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ANGEL VENTURES NEWSLETTER Year 5, Vol. 7, July 2013

“Small opportunities are the beginning of great companies” Demóstenes Do i really should write a business plan to raise capital? P. 2 Hey... Welcome to The Venture’s World. P. 4 10 Marketing tactis that every startup should take. P. 7 Angel Ventures USA events entrepreneur. P. 9 y 10 PWC Sessions. P. 11 Financial vocabulary and recomendations. P. 14 y 15

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Do I really should write a business plan to raise capital?

By: Claudia Ludlow, Project Manager, Angel Ventures Mexico

If you are raising capital, you have probably been a in a heated argument about whether a business plan is actually necessary to evaluate your project? Or Is the amount of requirements that are being requested necessary?

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Many people do not believe in business plans or they are too lazy to make one, and to some extent they are right, honestly if you are going to produce a document that stays “powdering” on the desktop of your computer or worse printed on your bookshelf, better, do nothing, it is indeed a waste of time and effort.

I am a firm believer of empathy, so I think that the best way to analyze this is putting ourselves in the investor’s shoes.

The business plan In my opinion the real reason why many people are against business plans is because they associate it to a very long document and hard work. If that’s your real concern, read the next quote:

Good things, when short, are twice as good.

Baltasar Gracián.

ANGEL VENTURES NEWSLETTER

Guess what?

If an entrepreneur does not want to write a long business plan, an investor does not want to read a huge business plan either, now that you know that the two are on the same page, create a focused business plan, there are many methodologies that today have nothing to do with sitting down to describe a business, but to design one. One of my favorite methods is the canvas, but there are many out there. Make sure the person who will receive your plan know the methodology, if not you should explain it very briefly. (Tip: The new “workhard, playhard” is “worksmart, playhard”.)

Business Plan Document ≠ 400 pages in MS Word.

Why an investor or fund requires a business plan? Aren’t They too busy to be reading a business plan?

In effect, investors and fund managers are busy people, and therefore they understand that time is the most valuable asset, but not only their time, also yours. Getting to an interview prepared and aware of what they are going to listen is helpful, even be able to establish if they cannot invest in your company for your investment thesis without making you go to meetings, is time saved for both.

“I heard that the guy who invested in Google says he does not believe in business plans, so he allocates with a pitch the capital ...”

Or how about the famous “I saw in Dragon’s Den (or Sharks Tank) ...”

This and other myths of Venture Capital make us having a biased perspective in terms of processes, although this usually happens, it happens at the begging (seed level) of the Venture Capital and it is not the case of all funds, economies and industries, and definitely is not representative of the industry in its aggregate.

Your first one hundred thousand dollars will involve a different challenge to the three million dollars of expansion, both are very different stages. Many times instead of asking you for a business plan, you are asked to attend a Bootcamp or to an acceleration process, and as my mother would say: “You win some, you lose some”, those are investments of time to make your investor trust you and understand your business, but in the end, the currency is the same, time spent.

Identify what stage your company is and based on that think about the amount of information that may be required, more operating time is equivalent to more information and longer processes.

So then ... Do I need it or not a Business Plan?

That depends on who you approach to raise capital and the size of your ticket, if a business plan or additional documents are required to determine the investment fund, you have to deliver it, if you are comfortable with the methodology of work or any particular requirement, approach to someone else whose methodology makes you feel comfortable. Funds are a motivation to apply for the amount of information, but have enough information to have a little more certainty is a volatile industry.

A business plan should be a document that guides the company, never lose sight that to the investor it is a document to analyze, but for you as an entrepreneur it should work as a “to do list”.

There some people who remember all their unresolved thing, meetings, calls without an agenda, most of us need an agenda, an electronic calendar or the famous meetingrequests. If you’re going to sit down and develop something because you need investment, not miss the opportunity to reinvent yourself and work on strengthening your project.

The man who has no memory makes one out of paper.”

