Angel Investing

DAVID S. ROSE is a serial entrepreneur, Inc 500 CEO and one of the world’s most active angel investors. Described by Forbes as “New York’s Archangel,” by BusinessWeek as a “world conquering entrepreneur,” and by Red Herring as “patriarch of Silicon Alley”, David has founded or funded over 90 high tech companies. He is the founder and CEO of Gust, the international collaboration platform for startup financing used by over 50,000 accredited angel investors, 1000 angel groups and venture capital funds, and 250,000 entrepreneurs. Gust received the SIIA CODiE Award for Best Collaboration Solution in both 2012 and 2013, as well as the 2012 SWIFT/Innotribe Award as the world’s most innovative financial technology company.David is also Managing Partner of Rose Tech Ventures, an early stage angel fund; Founder and Chairman Emeritus of New York Angels, the most active angel group in America; and Associate Founder and Founding Track Chair for Finance, Entrepreneurship and Economics at Singularity University, the Google/NASA-sponsored post-graduate program in exponential technologies. A native New Yorker, David has a BA from Yale University, an MBA in Finance from Columbia Business School, and a D. Eng. h.c. from Stevens Institute of Technology.

• Foreword Reid Hoffman xvIntroduction: How I Became An Angel Investor xviiPart I The Basics of Angel Investing 11 The 25 Percent Annual Return: Why Everyone with Six Figures to Invest Should Consider Angel Investing 32 Plus, It’s Really Fun! The Nonfinancial Rewards of Being an Angel 233 The Portfolio Theory of Angel Investing: Why Every Angel Needs to Invest in at Least 20 Companies 374 The Financial Life of a Startup: Where Angels Fit in the Big Financing Picture 47Part II The Nuts and Bolts 555 Develop Your Deal Flow: Sourcing and Identifying High-Potential Opportunities 576 Bet the Jockey, Not the Horse: Evaluating the Entrepreneur and Picking the Right One to Back 677 Here Comes the Pitch: Listening to the Story Does It Make Sense for Your Portfolio? 778 Look Under the Hood and Lead a Deal: Coordinating Due Diligence and Running the Show 879 Valuations and Expectations: Discovering the Secret Economics of the Angels 9310 Investment Rounds and Their Forms: Common Stock, Convertible Notes, or Preferred Stock? 10911 The Art of the Angel Deal: Negotiating a Win/Win Relationship with Your Entrepreneur 12112 Term Sheets and Closing: Trust Everyone … but Cut the Cards Anyway 12713 After the Investment: Managing Your Portfolio and Adding Value as an Active Angel 13314 Exits and Other Unicorns: Getting Your Money Out Makes All Things Right 147Part III Your Place in the World of Angels 15915 The Entrepreneurship Financing Ecosystem: Grants, Venture Capital, Accelerators, and Other Players 16116 Building Your Angelic Reputation: Getting the Best Deals to Come to You 17517 Joining an Angel Group: Increasing Your Opportunities and Reducing Your Risks 17918 Impact Investing: Doing Well While Doing Good 18919 Sit Back and Let Someone Else Do the Work: Investing in Startups through Seed Funds and Venture Funds 19520 Crowdfunding and the Global Revolution: Angel Investing for Everyone 199AppendixesA Angel Screening and Valuation Worksheet 205B Angel Investment Due Diligence Checklist 209C Gust Convertible Note Term Sheet 215D Gust Series Seed Term Sheet 223E Gust Revenue-Backed Note Term Sheet 237F International Angel Investor Federations 243G Major Regional Angel Groups 245H Angel Investing Blogs and Resources 249Glossary 253Acknowledgments 265Index 271