Industry sign banking nebraska contract free
all right everyone my clock says it's noon so I think we are going to go ahead and get started I'm Heidi Garvin with Gro Nebraska and I like to welcome all of you to our third Thursday training so for those of you who don't know every Thursday third Thursday of the month we host a free training webinar you can learn more about these at grow nebraska org it's under our training step and you can find out about all of our wonderful trainings there but our third Thursday trainings are always free and open to the public so I'd like to thank all of you for joining in on this one on that page you can also learn about our annual market tech conference in Kearney it's going to be on March 15th this year and we're super excited we are bringing in some amazing national speakers including Jen Herman who is an Instagram guru out of San Diego and Maria Elena Doron who's flying in from Texas she is a Google expert we also have an amazing Google training series that we're going to be putting on over the next few months here that you can learn about we also have exclusive trainings for grow Nebraska members our March training it's going to be on the first Friday in March from noon to 1:00 and that one is going to teach you how to master selling online so if you are a grown abrasca member I highly encourage you to sign up for these then you are all also invited to our annual open house at the Nebraska State Capitol so this is going to be on February 22nd in room 10:23 so if you want to network with other amazing Nebraska business owners this is a great opportunity for you to come hang out try some light refreshments and see how innovative Nebraskans are being so gonna be a great event we are also celebrating 20 years at grow Nebraska we invite you to join in the celebration you can learn more about how we're celebrating by following us on social media so go on like our Facebook page not only will you get up-to-date updates about trainings like these but you'll also get to celebrate Nebraska businesses with us and now the reason we're all here we'll finally get started I am going to unmute for a moment Deb can you yep I'm here perfect okay we can hear you so these trainings we keep them free and open to the public but this would not be possible without the help of our amazing sponsors so today we have Deb Andrews on the line and she is going to tell us a little bit about this one sponsor First State Bank community banks okay well thank you and I'll just take a moment here of your time I just wanted to mention as a sponsor of today's webinar I just wanted to take the opportunity to thank you for attending and also just to introduce you to our bank we our Community Bank a division of First State Bank Community Bank is located in Alma and Stanford Nebraska but we also have three other locations that are known simply as First State Bank and they're in Farnum Holbrooke in Cambridge Nebraska so basically we have two names and five locations but all of our locations encourage local growth and we do strive to help new businesses in our areas and get up and get going and for our new business customers we offer operating lines of credit intermediate-term loans and long-term real estate loans we also have partnered with local companies you know that that also encouraged local growth like as an example twin valleys public power and they occasionally have low interest loans available for new business owners and together we've partnered with them to help a local customer and obtain the real estate loan that they needed plus we were able to operating funds needed to get them up and going we've also partnered with the Small Business Administration and have done quite a few of those loans for our local people we'd love to have the opportunity to work with you so if there's anything that we can do to assist feel free to contact any of our branches and see what we can do thanks for today's and you guys have a great day yeah Thank You Deb and for those of you who haven't worked with community bank before they are amazing people to work with so check them out we will be sending a link to their website in our follow-up email I'll also be sending out a recording of this presentation so if you are trying to take notes and you feel like we're just going a little too fast you can always go back and review that recording afterward so I will be sending that out along with the survey following the training but now the reason we are all here we have been Williamson on the line with invest Nebraska so then I'm going to let you take over the screen all righty hi everybody my name is Ben Williamson I want to thank first of all Heidi and then Deb as well for this training this third Thursday training I'm excited to be here and do this webinar I am an associate with investment Brassica corporation and I will get into what that means a little bit more here shortly today's presentation is titled and I guess subject matter is raising capital with Nebraska's angel investors so to start just to provide a little bit of useful background information I thought I would discuss what investment Braska is in our relationship to Ango investors in the state investable esque is a non-profit venture development company fund from the state and braska and what that means is among other things we invest in high-growth companies in the state of Nebraska and most of the funding for that pursuit comes from the state of Nebraska while investing these companies you see a couple bullet points there of I guess requirements or constraints that we do and don't follow and the first one being that the typical investment that we make in a startup company is anywhere from 125 to 250 thousand typically and the total amount that we can invest in any one company is generally five hundred thousand dollars as far as the types of industries that we like to invest in we're completely industry agnostic which obviously means that we don't have a preference to any different industry and in fact we prefer and enjoy to keep our portfolio diversified and would like to have every industry represented if possible the next bullet there says lead and follow that simply means that we will either lead the investments acting as kind of the point of contact for all the other investors whether that be negotiating with the company or simply just organizing the investment or we'll follow along if someone else takes that role whether in the state of Nebraska or outside the state of Nebraska as I implied by saying we could invest up to five hundred thousand in each company that means they will do typically your first investment of between 125 to 250 and then somewhere down the line a company