Fragment of Love in the Time of Cholera by Gabriel García Márquez

Things that should not be missing in a business plan: • The Curriculum Vitae of the management team.

• “The best” executive summary that you have written in your life.

• Index / calendar / guide with hyperlinks (or anything that make the reader go through the document in an easy way).

• Financial information which can be track in Excel (deliver projections, investment breakdowns, or any other figure, pasted as a value in PDF, Word, etc., is very similar to not deliver anything, you’re not giving a report. Remember that you are providing information for analysis).

• Objectives or milestones that follow the philosophy “SMART”: Simple, Measurable, Achievable, Realistic, Temporary.

It is almost impossible for a company that already operates receive money without the investor see at least its historical financial statements, if you have debt or where did the initial capital came from, all this must be documented, just to mention some examples.

- See more at: http://www.ellas2.org/2013/05/28/de-verdad-debode-escribir-un-plan-de-negocios-para-levantar-capital/?utm_ content=buffer30874&utm_source=buffer&utm_medium=twitter&utm_ campaign=Buffer#sthash.2aEoqzpd.dpuf

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I want to start my venture.

But how??

How should I start to work on my project?

Do i need capital for my venture?

What will b to start uep the right path my venture?

tion u l o s the stions? e b n a ue q c e t r i a t Wh hese en of t

Hey...Welcome to

The Venture’s World Por: Sherwa Sharma, Project Analyst, Angel Ventures México

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These questions are normal, which comes into the mind of any entrepreneur who wants to start any project.

Don’t get worried about how you’re going to fund your new venture? You’re not alone.

Securing start-up capital is the first hurdle all entrepreneurs face when starting a venture. While it isn’t necessarily going to be easy, you can raise capital a little bit easier by effective planning and arming yourself with information.

An entrepreneur is an individual who creates and manage a business, taking the financial risk associated with it. So, you are the guy who leads your venture. You know your venture more than anybody else. You know the positive and negative points of your project. Your idea is superb; you can make millions and billions with that. But to get start, first of all you will have to find the source of capital for your venture. In this regard one can ever start by personal contacts and then professional ones. But in my views, family, friends, relatives and colleagues are not the best option to raise money, as you miss the chance to get capital with knowledge of market and suggestions from the experts.

“Recently I read an article in which Ellen Weber the executive director of Robin Hood Ventures, a Philadelphia-based angel investment group, and managing director of the strategic consulting firm Antiphony, share some of her insights into entrepreneurial ventures from an angel’s perspective.

What are the advantages to seeking funding from an angel investor (as opposed to venture capital groups or banks)?

Angel investors fill the funding gap between earliest start-up (where you should self-fund, or obtain funds from friends and family) and the later-stage funding done by venture capitalists and banks. Angels are prepared to fund smaller investments, and are prepared to invest at earlier milestones. Most VC funds invest when the company needs $5 to $10 million dollar, and has enough revenue to predict success. Angels will invest as early as proof-of-concept, although most angels wish to see some revenue. What we are seeing today is angels investing in a round where terms are tied to getting VC funding at a later date.”

In this way Venture Capital is the best option here to raise and secure start-up capital. An entrepreneur can raise money at any stage of his business. Every firm and VC has their own specific strategies, philosophies, and attributes, but in overall, they all need to know how the business model works, how much money are you raising, and for what reasons. According to Forbes, before getting in touch with any VC firm, entrepreneur should know the answers of following questions:

• Who am I approaching?

• What type of person are they?

• What is this firm’s specialty?

• Who have they invested in before?

• Where are they at in their fund cycle?

• Are they actively investing in new deals or simply reinvesting in their current portfolio companies?

• What is their investing strategy?

• How much does this firm typically invest?

• And most importantly, do I want to have this investor as a longterm partner?

Once you have decided to go for VC capital and select which fund(s) are you going to apply, and If you’re ready to take your business to the next level with the assistance of a venture capitalist, there are a few things you should consider as you prepare to approach your potential investor.

Once you’ve identified the venture capitalist(s) you’re interested in approaching, you’ll want to begin by making an initial contact.

