Angel Capital -- Contents -- Preface -- Acknowledgments -- Introduction -- PART ONE THE CHALLENGE AND THE SOLUTIONS -- CHAPTER 1 The Challenge -- Introduction -- The Challenge -- The Angel Investor -- Structure of the Private Investor Market -- Making Sense of the High-Net-Worth Market -- Investor Activity in Early-Stage Deals -- Angels: A Golden Capital Source -- Investors Worth Accessing -- CHAPTER 2 The Solution: The Private Placement -- The Private Placement -- Selecting the Right Capital Source -- Is Your Deal Financeable? -- Are You Financeable? -- Is Your Risk Financeable? -- The Benefits and Disadvantages of Equity -- Making Your Search for Investors More Efficient -- The Problems with Conventional Wisdom -- CHAPTER 3 The Solution: A Strategy That Works -- An "Inefficient" Market Defined -- A Strategy That Works -- Build a Capitalization Strategy -- Focus on Management, Not Documents -- Budget for the Financing Program -- Anticipate Due Diligence -- Build Relationships with Prospective Investors -- Line Up Precommitment -- Aggressively Manage Database Development -- Go Directly to Qualified Investors -- Sell -- Manage the Close -- Dreamers and Dream Makers -- PART TWO UNDERSTANDING THE ANGEL INVESTOR -- CHAPTER 4 Alternative Sources of Capital -- The Impact of Economic Trends on the Accessibility of Capital -- Alternative Sources of Capital and How They Affect Early-Stage Investment -- Corporate Investment and Strategic Alliances -- Lease Financing -- Licensing -- Franchising -- Research and Development Arrangements -- Venture Capital Firms -- Cash Management and Tax Strategies -- Private Placement (Exempt Offerings) -- Government Financing (Loans and Grants) -- Bartering -- Commercial Finance Companies -- Banks -- Initial Public Offerings -- International Sources of Capital -- Employee Stock Ownership Plans -- Management Buyout.

Incubator-Based Financing -- Asset-Based Loans and Factoring -- Self-Finance -- Community Development Corporations -- Small Corporate Offering Registration -- Business Angels as the Best Source of Capital, Especially for Early-Stage Investment -- The Appropriateness of Your Venture for a Direct, Private Placement -- Stages of Development Defined -- Professional Venture Capital as a Funding Resource for Early-Stage Companies -- Comparison of Angel Investors with Professional Venture Capitalists -- Professional Venture Capital: Help or Hindrance to Your Funding Success? -- CHAPTER 5 Angel Capital in America: A Study -- Introduction -- Methodology -- Results of the Study -- Concluding Remarks -- CHAPTER 6 What Do Private Investors Look for in a Deal? -- The High-Net-Worth Investor Market -- The Informal, High-Risk Investor Profile -- Advantages and Disadvantages of Direct Venture Investing -- The Private Investor's Criteria -- Common Reasons Why Angels Reject an Investment -- Variations in Preferred Level of Involvement after Investment -- How Angel Investors Can Help Beyond Capital -- Private Investor Motivation -- The Allocation Decision -- CHAPTER 7 Types of Private Investors -- Introduction -- The Value-Added Investor -- The Deep-Pocket Investor -- The Consortium of Individual Investors -- The Partner Investor -- The Family of Investors -- The Barter Investor -- The Socially Responsible Private Investor -- The Unaccredited Investor -- The Newest Breed of Angel : The Manager Investor -- PART THREE RESOURCES FOR ENTREPRENEURS RAISING CAPITAL -- CHAPTER 8 Alternative Funding Resources in Accessing Angel Capital -- History of the Development of Alternative Funding Resources -- Overview of Alternative Funding Resources -- CHAPTER 9 Directory of Alternative Funding Resources -- Directories, Printed and Software-Based -- Incubators.

Entrepreneurial Finance Conferences -- Investor Education Meetings and Conferences -- Venture Forums -- Venture Capital Clubs -- Offline Investor Networks -- Online Matching and Search Services -- Financial Intermediaries -- CHAPTER 10 Building Your Own Database of Angel Investors -- Introduction -- Hurdles -- Data Entry -- Backup -- Cost -- PART FOUR UNDERSTANDING THE ANGEL INVESTMENT PROCESS -- CHAPTER 11 The Venture Investing Process -- Introduction -- Generating Deal Flow -- Due Diligence -- Business Valuation -- Negotiating and Structuring the Deal -- Risk as a Driving Force behind Deal Structure -- Definition of Negotiation -- Elements in Structuring the Private Placement -- Overview of Deal Terms and Provisions -- Overseeing and Advising Postinvestment -- Harvesting Returns: Realistic Exit Strategies -- CHAPTER 12 Preparing for Due Diligence -- Introduction -- Prescreening -- Management -- Business Opportunity -- Industry -- Products or Services -- Market, Sales, and Distribution -- Competition -- Research and Development -- Production -- Intangibles -- Legal Due Diligence -- Financial Due Diligence -- Questions About Projections -- Questions About Capital Requirements -- Questions on Assets in the Pro Forma Balance Sheet -- Questions About Liabilities -- Questions on Shareholders' Equity -- Questions for the Income Statement -- Questions for the Cash Flow Statement -- Questions for the Use of Proceeds -- Questions on Financial Assumptions -- Lists for Reference Checks -- CHAPTER 13 Valuation of the Early-Stage Company -- Introduction -- Pricing as Good Judgment, Not Formulae -- Risk -- Negotiating Valuation -- Sweat Equity -- The "Living Dead" -- Strategies for Circumventing Negotiation Roadblocks -- Fundamentals of Valuing Start-Up Ventures -- Macroeconomic Forces in Valuation -- Risk Profile of the Investor -- Company-Specific Risk.

Investor Involvement -- Correlating Rate of Return with Time to Liquidity -- Multiples -- Discounting Projections -- Valuation Methodology Used in Early-Stage, Private Equity Transactions -- Dilution -- Truisms in the Valuation Process -- Caveats for the Entrepreneur -- APPENDIX A How to Write and Present an Investor-Oriented Business Plan -- The Target Audience -- Introduction to the Business Plan -- What Does Your Business Plan Need to Contain? -- Creating a Business Plan -- Executive Summary -- Mission or Charter -- Description of the Business -- Ownership Structure and Equity -- Description of the Product/Service -- The Market -- Description of Industry and Trends -- Marketing Strategy -- Marketing Plan -- Sales Plan -- Operations, Research and Development Strategies, and Plans -- Management, Organization, Personnel, and Information Systems -- Objectives and Milestones -- Financial Projections -- Supporting Documents -- Preparation and Delivery of Your Presentation -- Preparing an Effective Presentation -- APPENDIX B Legal Primer on Securities Law Issues for Nonlawyers -- Contents -- Foreword -- Overview -- Private Offerings-The First Step -- Public Offerings -- Disclosure Documents -- Integration Rules: Timing -- Restricted Securities and Trading -- The Internet -- Federal/State -- The '40 Act -- The Usual -- Sales-"Agents" (California) -- Suggested Reading List -- Glossary -- About the Authors -- Index.