may need to raise money again and we would certainly help in that but we would also like to participate again and invest again to continue to support that company that's where the total number comes in there and as far as financing options types of funding we will get a little more into this later also but as far as investments go when we're talking about high-growth startup companies the the two typical types of investments are either preferred equity investments or the alternative would be convertible note investments which are similar except for that they operate as debt at the beginning ultimately the goal is to be converted into equity just like the preferred equity begins so those are the two main types for companies that may not fit into the high growth mold we also have types of loans in our micro loan program to provide for companies as well that may not want to take equity that would dilute their ownership of the company the last bullet point there is very significant very relevant to today's presentation and that is although investment baskets technically technically is not an angel investor for reasons you'll see in a bit we often invest at the same time as and alongside angel investors and work closely with angel investors and so that opens up a lot of opportunities for investor bresca and gives us insight in this area next I thought it would be helpful to provide just a little background on venture capital or angel Capital generally and I guess the basic definition or general high-level view there is just the capital is financial capital provided early-stage high potential high risk startup growth companies obviously that is not every company that is a startup company or small business but there is a subset of those companies that fit into that mold and are appropriate to take on venture and jewel capital the next bullet point there goes a little bit more in-depth and explains that because these investments are higher risk the angels or the venture capitalists usually invest in very early companies and therefore you would anticipate getting a little bit higher percentage of ownership in order to justify the risk that these angel investors or venture capitalists are taking in the company so that's just a little bit background information that most people probably know but it's worth discussing before we move on now this is an interesting graphic that we have here and it is relevant for a couple of reasons from an investment Brassica standpoint the the reason that the program exists as it as it does today comes from 2011 there was an act called the business innovation Act that was passed Nebraska without getting too much into detail about the act it essentially enabled funds to be allocated to different programs in the state of Nebraska some grant programs and then some investment programs which is the program that investments get runs that incentivize and provided money to invest in startups in the state you'll see in this graphic here this is aggregated dollars invested in start-up companies in the state in every state and the first column there on the left is from 2011 you'll see the Nebraska is tied for dead last as far as investment dollars go so in large part because of companies like investment brassicas private companies angel investors over the years from 2011 on you'll see that from 2014 until last year even Nebraska is closer to the middle of that group and in fact we anticipate the 2018 will be even higher than than we were in 2017 so that's an interesting graphic that just shows that this this business innovation Act and some of the programs that the state of Nebraska has put place are actually sort of progressive and match some of the programs you often see on the East Coast and it is actually making a difference in the amount of money being invested in these startup companies trying to help them succeed and incentivize entrepreneurs to start companies when they otherwise might not again a little bit of a basic and maybe obvious definition but some people may not know is just who are angel investors and angel investors are obviously individuals that provide capital to one or more startup companies obviously that's one reason why invest nebraska is technically an angel investor because we're a company and not an individual but as I mentioned we invest alongside of angel investors and at the same stage as angel investors oftentimes you'll find the angel investors were former entrepreneurs and have experience in that certain sector so angel investors are especially valuable because they can add that value to the entrepreneur to their business where they have a certain expertise maybe they've started a and ultimately sold the company which is where they acquired their wealth or merely worked in an industry for a lot of years successfully and have inside some expertise that they can share with that entrepreneurs that founder that team on the right side there you see a little more nuanced definition because of the securities laws and regulations it's necessary that generally angel investors are qualified as accredited investors which means those three ballpoints there you have a million dollars in net worth two hundred thousand annual income within the last two years and three hundred thousand annual income jointly with your spouse next what are angel groups and again this may be a little bit obvious but this is something that before I got into the industry I didn't really know existed in the state of Nebraska so angel groups are obviously networks of angel investors who work together to do several things the most important or most obvious of which is to find and review deals so it's easier to get people to come present deals to you if you have a group of angels willing to invest rather than just one person additionally they would conduct due diligence together which includes all those things among other things they would negotiate the terms of the investment together obviously different angels bring to the table different types of expertise and there's often people that have expertise in negotiating deals and that becomes very important when having those conversations with the companies and perhaps most importantly angel groups do a great job of pulling insights pooling ideas connections expertise and other resources obviously when you have a lot of people in the room that are interested investing companies and have the wealth to do so but also want to give back and provide value to these companies you can take advantage of a lot of those connections and things that come from that so the next bullet point there the next main bullet point is although it's a group of angel investors the members still