Ideally, this is an introduction made by a business contact or mutual acquaintance - someone who has an established relationship with the investor and whose input the investor values. If that’s not possible, however, you can send a query letter, or even just a brief e-mail introducing yourself and your project, and asking for an opportunity to meet in person.

Give the investor ample time to respond (two weeks is adequate) before following up with a phone call. It’s not necessary to include extensive documentation with your initial letter or e-mail, although you may wish to attach a one-page executive summary of your business plan to give them an idea of what you’re doing.

When you get a face-to-face meeting with your potential investor, that’s your chance to show them what your venture is all about. They’ll want to know about the history of the business, the state of the industry (and who the competition is) and projected returns on their investment, as well as who’s on your team and what kind of experience they have.

Your presentation doesn’t need to be elaborate, although it should be interesting - essentially, you want to tell the story of your business, and show the venture capitalist how their investment will write the next chapter in that story. Avoid exaggeration and hyperbole (“This is an once-in-a-lifetime opportunity!”). Your business plan, financial projections and experiences should speak for themselves.

Keep in mind that you don’t have to stage a nationwide search

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for a venture capitalist; you can probably find them in your community, and in fact, many venture capitalists tend to focus their investments in their own geographic area.

What as you prepare to approach a venture capitalist, keep in mind these do’s and don’ts: • DO get prepared before you start looking for venture capitalists.

By the time you start researching investors, your business plan should be exactly airtight, your presentation should be ready and you should already know the answers to the questions you can assume you’ll be asked. If components of your business plan are incomplete, or if you’re still hammering out a few wrinkles in your financial projections, you’re NOT ready to meet with potential investors. Hold off on reaching out to venture capitalists until you’re prepared to make your presentation.

• DO your homework.

Find out what you can about your investor before you send your query letter. Know how your venture capitalist invests the industries they favour, the size of investment they usually make, and the stage at which they usually invest in a business.

Personalize your e-mail or letter so the investor knows you made the effort to learn about them before approaching them for money.

• DO use your connections.

A venture capitalist is more likely to review your plan favourably if you come recommended by a reliable source. Talk to your attorney or accountant to see who they can introduce you to, or ask a successful entrepreneur you’ve met through your professional networking efforts for an introduction. Be sure the person making the introduction is familiar with your business and supportive of your new venture - they’ll be your first emissary.

• DO utilize technology.

Use Excel, PowerPoint and other applications to demonstrate to a venture capitalist that you’re worth investing in. Make your presentation informative and interesting, but not overwhelming.

Use slides to highlight key components of your presentation and help you tell the story of your venture - including the role your venture capitalist will play in helping you move forward.

•DO NOT show laxity in contacting investors.

It may seem like a timesaver to just prepare a blanket query letter and send it to all the venture capitalists you can find, but it’s actually a waste of your time and theirs. Many venture capitalists specialize in a particular field or industry; by contacting investors without bothering to find out what they invest in, you’re telling those investors that you didn’t do enough research. That’s definitely not the message you want to send. Acquiring venture capital is too personal, a process to be attacked in a scattershot manner. A copied-and-pasted e-mail, with your business plan attached, isn’t going to cut it - you’ve got to show your potential investor that you’ve taken the time to learn something about them.

• DO NOT take it personally.

If the first venture capitalist you encounter passes on the opportunity to invest in your endeavour, move on. Venture capitalists are looking for specific types of investments and returns, and they are often methodically developing investment portfolios that meet certain individual requirements. Remember - it’s not personal, it’s business.

If your idea seems feasible and investors get impressed by your presentation, then you can get chance to grow up your venture as much as you want.

So now, as you will do your best, and will start your venture soon, our best wishes are with you.

