue at time of investment. Only reviewed angel investors who were members of angel organizations; not individual angels.
Returns To Angel Investors
In addition to this historical picture of group angel investor outcomes, some strategic questions also reveal useful patterns. For example, does the extent of due diligence matter in relation to the outcomes experienced?
Does the extent of angel investor interaction with the venture relate to the outcomes?
Is it more effective to put capital into follow-on investments in existing deals, or into a larger number of ventures.
Patterns in the distribution of outcomes can shed some light on the relationships these choices have on group angel investor returns.
Due Diligence Time
To assess the role of due diligence, each respondent was asked how many hours of due diligence he or she performed for each investment. Angel investors reported the median length of due diligence prior to investing was twenty hours. Enough investors went far beyond the median that the mean (average) length of due diligence was sixty hours per investment. For comparison, formal venture capitalists may spend several months on due diligence, though the actual number of hours spent working on diligence for a single venture investment is less clear. It is worth noting that length of time may not be the only important factor in due diligence; future research may explore methods to assess the quality of due diligence rather than just the quantity.
Spending time on due diligence is significantly related to better outcomes. Simply splitting the sample between investors who spent less than the median twenty hours of due diligence and investors who spent more shows an overall multiple difference of 5.9X for those with high due diligence compared to only 1.1X for those with low due diligence. Sixty-five percent of the exits with below-median due diligence reported less than 1X returns, compared to 45 percent for the above-median group. The differences become more stark when comparing the top and bottom quartilesof time dedicated to due diligence. The exits where investors spent more than 40 hours doing due diligence (the top quartile) experienced a 7.1X multiple.
Median: 20 hours
- Avg. 26% involved more than 40 hours
- Overall Multiple for High Diligence 5.9X (4.1 years)
- Overall Multiple for Low Diligence 1.1X (3.4 years
- Return twice as high if connected to investors’ industry expertise.
Angel investors who interacted with the venture a couple of times per month experienced an overall multiple of 3.7X in four years. In contrast, investors who participated a couple of times per year experienced overall multiples of only 1.3X in 3.6 years.
Take VC Money? Yes? No?
The multiples for the companies that took venture capital funds were not significantly higher than for those that had no investment from venture capital firms.
Multiplier Ratio: VC Yes:VC No
- 1X Ratio 55:45
- 1X-5X Ratio 25:75
- 5X to 10X Ratio 65:45
- 10X-30X Ratio 55:45 (Fewer VC's in group)
- >30X Ratio 55:45