defy sides individually whether or not they would like to invest in the company you could potentially have a company that goes through an angel group and only has one angel invest oftentimes though you see a handful of angels that tend to invest in most of the deals so that would be probably pretty rare as far as angel groups locally or in the state of Nebraska the most prevalent is the Nebraska Angels and that's a group that is based primarily out of Lincoln in Omaha you don't have to be from leaking in Omaha but that's where the meetings take place so that's where you see most of the concentration of the members there and that's a group that has monthly meetings that here's pictures from companies and and does quite a few investments every year there's also a group out of Norfolk that investment Braska helped start and that's a group of about eight or ten investors up in that area that are interested in reviewing deals they don't have regular meetings necessarily but they invest whenever deals come to their attention and it's a situation where investor Braska or the Nebraska Angels or other investors in the state would share deals between the northeast angels group and vice-versa there are similar groups to the northeast angels that that have begun to start and begin to gather interest in the Hastings in the Beatrice areas in Nebraska so it's really kind of cool to see these different groups popping up across the state where investors are becoming interested in working with early-stage startup companies this is another interesting graphic and the next page will shed some light as well but it answers the main question when do angels typically invest in these companies and the first bullet there it is very common that angels invest in companies that have just passed the prototype or the MVP which stands for Minimum Viable Product or prototype phase obviously this stage can vary by industry in easy example of that is a medical device for example may need to raise a bunch of money prior to developing a prototype or prior to going through FDA or certain clinical approvals so specific industries do have a little bit of nuance to them but typically the investment comes in what is known has not so enduringly the valley of death stage as you see in that graphic what that means is is ain't or excuse me entrepreneurs often get to a point where they've created a prototype they're ready to try to go out and get customers but they need money to get traction and to go ahead and do that and then you have the investors on the other side of the table saying that's great but you need to get that traction before we'll give you the money so they come to a bit of an impasse where it's hard to give funds in that area right past the prototype stage before commercialization and so that's a stage when you typically see angels come into the picture you'll see at the bottom there as
ypical primary investors and that shows the different groups that often come in and invest in those stages the first being government meaning investments not in the traditional sense but more in the sense of grants and different programs the government's run the next being where you see angel investors and also investor Braska and this graphic is essentially saying the exact same thing but in a little bit of a different arrangement there so you see the up top you see just past the prototype stage we get into what is known as the seed stage and that's often where you see angels and other groups that are interested in very early startups fill that void as mentioned we invest alongside angel investors at that stage and sort of operate alongside those angel investors so now we will talk a little bit about why angels invest what the upside is for angels to invest this may not seem completely relevant to people who aren't interested in being angel investors but if you are anyone who wants to start up a company or be an entrepreneur start a small business I think it's important to see the other side of the table and and remember why angels might be doing this so you can cater to those interests of the angel investors the first goal point here is maybe obvious but but some people may look past it obviously anyone who's defined as an investor by definition they are looking for some type of economic return on their investment so the first bullet there shows that multiple studies have shown over the long run carefully selected and managed portfolios can produce a pretty healthy return and obviously that return is one that over time forms much better than the stock market or frankly any other type of debt instrument or investment the bold language there is intentionally bolded because it is the most important language and often forgotten by even angel investors that they must keep in mind it is for the long run must be carefully selected and managed and that that goes back to talk about things like diversification of a portfolio or simply making enough investments to get that type of return I'll go kind of quickly through the other ones again as they may be a little obvious but being involved as an owner of the startup obviously is fun and rewarding that's why one of the reasons the entrepreneurs do it it's also a good way for angels to provide value to these companies provide connections to these companies and kind of give back to their communities to their ecosystems that they have probably succeeded in so giving their money to a company who is in desperate need of money and maybe Direction is kind of this so we'll give back factor and it's exciting as well gives them the opportunity to be part of the startup without being on the front lines again kind of in the same vein the opportunity to advise and mentor as a company changes and develops and grows is is exciting as well and it's fun to see and be a part of next to be part of the technology the next big thing and to keep up with the world this example that might be relevant today would be something like virtual reality or augmented reality that a couple years ago tried to make tried to come out and and had a lot of companies trying their hand in that and it might have appeared that the technology was too early but that's something that is on the cutting edge that an angel and venture capitalists have the opportunity to be involved with them learn about and have some expertise in because they are involved in these startup companies obviously the next to help train future leaders to build communities to create jobs diversify wealth diversify the economy grow business and very importantly perhaps most importantly to encourage entrepreneurship to build the ecosystem and then to help these companies go out and raise additional money