References: http://www.forbes.com/fdc/welcome_mjx.shtml http://www.womeninbiz.sbresources.com/index.cfm

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10 Marketing tactics that every startup should take Source: Miguel Angel Garcia del Valle Lajas Translated by: Abigail Oviedo

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here are certain marketing strategies that every startup is already doing: content marketing, SEO, presence in social network, newsletters, web analytics, etc. But there are other equally important areas that are ignored by most startups. Thus, they miss growth opportunities and differentiation from the competence.

The most useful marketing strategies that are often ignored by the

startups are:

1) Surveys: The key of marketing is to know what the customers want and give them that. To know what they want, the easiest solution is clear: ask. Despite how obvious it is, there are many startups that do not conduct surveys to potential and current customers.

What is not easy is finding the optimal survey. If you do not hit with the right questions, make too many questions or use the wrong tool, you probably will end up with useless answers.

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2) Usability: With hundreds of websites and services to choose from, users no longer bother to try to understand a service that is difficult to use. U.S. Startups already understand this and give the same importance to the presentation of the service (design and usability) and the functions of itself (programming).

No matter how wonderful your product is if your client does not understand why he should use it, why is it better than other alternatives and how he should use it to get the best of it. And this is where disciplines like “copywriting” or neuromarketing, or A / B test fit in.

In this field there are many actions that can be performed: usability tests with real users, heuristic test conducted by experts, eye-tracking, recording of user’s mouse movements, etc.

7) Optimization of websites: The website becomes the center of your entire marketing strategy. Therefore it is the key to convert visitors into customers.

3) Heat maps: Most companies already use web analytics services (Google Analytics mainly), but the statistics of those services do not allow us to actually visualize how users are interacting with the web.

To optimize it, the best way is to perform an A / B test; you may test different versions and verify statistically which one provides better results.

The tools of “heat maps” allow us to see where users are moving, where they are doing click, how lower they go, etc. This can be the key to improving the order of the elements of a website.

4) Loyalty: It is usual that all companies (and especially the newly launched startups) invest all of its efforts to attract new users and customers, but then they do not spend hardly anything to retain them.

For startups with subscription models (for example: SaaS software),the churn risk is what can make the difference between success or failure. Something similar happens with startups that are dedicated to the sale point (for example: ecommerce), which usually only obtain important benefits if they are loyal to their customer, thereby increasing the frequency and volume of purchase.

5) “Lifecycle emails” (customized emails): To improve the loyalty processes mentioned above, many companies already use email marketing as a way to keep in touch. Mainly they use newsletters and sometimes preprogrammed autoresponders with a sequence of emails.

These are interesting tactics, but generally the best results are obtained with the emails tailored to each user’s activity (according to the time they have without buying or open our emails, their purchase history, or the pages they have visited lately, etc.).

6) Optimization of commercial messages: You will often see startups offering products of great value, but they do not know how to communicate properly on their websites and promotional messages.

8) Optimization of emails: The same criteria as in the previous section apply here. The best way to optimize key emails (mass mailings, newsletters, etc.) is to try different versions.

In this case, it is especially important to test different titles (e-business), because if you do not grab their attention and get them to open the mail, everything else does not matter.

9) Optimization of ads (with A / B tests): If you are investing big amounts in advertising, is an unforgivable sin not try out different versions of your ads to see which one gets more attention (CTR) and, above all, more conversions.

Besides improving the ROI of advertising, with these tests you learn what kind of messages get a greater effect on your target.

Then you can use what you learn to improve other online and offline campaigns.

10) Testing prices: To change prices is probably the most simple and effective way to increase profits. However, there are few businesses that take the risk to make changes and tests to try to approximate to the optimal price structure.

The A / B tests also are useful here in order to measure the effect on revenues and total profits that each price modification has.

What are you waiting for? Summer can be the best time to start developing all these tactics and get your startup ready to sell a lot more around holidays.

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Yolia Health,

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Angel Ventures USA events entrepreneur

one of the project funded by AVM, won 2nd place in MedTech Idol.

