FAQ
- What is Angel Investing?
- What is the pre-money valuation?
- What is the post-money valuation?
- What is dilution?
- An example of how valuation works.
- What are the Montreal Angels looking for in terms of investment opportunities?
- Do I meet the qualifications for application?
- How do I apply for funding?
- What must be included in my application?
- What language must my application and business plan be in?
- Where can I find the application form?
- What must be included in my business plan?
- How do I submit my application form and business plan?
- How do I know whether my application has been accepted?
- How can I contact the Montreal Angels for further information?
Overview of angel investing:
Angel Investors are individuals who invest a portion of their wealth in early-stage companies. Due to the high-risk nature of such investments, angel investors can obtain a higher returns with these investments than with traditional investment vehicles. Angel investors often provide more than just capital however, by contributing their time, experience, and business contacts to further the company goals. Angel investment can be used as an alternative to Venture Capital, or as a way to obtain investment at the pre-VC stage. Some key concepts you should be familiar with are described below.Key concepts:
Pre-money valuation: The pre-money valuation is quite simply, the dollar value ascribed to your company before a round of outside investment is made. This might include amounts for intellectual property owned, assets, investment made to-date, the dollar value of time spent on R&D to-date, and other items.Post-money valuation: The post-money valuation is the pre-money valuation plus the investment. Once the investment has been made in the company, those funds are added to the value of the company.
Dilution: Dilution refers to the reduction in the proportion of ownership due to bringing new investors on board. Dilution occurs at each round of investment.
A simple example:
- During investment round #1, Company X has a pre-money valuation of $6000 and is looking for an investment of $4000. The post-money valuation would be $10,000 with founders holding 60% of shares and Investor1 holding 40%.
- During investment round #2, Company X has a new pre-money valuation of $40,000 the company is looking for an additional $10,000 of investment. The post-money valuation would be $50,000. Investor2 (who is putting up the $10,000) would then own 20% of the shares, Investor1 would own 32% of the shares (40% x 80%), and founders would own 48% of the shares (60% x 80%).
What are the Montreal Angels looking for in terms of investment opportunities?
We are interested in funding software or high-tech start-ups located in Montreal and other areas. We are looking for companies with a good product concept, a definable and significant target market, unique technology, a dedicated and experienced management team, and potential for profit. Interested companies should have already completed some development work on their product(s), have written a comprehensive business plan, and have some initial financial projections.Does my company meet the qualifications for application?
Use this checklist to see if your company meets the requirements for application:- Industry: Your company must be in the software, hosted application, Internet or high-tech industries.
- Funding sought: You must be looking for funding of less than $5,000,000 in the aggregate. Our group would invest less than $1,000,000 and can invest seperately or alongside other investors.
- Development stage: You must have already completed a significant amount of development work on your product. It does not need to be complete, but must be well beyond the conceptual stage. At least some form of proof of concept is desired.
- Required Documents: You must have written a business plan that covers the required information as outlined below. You must also download and complete the short application form.
How do I apply for funding?
If you are an entrepreneur and you wish to seek funding from the Montreal Angels, you can make your submission directly from our website. The process is as follows:- Download and complete the short application form. The form is 2 pages long and covers a few key aspects of your company. Please keep your answers succinct using the space provided. The form can be downloaded here in Microsoft Word format.
- Upload your application and your business plan. The upload form form is located here. Please upload your application and business plan at the same time, with a single form submission.
What must be included in my application?
You must submit both your business plan and a completed application form. Please make sure that your application is fully completed. Your business plan can be in your desired format, but must include certain required information. These business plan requirements are outlined here.What language must my application and business plan be in?
Your application and business plan may be in either English or French.Where can I find the application form?
The application form can be downloaded from here in Microsoft Word format.What information must be covered in my business plan?
Product:
- In depth description of the product(s) and detailed overview of functions and features.
- Customer pain (or problem the product is trying to solve from the perspective of the customer) and why it is significant. How do customers currently solve this problem?
- How far along are you in your development plan? How much more development is required (time and money) until you can bring a product to market?
- What are your biggest technological hurdles going forward
Market
- Which industries are you addressing (automotive, aerospace, medical, etc)?
- Market potential: What is the current size and growth rate of the market? How did you arrive at these numbers?
- Competitive advantages: What makes your products superior to what is currently available in the market?
- Competitors: Name your main competitors in the market, their products, strengths and weaknesses.
Sales and Marketing
- Product positioning (by industry, competition, etc).
- Customer acceptance (how are customers reacting to your product?)
- Sales and Marketing efforts so far.
Company
- Contact information for the company and management.
- The founders and management (background & experience). Short biographies or resumes.
- The current shareholders
- The idea: its origin
Financial Situation
- Financial statements if any, cash flow situation, financing so far, etc.
- Future financing plans: How much, how and by whom?
- Revenue/Profit-Loss Projections for the next 3-5 years
- First stab at pre-money valuation: What is your estimated pre-money valuation? How did you arrive at this number?
- Amount of investment sought and security offered: Convertible note, preferred shares, or common shares, and what percent of the company is on the table?
- Details of how the funds will be used.