oftentimes in the state of Nebraska you'll see that angels and investment Brassica may get involved very early in these companies and they go on to raise incredible amounts of money both from in-state and out of the state of Nebraska and bring that bunny Mac to Nebraska and put it to work and the last point is one that I already mentioned it's great to collaborate with the other angels and gain the insight expertise connections and those types of things neck what are angles looking for and these are important and again maybe a little obvious and sound sound easy but the first being a strong founder all of those all of those characteristics that I've listed below are ones that are specially relevant for start-up entrepreneurs next a product in the market or at least a finished prototype a strong team assembled at least the key management or key employees a well-crafted financial plan and a clear and detailed pitch in supporting materials sounds very easy it's not always so easy in practice you'll notice one thing that it's not included on this list is a good idea and that is for two reasons the first reason being having a good idea is sort of cost of doing business I think that's what gets you in the door a lot of times is a good idea and for another reason is often people focus too much on the idea and the idea isn't necessarily what matters in a start-up with an entrepreneur this next graphic is one that I really like that sort of illustrates that fact and it's placing the emphasis on the actual execution rather than the idea it says their ideas are worth nothing unless executed they're just a multiplier so to make a business you need to multiply the two columns the idea against the execution so you'll see that even the most brilliant idea with no execution is only worth $20 so oftentimes you see entrepreneurs that are putting too much focus on the idea and not enough focus on how to make it happen next we will do go through a bunch of different steps on how to actually secure angel capital what those steps look like and some practical advice along the way so obviously as I pointed out in those earlier slides and graphics venture capital and angel capital are typically not the first form of funding that comes into a business it's often one of the later sources of funding even though it's still quote/unquote early-stage oftentimes things that companies will do first before they seek outside capital is bootstrap the business which simply means they run the business with as few expenses as possible without taking salaries maybe partnering with service providers or people who have a certain expertise whether it's technology or sales or something where they get a portion of equity in the company rather than getting paid a salary this is your stereotypical build Facebook out of your garage or out of your basement bootstrapping and it shows the team's commitment to investors it's nice to see the team that is bootstrap their business for a while before they try to seek outside investment the next category is the friends family and fools category and that's a little bit of a tongue-in-cheek title but oftentimes investors that excuse me entrepreneurs and startups will seek money from people around them in order to try to get off the ground and gain some traction again without diluting equity or taking on too much outside capital and that's it's an underrated source for money if the way an investor sort of looks at it is if a company has a hard time convincing your friends and family that they should invest money then then why should the investor invest money that is one way that the investor might look at that but we also see lots of companies that are able to get quite a bit of capital and gained a lot of traction and figure a lot of things out before going and getting outside outside funds and that's really important as well the last bullet point there is very important and it's something that we discussed with companies all the time and it's a distinction between a quote unquote lifestyle company and a quote unquote high-growth company and both approaches are completely and 100% valid approaches of running a business but one of approach caters itself to taking on outside investment to try to grow quickly where the other doesn't necessarily cater to doing that obviously the lifestyle company implies that this is a company that you may run for your entire life and simply make money and live off of that company again a perfectly valid way to run a company however from an investment standpoint whether it's an angel venture capitalists or otherwise it may not be wise for someone who wants to run a lifestyle company to take on investment where you're going to give up some equity in your company and ultimately when you give up equity you give up a little bit of control of the company so that could hurt the company in ways that you need to to kind of think about and make the decision which way you want to pursue so that's obviously the first step just determining whether outside money has been appropriate at that time and frankly trying to get some some organic money to figure things out before pursuing pursuing outside capital a next step is to find the right angels or the right angel group and part of this is trying to figure out what types of companies they like to invest in the first bullet point their stage focus so typically if for example your company has not yet started making any revenue you would want to find an angel group that is comfortable with and has in the past invested in companies that are quote unquote pre-revenue have not made money yet otherwise it's simply not going to be a good fit and it will be a waste of your time some other factors Geographic focus industry focus size of investment criteria most of those are pretty self-explanatory I would think that most angel groups don't have a very strict geographic focus it probably is not thoroughly in the best interest to limit the investments to here to maybe the state that they're in you know an exception could be some manger groups out in California that have so much deal flow from the state they may not rusher in or try to attract outside companies as far as locally for the most part that the Nebraska Angels at least do not have any requirement that it has to be a Nebraska company but I think that all of the angel groups in Nebraska have a preference for Nebraska companies because they want to invest in companies in the state they want to keep their money in the state keep creating jobs in the state and that type of thing the next bullet point is another important one return on investment criteria and frankly this one is a little sensitive for some entrepreneurs but