INVESTMENT CRITERIA  

 





As an aggregate, the members of New York Angels invest between $100,000 and $1,000,000 per round in early stage companies. Our members are looking for companies that have an established proof of concept and are poised for growth. Members have invested across multiple industries but have a core strength in business products & services, digital media, financial services, healthtech, and medical devices.

Portfolio company pre-money valuations for New York Angels' seed rounds of investment typically range from $2,500,000 to $6,000,000, with preferred equity being the typical investment structure. Our sample term sheet can be found at 
http://bit.ly/ModelDocsNYA
 
While the merits of each investment will vary, our members will evaluate your venture according to the following criteria found on our Angel Investment Checklist:

Management team
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 angel investors.

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Market opportunity
We invest in solutions that focus on major problems for significantly large addressable target markets. Do you have an identifiable market segment? Is there a demonstrable and significant demand for your solution? Is the projected spending in your product category large and growing?

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Competition and 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?

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Go to Market Strategy
We are seeking teams that have derived thoughtful, well-designed frameworks for maximum market penetration with efficient use of resources, whether internally or externally sourced. 

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Financials
We are looking for rational, logical and reasonable revenue projections, with a granular analysis of cost structures, inflection points in the sensitivity of these structures to volume, margin, analysis with projected cash flow break-even, etc. We typically see income statements, balance sheets and cash flow analysis (sources and use of funds), as well as a clear identification of projected uses of funds to be raised in this round and total capital required to achieve break-even.

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Use of proceeds

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 executives.

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Growth potential
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?

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Fit
Our group members are all accredited individual investors with significant executive experience in a variety of fields. One of the benefits of working with angel investors is the active coaching and contact network that such investors can provide. As such, there must be a fit between members of our group and both your idea and your team.

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Exit strategy
Our members typically seek returns of ten to twenty times their initial investment, depending on the riskiness of the plan. This risk-adjusted level of return on investment is essential due to the high rate of failure among early stage ventures. Thus, a clearly articulated exit strategy - how angel investors will realize such returns - is essential. For example, do you plan to sell the company to a strategic buyer - have you identified several established corporations in your industry as potential acquirers? Or will your exit be through subsequent rounds of financing - venture capital or the public markets? Angel investors are not just interested in the strategy you select, but more importantly in the mechanics - the operational strategy that outlines specific steps you will take to achieve the exit.

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