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Investment Process

Submit Your Plan here. You may also view this overview presentation.

The process starts with your assessment of whether your company is a good candidate for Sand Hill Angels given the specified criteria. In addition to the above, we also generally prefer companies that are:

  1. Located in the San Francisco Bay Area.
  2. Early stage but usually beyond seed stage. The company usually has a developed product that is either in alpha, beta, or “in-revenue”. In any case, the company will be engaged with customers that can be referenced.
  3. Venture Financeable. Our requirements do not differ significantly from venture capital firms in that we are looking for sizable and growing markets, well defined problem-solutions, defensible technology, disruptive solutions, well defined product-market plans, and strong teams that have the demonstrated ability to execute. We are looking to support the growth of big companies that will generally also require classic venture financing. It is for this reason that we build strong relationships with local venture capital firms.

If you meet our criteria, we encourage you to submit a plan for our investment consideration. This is accomplished by going to the submissions section of this website and following the instructions and providing an executive summary. A poor quality submission at this point will almost always lead to a disappointing response. Our prescreen group evaluates submissions on the third Thursday of each month, and we will respond to submissions toward the end of the month.

There are no charges to submit materials to Sand Hill Angels or to present to the group. Sand Hill Angels earns no commissions at any point in our process. As is the case with most Angel Groups and Venture Capital Firms, we do not accept confidential information and do not sign nondisclosure agreements.

Application Material

Executive Summary

You should think of the Executive Summary as just that — an executive summary of your business plan. It should have all the elements of a good business plan, however, just summarized. The Executive Summary should follow the outline of your investor PowerPoint presentation but in narrative form and with appropriate charts and tables.
In reality, there are two kinds of executive summaries in use today. The “One-Pager” and the several page document. The One-Pager is usually in template form and has a summary of all the key information. These are somewhat useful for a cursory assessment. However, the several page document is much more effective for discussing the opportunity and plan. You should prepare both documents because you will be asked for both by various investors.

Investor Presentation

There are a number of excellent resources on preparing presentations for prospective investors. A well prepared presentation and great delivery are critical to your financing success. You should plan on no more than 20 slides for your first presentation. You should plan on a 20 min – 30 min delivery with the balance of your meeting for Q&A. Your ability to manage the meeting time is an indicator or your management capability. These guidelines will serve you well for a meeting with virtually any angel group or venture capital firm.

While the specifics of your presentation will differ with the nature of your business, the following guidelines will address what virtually all early stage investors which to assess. Entrepreneurs often make the mistake of building what is primarily a product presentation. You should force yourself to keep the product discussion to just a couple of slides. This presentation needs to be focused on the building of a company — of which the product is a foundational element. This is often a difficult mental transition for entrepreneurs to make — see the company building opportunity, not the product! You can’t go wrong with this outline:

  1. Company Background — One or two page summary that profiles the company, product, sales & marketing, market opportunity, and financing overview. The object is to provide a snapshot of the company and to “tell them what you are going to tell them.”
  2. Vision/Mission or Elevator Pitch — This should be a very simple several sentence statement of why the company has been formed and how its going to change the world.
  3. Problem/Solution Scenario — All products start with the definition of problem — a pain point. A well articulated problem and a well articulated solution will set the stage for the rest of your presentation.
  4. Market Opportunity — All good company-building opportunities start with an attractive market opportunity — in market size and growth. The pain you articulated earlier should translate into a market opportunity. Quoting analyst market numbers that are not particularly focused will not convince an investor that you understand the market opportunity. You should challenge yourself to try and build a bottoms-up analysis, with assumptions, that builds an attractive market opportunity. Other issues you may wish to address are customer switching costs, willingness of customers to buy from start-ups, power of incumbents, etc. Competition can be addressed at this point but is more meaningful after a product context has been established.
  5. Product/Technology Description — This is the opportunity to talk about the product. Talk about what’s disruptive and innovative. Define the value propositions. This section does not need to be half of the presentation. Plan on no more than just a few slides.
  6. Competition — Direct and indirect. Current, future, & framework for analysis.
  7. Current & Sustainable Competitive Advantage — IP is helpful, but usually not sufficient. Strong know-how, network effects, high switching costs, long term contracts, learning curve benefits, and capturing key distribution channels can all be used to build powerful competitive advantage and entry barriers for others. First mover advantage in itself is usually not sufficient unless it can be used to accomplish some of the above mentioned entry barriers.
  8. Business Model — Manner in which you develop repeatable & profitable business. Discuss capital efficiency. Discussion of supporting models — operating, product development, and sales and marketing will demonstrate your command of the business and the business model.
  9. Go-to-Market Strategy — This slide(s) should be dedicated to how you plan to cross the chasm, obtain your first reference customer(s), first 500K users, etc. Discuss target market strategy, sales & distribution, partnering, pricing, & promotion.
  10. Customer Traction/Pipeline — Show your pipeline and that you have an organized process for developing customers and know how to advance them through a sales process.

Backup Information

Your backup information should include evidence of whatever key facts you are claiming. If you claim you can definitely design something for $1M in 12 months, you might support it with schedules, engineering analysis, comparison to similar efforts and 3rd party expert opinions. If you claim there is a $100M unserved market opportunity, you might support it with market data and verifiable customer testimonials.

Your backup material should also include an operating plan, including detailed milestones and monthly financials for the period supported by the funding you are requesting, plus key milestones and quarterly financials to the exit point. The financials should generally include an income statement, balance sheet and funds flow statement.

Your backup info should also include resumes for all key team members.High quality backup material will allow your deal to move ahead much more quickly.

Pre-Screening

If your Executive Summary is of interest, we will schedule a pre-screen meeting. The pre-screening process ensures that the deals presented to our full membership are ones that will be of interest to the larger group. Deals are evaluated on multiple criteria, including quality of management, market opportunity, product concept, competition, go-to-market plan, financial projections, the investment’s potential returns and whether the deal fits the investment objectives of our membership.

Expect to provide your investor presentation to 6 — 10 of our members during a prescreen meeting, held at the end of each month. The meeting generally will include your presentation of your PowerPoint pitch, as well as a Question & Answer period. Depending on the nature of the deal, additional pre-screening meetings may be required.

Presentation to Sand Hill Angels Membership

Start-ups that pass the pre-screening will be invited to present to the entire Sand Hill Angels membership at our monthly meeting. Plan on a 20 minute presentation and a 15 minute of Question & Answer period.

Followup

In the days following the meeting, each Sand Hill Angel member decides whether the deal is of interest and whether they wish to participate in due diligence for the purpose of an individual investment. You will hear back from us within 5 days of your presentation. If the deal attracts members’ interest, the members wishing to invest will form a due diligence committee to work directly with your company to address any outstanding concerns and to negotiate the investment.

Investment

The method by which our members invest is through an LLC which we form. This keeps your company’s capitalization table simple, and keeps it easier for you to communicate with our team, collect shareholder votes, etc. In some rare cases, we can instead invest as individuals, if that is mutually beneficial for our members and your company.
Our typical investment range goes from as little as $100,000 for some very early-stage deals, to more than $500,000. We typically invest in priced rounds, though we can also invest in convertible note, when appropriate.

Submit Your Plan