what it basically is saying is most investors angel investors and otherwise have a criteria in their head that they want to return the amount they want to return on their investment so for that you can kind of reverse engineer and figure out whether it's an appropriate investment for you for example if if an angel investor knows how much they're going to invest and they know what the return on investment criteria is let's say for example it's a five times multiple of the original investment and they think they can guess how much your company will ultimately sell for in a best-case scenario they can figure out what percentage of the company they need to own in order to get that desired return oftentimes that could disquiet excuse-me disqualify a company right off the bat if they're asking for too high of evaluation that doesn't allow the angel to even have a shot at their desired return so that's something good to always think about the last one is also very important is the investment style there are definitely some angels out there that have the expertise and they really like to take a hands-on approach and help the company whether it's providing know-how or providing connections so Mangel simply like to invest and then not do anything with the company except forget their periodic updates it's good to know what types of angels you're dealing with so you can anticipate whether that that capital is appropriate for you to take and to dictate how you proceed with your company after taking the investment third is to prepare a business plan so the bullet points here again are relatively self-explanatory obviously investors are trying to gather as much information as they can about any particular company company it helps to lead with a summary but then go through and actually explain things out like your company's advantage in the market what the market looks like how large the market is and provide any analysis you might have your plan of attack for the next couple years and also it's a good place for you to highlight the team that you have in place to prove that ever important point I mentioned before the execution and how you're going to actually execute on your idea on your goal and on your financial projections a lot of times angel investors or other investors would expect your business plan to be in excess of twenty pages there are a lot of business sources out there that advocate for the to page business plan and I think those are fantastic for internal uses to get everybody in a company running the same direction and on the same page however as I mentioned investors want to get as much information as possible and putting the time in and thinking about developing a long-form business plan benefits you in an investment scenario there are actually companies that we've seen where companies have had the two or four page business plan and that was probably a major reason that that company did not go on to secure an investment as I mentioned before again focus on your team your management team and your key employees angels and other investors want to invest in teams over ideas the team is ultimately who's going to take you to execution and so that's important to focus it gives you an opportunity to sell yourself sell your team and focus on the advantages that you guys have and bring to the table another good thing with the market is to think about how your business is going to change the current market and where you see the market going over the next five years the angel investment or startup investment game is a long-term game and although all angels would love to get their money back in three years realistically it usually takes at least five before anything happens so showing that you have that vision of where the market in the business will change is also very helpful in a business plan is a really easy and nice way to show that you have thought about that and prepared for that also feel free to ask for help from anyone that you know involved in investing or business at all it never hurts to ask for help with the business plan have someone read over your business plan someone like myself or any angels who might know I think almost everybody especially in the state of Nebraska would be super great about reviewing and providing feedback and notes and that type of thing number four is to make a powerful powerful presentation to the angel or the venture capitalists this is obviously known as the pitch and it's something where a founder again has an opportunity to kind of showcase their strengths and really focus on the things that that are advantageous to that company over the rest of the market or over competitors and things like that some important points get to the point this is not where you read through your whole twenty page business plan is where you show your highlights and go through the kind of main points of what you want the angel or the investor to take away focus on the market opportunity in today's market technology is necessary but just having technology is not enough guide the presentation towards the management towards the market and show where the money altom utley follows and the next one again a little tongue-in-cheek but when doing a pitch the angels typically have a short attention span so they want to hear the idea here the main points and then have the ability to ask questions and dig deeper where necessary next as I've already mentioned find strong seasoned managers and team demonstrate a very large future market opportunity that's something that angels want to see show escalator escalating barriers to entry in your market and what this means is that show that after you enter the market it's going to be very hard for a competitor to come in and