By: Emma L. Cruz, Regional Manager of Public Relations, Angel Ventures Mexico

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ecause of its innovative concept Alberto Osio Hernández-Pons, CEO of Yolia Health was chosen among 65 other projects in the medical technology industry around the world to participate in MedTech Idol, an event which has as main objective to present a unique opportunity for the participants to expose their project to a group of active investors interested in investing in their technology.

Yolia’s True Vision Treatment (TVT) is a safe, non-invasive and repeatable procedure for treating presbyopia. TVT is selfadministered by the patient in his or her own home. It employs a combination of personalized gas-permeable contact lenses and specially formulated eye drops – which, when used together, safely modifies the sphericity of the patient’s cornea leading to superior vision. After only 5 days of treatment with TVT patients are able to stop using the personalized contact lenses, specially formulated eye drops and their reading glasses for up to 12 months at a time before re-treatment with TVT is needed.

The event was held in two stages, the first was held on April where 65 companies presented their projects to a panel of independent judges who reviewed and analyzed each of the projects until find the 10 finalists: Yolia Health, LIM Innovation, Endeau, Somnarus Inc., Mighty Oak Medical, Neural Analytics, Neurosyntek, Rock west Medical Devices, Medical and Sonogenix Silver.

Of the 10 finalists, only the top four projects presented a live session which took place in the framework of the XXI Annual Conference of Medical devices, conducted by the law firm Wilson Sonsini Goodrich & Rosati on June 19 in San Francisco, it was attended by over 600 professionals in the medical industry.

The jury included Christopher P. Martin, President, RCT Ventures; Paul Grand, Managing Director, RCT Ventures; Ned Scheetz, Founder & Managing Director, Aphelion Capital; and Brad H. Vale, Ph.D., D.V.M., Head, Johnson & Johnson Development Corporation (JJDC).

Med Tech Idol is organized by RCT Ventures, an investment program of Research Corporation Technologies.

Thanks to the result obtained in the event, Yolia Health is currently in the process of “due diligence” with several investment funds and highly recognized pharmaceutical companies.

With these kinds of results we realize the importance of our work and this encourages us to continue looking for potential companies and projects seeking investment to link capital.

Angel Ventures will continue supporting projects and entre-preneurs, submit your project at www.angelventuresmexico.com

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Angel Ventures USA events entrepreneur

they just keep getting better!

Startup DrinksMX By: Emma L. Cruz, Regional Manager of Public Relations, Angel Ventures Mexico

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his month being a tradition, Angel Ventures USA organized one of the best Startupdrinks of the year. This time the venue was the New Yorker restaurant, located in downtown San Diego.

The expectacular atmosphere framed talks between entrepreneurs, investors and mentors who gathered to share ideas and experiences in the entrepreneurial ecosystem.

We thank all who joined us and especially the New Yorker restaurant to host this months event.

We are excited to meet new faces every issue, not to mention the entrepreneurs that are always with us. Dont miss the next edition.

do not forget to register in:

sandiego.startupdrinks.mx

SESSIONS - ANGEL VENTURES NEWSLETTER

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Scenario of México in the

MIST Alejandra.barroeta @ mx.pwc.com Customers and Markets Bernardo.Flores @ mx.pwc.com Advisory

Michael Porter, contemporary economics guru, said that a nation’s competitiveness depends on the capacity of its industry to gestate acts of innovation, which has led to consider innovation as an engine of growth and economic progress linked Jim O’Neill, global economist, member of Goldman to the research and development.

Sachs and author of the term BRICS, has formed a new group of emerging countries: Mexico, Indonesia, Good news: in 2013 Mexico rose 16 positions to place 63 of 142 in South Korea (SK for short) and Turkey. There is the index of the World Intellectual Property Organization, leaving an important reason why countries have a rapid Brazil in the 64th and following Costa Rica in position 34. We are development perspective and this is by aligning very creative! But we were not capable enough to encourage the following factors: its large population, rapid production processes and services that promote the evolution population growth and democracy as a system of government. of “Made in Mexico” designed or invented in Mexico.

