Working with FSI's Angel Network is modeled after other informal Angel Groups' best practices. What's important for the entrepreneur to understand is that FSI does not operate like a VC fund, which pools their money and goes through a significant vetting and due diligence process before deciding which co.'s win their money.
FSI, like many other Angel groups, is a loose network of individuals that are interested in both investing in high quality deals and improving the entrepreneurial ecosystem in the region. You are really seeking to find a LEAD INDIVIDUAL to be your champion in the group and evangelize to the network why your deal is so attractive. FSI's investments from the group have been right in line the U.S. Angel group average of $250,000 per deal.
We expect that you are in the process of seeking equity funding and are approaching multiple sources of funds. We encourage that, since many Angels network with each other, both individually and as groups, and rely on each other for due diligence exchange. FSI expects these Steps to be driven by you the entrepreneur as part of your fund-raising process. The more traction you achieve in this process, the more attractive your company will be perceived to be.
Here's what you can expect from us as you go through FSI's process:
Step 1. APPLY by sending us your executive Summary 1-sheet. We add value to you by providing prompt feedback on your current set of investor materials and how to make your deal more attractive to investors. The key criteria for "attractiveness" comes right from the Executive Summary 1-sheet.
Step 2. SCREENING occurs by FSI’s Business Creation Committee. Although much of this part is transparent to you the entrepreneur, what you can do during this time is to get to know FSI Members. The Screening step takes about 2-3 weeks. We add further value to you by providing you with more detailed feedback about your business and plan, and make recommendations as to what you need and where to find it.
Step 3. Select co.'s are invited in each month to MEET the Business Creation Committee, and we can hear their investor pitch. These co.'s are selected based on the quality of their company.
Step 4. Select Co.'s that meet with us are invited to PRESENT at our Breakfast Showcases and Entrepreneur Showcases, which are structured to bring in Angels interested in investing in these types of deals. Entrepreneur Showcases are focused around Angels and their industry segments, and Breakfast Showcases are for the larger FSI community. Steps 3 and 4 may take up to 3 months, and do not preclude any company from advancing to Step 5.
Step 5. Depending on your co.'s attractiveness and suitability criteria, FSI may elect to FACILITATE INTRODUCTIONS to select Angels in its network. It's important to understand that FSI is not endorsing or recommending any companies for investment, only facilitating and communicating companies that may be of interest to its network of investors.
Step 6. You will need to develop (if you've not already done so) a PRIVATE PLACEMENT MEMORANDUM (PPM). This is the formal document that the SEC recognizes as the vehicle to legally raise equity funding. Our Resources section can point you to sources and firms that specialize in this. This document formalizes critical financial terms such as key company risks, company valuation, audited financial statements, number and pricing of shares.
Step 7. Investors may or may not agree with the terms in your PPM, but may elect to offer you a TERM SHEET with their own investment terms. Receiving term sheets is a good thing and it means you should be close to funding. You should collaborate with your executive team and fund-raising advisor for navigating this final negotiation step. Congratulations!