essentially copy what you're doing that's important and often overlooked by people when making pitches sometimes investors including angel investors will recommend you do a 10-20-30 rule which means ten PowerPoint slides twenty minutes thirty point font and the concept there is to imply that you should be able to explain your business inside those constraints and if you're able to do that it reflects well on on you as a founder the next category here is understand the valuation process and determine an exit strategy this is something I sort of alluded to a little bit when I was referencing the valuation requirements for any angel or excuse me the return on their investment requirements but one of the things that every investor is going to be thinking about from the very beginning is what the endgame looks like what the exit looks like for this company and how they're going to ultimately get their desired return on their money again this is where it's it's important that you have decided that you want your company to be a quote unquote high-growth company instead of a lifestyle company if you get into a situation where you want to run a lifestyle company and you have someone that owns equity in your business at that point your interests are no longer aligned as soon as the investor wants you to somehow sell your company or exit your company and you want to continue running it obviously if you are taking on the outside investment that's why being a high-growth company with an exit in mind is an essential factor so you want to identify the major risks and your business again over the next couple years reduce the perceived risks to achieve the increased value in your company ultimately and again understand the investors return on investment criteria and this may be more difficult to do when you have angel investors and you have several investing at the same time it may be a little easier when you have just a few firms investing but either way this is where angel groups can work together to communicate some of those things but the most important thing is to be able to show that you and your team has thought about where the company is going to go and what the endgame is that's the most important thing the investors want to see what is your exit strategy and there are several methods without getting too far in the weeds today there are several methods that angel investors venture capital investors and other investors used to value companies it's even harder to do valuation analysis for start-up companies because of so many unknowns and a lack of financial history if you will but a lot of times if you are in a certain industry angel investors and other investors might do things as simple as comparing your company to other companies that have exited or been purchased or merged with a bigger company in the past and that's an easy way to get a sense of of where the company is going and what the exit might look like there are so many factors involved with that like your market your team the risks involved how far along your company is how healthy your company is what your product looks like and all these things that it's it's really hard to nail down one method that a company should use but a company should be familiar with different types of valuation that investors might use in order to properly get their exit strategy in mind and convey that to the investors the last step I have here is due diligence and this is simply the process of learning everything about a potential portfolio company so a potential investment anything from business structure financials taxes legal issues employees contracts signed regulations patents intellectual property anything like that and much more as a founder as a company as an entrepreneur you should be gathering information and digging and doing due diligence on your investors and just as you're doing that obviously the investors are going to be doing the same for your company which ultimately is a good thing for both parties this can be a very long process and this is something that is often underestimated by investors in fact the fundraising process as a whole is often underestimated by entrepreneurs and companies it tends to be a full-time job and the due diligence process alone can consist of several phone calls multiple meetings lots of e-mails back and forth sending everything from your pitch deck to your business plan to your financials to projections and it can be fairly onerous so when you go out to decide that you would like to raise out a capital it's good to just be prepared that it might take longer than you expect it might take more time than you expect and it simply may be a bigger process than you expect then you may have to make sure your business is still able to run in the background so practically speaking how could you apply for angels in angel investment in the state of Nebraska I mentioned that most prevalent angel group is a Nebraska Angels and they use obviously word-of-mouth is probably the number one way connections are made introductions are made Nebraska Angels also uses a platform called Guus which is an online angel platform where a company or an entrepreneur can go on there and create a company profile and can apply out to as many angel groups across the country as they want or they could just apply to their state's angel groups and simply do things like provide all the details about your company your company's team maybe what the structure of the legal structure and the cap table the capitalization if you've taken on previous money what that looks like it allows you to upload your pitch deck your PowerPoint it allows you to upload any documents that you deem relevant but that is a good and easy way for companies to apply if a company applies to that program and is of interest to the director then that discussion would move forward and they would have an opportunity to come present in front of that group alternatively I've left my contact information there if anyone would like to reach out with questions or would like to be introduced to anyone I'm happy to do that and I'm happy to answer questions with respect to angel investing investor Braska some combination of the two or just fundraising in general and what that looks like taking a bit of a step back if you've heard a lot of the things that I've said and you've just decided maybe I'm not quite ready to go out and and acquire additional third-party outside capital the state of Nebraska has several awesome options for companies that are very very early on or companies that may want to pursue resources that again I've said this a couple times are not diluted and what I mean by that is you don't give up equity in your company which could detrimental affect you in the future the first one I listed here is called n motion accelerator it's an accelerator in Lincoln and accelerators are typically programs that last usually around ninety days where companies sign up they come in and they receive basically accelerated teaching from faculty and business people locally they can come in and help the company define their vision to learn things that they may not have had the chance to learn out in the market yet to do sorts of things like market validation and really just clarifying where you want to go as a company in motion is a great opportunity for many companies and we've ultimately invested in many in motion companies after they've graduated from the in motion program so I highly recommend that there's tons of information online there otherwise feel free to reach out to me for that as well the next is called the startup collaborative and that is in Omaha and it's kind of a hybrid accelerator and incubator so that means that they don't follow the 90 day approach of the typical accelerator like in motion does instead they'd like to take companies back to square one and really break things down on a granular level and make sure that you have taken every single step along the way and haven't skipped ahead or jumped ahead too far where you you waste a lot of time and resources going in a direction that isn't the best or the most efficient direction for you to go and that is something that has over the last year really developed and grown and they're doing a great job attracting a lot of companies and helping a lot of companies so again something worth looking into additionally there are some state programs which I alluded to part of the money that came from the Business Innovation Act years ago was allocated to the state of Nebraska grant program which is also run by the state of Nebraska Department of Economic Development and the the most typical grants that you see available to startup companies is called the prototype grant and the average and average prototype excuse me the average grant awarded is $50,000 and the goal is to assist with a new product a new prototype new technology development that is a matching reimbursement grant meaning you must have 33% of the total amount of money you plan to spend so for example if you want to get a $50,000 grant you would need to have $25,000 in the bank so you could spend money and then be and reuse me be reimbursed by the state this is a great program that has helped hundreds of companies over the last few years and is relatively accessible and easy at least as far as the application process goes the people at GD and they run the program are very very approachable and would love to have further conversations with anyone I have plenty of information on that as well again don't hesitate to ask about that and the final is there are plenty of federal small business association grants obviously because they're federal grants they may be a little harder to get harder to apply for simply because there are more people applying for these grants there are several Nebraska companies though over the last few years that have succeeded in acquiring one of these grants and the state of Nebraska also has some matching grant programs available in the event a company goes out and get one of these federal grants so these are just some other options for companies that decide they either may want to operate as a lifestyle company or simply may not be ready yet to take on outside investment and again my contact information one more time and I would love to answer any questions that anyone has about anything I said today or generally about angel investing or Investment Africa or anything along those lines so thank you umm Thank You Ben that's tons of great information and I will be sending out your email address to everybody following the presentation as well right off the bat I do you know I get this question all the time how much equity should people be prepared to give up if they want to work with an angel investor like when you're going into that what kind of range do you see that is a great question and one that unfortunately is is not necessarily a science but there are a few definite takeaways and piece of advice that that I would give with respect to that and that is most of the time when a company decides that they're going to be a high-growth company and decides to take on investment it is very rare that you would only go raise money one time meaning you may go to an angel group seeking for example let's say $200,000 oftentimes you'll see a company do that and then a year later they decide they need to scale again and they'll go raise more money so when you're thinking about being diluted and how much you might be diluted you need to make sure you think about the fact that there will likely be probably or perhaps or likely be additional rounds of investment so oftentimes the answer unfortunately is you will probably be diluted more than you want to be diluted and another way to answer that question is that as I mentioned often times when companies begin and quote-unquote bootstrap their business one of the useful tools that they use and one that's often frankly good to see from an investment side is founders will often bring in co-founders to provide services and add value to their business and again without having to pay salary you may give up a portion of your business as a general rule investors including angels like to invest in teams not individual founders for obvious reasons the more perspective the more experienced the more of that you have on a team the better it looks for an investor as far as that goes so it's useful oftentimes for a founder who had the initial idea to give up some portion of equity to other employees or other managers to that same end and I could talk about this probably forever but to that same end oftentimes what you see in startup companies is something called an option pool and that's something that often investors will require a company to establish and the reason for that is the reason for that and and honestly their their interests are aligned with the founders interest in that they want you to be able to incentivize your key employees to stick around because often times in the first couple years of a start-up you're unable to pay a I won't say livable but a salary that they might expect from another job so oftentimes you have to incentivize these people by giving out some equity of your company so it's not rare in fact it's very common to see these our investors require or founders will just do it automatically and establish typically about a 15% it could be 10 it could be 20 but I would say maybe an average is a 15% option pool so that means that even if you are an individual founder basically from day one you are down to eighty five percent ownership before you even take on any additional investment there's some legal nuance with options and and technically they don't exist until you grant them but so because of options because of additional rounds of funding oftentimes if you plan to take your startup from day one all the way to the point where you will get an exit it would be very likely that your ownership would be below 50% certainly and and much lower than you would like unfortunately that's sort of the nature of the beast and and ultimately if you achieve the type of return that you're going for you still would be obviously handsomely rewarded but that is definitely something that that you need to think about before taking on outside funding got it and kind of building off of that you talked a bit about the due diligence segment yeah where investors will obviously be doing their due diligence to follow up on you what would you recommend as a business owner we do for our due diligence looking into investors that's another great question and one that is maybe simple to answer in a couple ways so there was a slide previously back to listed a couple things that that you should look for for angel investors and that's that simply things like preferences whether it's like what their industry experiences for example is an easy one you want investors on your team to have experience in your industry now not every investor is going to have that but it's it's a huge help for you as a company to have somebody that could potentially sit on your board of directors someday and provide you actual value to your company so simply finding out where the expertise lies in a group of angels would be fantastic a very easy example of that is if you have a life sciences product so anything that has to do with health basically you would maybe want to target angels that have been doctors for twenty or thirty years and now I have turned to investing that's something that's very common but those are the types of angels you would want to have a preference for because they can help make connections and actually help you break into parts of the market you haven't been able to get into yet and and really actually help you scale without not from the monetary side but from the operational side another easy one is especially in the state of Nebraska because oftentimes you'll see the same angels or the same groups or same private companies that do the investing time and time again so it's it's a really good resource just to add find somebody that's taken on investment in the past and simply ask them what their experience was like with a particular investor they will be able to give you insight as to whether they were
whether they were great to work with whether their their vision was aligned with the company or whether they were came in and tried to be tough negotiators and really either hurt the process or somehow made made things less fun for the founder and the entrepreneur and often times you'll find that other founders and other startups and entrepreneurs will freely share that information because they don't want if they had a bad experience they won't want someone else to go through that same thing so that perhaps is the most useful thing to do is simply ask around in your ecosystem in your in your groups and you're involved in with your connections to get feedback on on what investors have been good to work with and in which happen I would say those are our two very good places to start awesome awesome thank you I am we've only got a few minutes left here so I do have a question if nobody else has any but I'm going to unmute everybody in case somebody has a question we will see all right so I don't think we're getting any more questions in so then my last question for you is can you tell us a little bit about Nebraska businesses who have been successful with this and I understand if you can't use names absolutely absolutely well there have been a lot and the exciting thing is as I mentioned and showed in that very first graphic is that Nebraska really did not get involved in the startup investment scene Intel's basically 2012 so we are relatively new to the game and and like I mentioned most angels and venture capital firms kind of view investments as a five to ten year timeline before you're going to achieve some sort of exit however in Nebraska we have had several companies and maybe one of the easiest stats to talk about is the amount of money that companies have gone on to raise after they've got either capital from angels or groups like invest Nebraska or taking grant money and there was an economic impact study that was done commissioned by the the state in in the middle of 2016 and what they found was for every dollar of capital the company has taken from someone like investment raska or from the grant program or companies or investors like that they've gone on to raise almost $7 more for each dollar from outside sources whether that's additional people in the state of Nebraska or or maybe more importantly bringing money from outside the state into Nebraska so without naming names we have several companies that have maybe started out raising 250 or 500 thousand dollars and have gone on to raise rounds of funding of up to eighteen million dollars was one recently that if you google you can you can find the name of that from some international organizations there have been a couple companies that have exited no companies recently that we've been involved with that have sold their company to anyone but there's been Nathan pre Haim who runs the start of collaborative was part of a company that ultimately moved to Silicon Valley but started in Nebraska and it they exited and then he came back to to try to help companies do the same thing you see companies may be an easy example is a company like huddle who started you know with nothing and then went on to raise almost a hundred million dollars in funding and now is doing amazing things both in Lincoln and in the state of Nebraska and really some impressive stories as far as Nebraska businesses go that of companies that haven't raised outside funding that are that are doing really really really well and and really impressive so there's there's something to be said for companies that are able to to figure out where they want to go and gain some traction without taking on outside investment but there are there are tons of examples we in the last two years at a company relocate actually from Silicon Valley to Nebraska because we have great partnerships with the University of Nebraska we have obviously it's cheaper to start and run a business in Nebraska and other places in the country but because of the support that investors in the and the state of Nebraska and other programs are giving to startup companies it's making a Brassica a more attractive place to come do business so there's there's a lot of success stories and hopefully we see a few more big ones over the next you know even one to two years awesome that is that is wonderful to hear then thank you so much for this amazing training today tons of great information and I do want to give another shout out to our amazing sponsor who helped us provide this training for free and to keep it open to the public so big shout out to First State Bank community bank again I am sending out an email with links to watch this recording to take a survey it's gonna have Ben's email address in it so even if you forget it you'll have it there so thank you everything today thanks everybody