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Mexico is heading towards the growth of its economy, and one of the most important reasons is the advancement of structural reforms and secondary legislation in the field of education, telecommunications and energy, which if approved could impact, according to the Mexican Institute for Competitiveness , in an increase of 1.7% of GDP.

The monitoring of cyclical indicators allows comparisons between countries, which has built a benchmark for foreign investors context and supervisory bodies who seek to deposit their interests in those countries that demonstrate economic strengths. This is how structural reforms become important in the performance of industries, which shall strengthen the effectiveness of legislative changes to boost golden productivity Being part of the acronym that seems to replace’S BRIC (Brazil, and Mexican 2020 off with gold.

Russia, India, China), requires that foreign policy is built on solid foundations, in an internal structure that is able to permeate So what really makes us form a block and a promise with the sustainable long-term stability. other countries of the MIST? The great mass of the population and the rapid increase of demographics represent a tangible In order to make a projection of the future is necessary –not opportunity of earning capacity of the countries, as they will optional-, to know where Mexico is today, and what is being have most of its inhabitants aged to generate income. done to locate competitively tomorrow. Fortunately, it is easier and more pleasant than it might seem now that we live in a knowledge society with diverse information within reach of a click.

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SESSIONS

The following graph shows the percentage contributed by each country in terms of population MIST, the remarkable leader is Indonesia, with 243.801 million inhabitants, a figure that surpasses Mexico, Turkey and South Korea together. Unbelievable, right?

However, the per capita income of one Indonesian is the smallest of the block.

While FDI in Mexico is the largest within the MIST with 1.2%, is far behind the 16% of China, leader in this category within the BRIC’s.

What can we offer? Mexico is a nation of wealth-and-contrast, which announces demographic benefits to various industries.

By analyzing the contribution of each country% to global GDP (left), with the number of inhabitants and GDP per capita (top from left. To right.), South Korea is the country that has best capitalize on his hand work because 1 Korean perceives more than twice a Mexican and Turkish, and approximately 7 times more than one Indonesian. Still, Indonesia ranks 46th in the Global Competitiveness Index, up from 58 in Mexico and 59 in Turkey - not to mention the place 24 South Korea (SK)

The confidence that the foreign investors puts directly reflects the positioning of Mexico, and even when Korea is more productive, they received 4 times less foreign direct investment (FDI). Bottom left.

Promoting Mexico as a productive nation also requires solid foundations, Mexicans that push our leaders to create business relations with most countries, policies and legislation that facilitate the creation of businesses and encourage higher education and training.

Finally, finding a balance in full, plus structural reforms should do an internal analysis of the industries involved through monitoring of performance indicators for use in decision making.

Below is an example of collaboration between various social and governmental agencies, local and international, in order to generate statistics and provide information.

• In the financial sector, the Mexican Institute of Finance Executives (IMEF) publishes the Business Environment Indicator Mexican IMEF (IIEEM), which measures the business climate around the economic environment and predicts the path or direction of economic activity in the very short term.

• In the Telecommunications sector the equivalent is the Telecommunications Sector Productivity Index (ITEL), which is issued on a quarterly basis and measures the performance of the main sector output variables. There are also global industry indicators, fixed local telephone, long distance, mobile, public, etc..

• In the energy industry, the National Commission for Energy Conservation (CONAE) collaborated with the International Energy Agency and the Inter-American Development Bank to develop national energy efficiency indicators. And the World Bank also publishes the Electric Energy Consumption (kWh per capita).

It´s an individual task to visualize what would happen in the best case scenario, being this: the implementation of reforms, and compare it to the present political and economic situation. The information exists, there´s no excuse.

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Financial Vocabulary Venture Capital Limited Partnership Investment vehicle organized by a brokerage firm or entrepreneurial company to raise capital for companies that start (Start-up).

Open Repo Repurchase Agreement in which you do not specify a date of repurchase and the agreement may be terminated at any time.

Perfect competition Market structure in which no buyer or seller has the power to alter the market price of a good or service.

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Book Funky Business Jonäs Riddesträle & Knell Nordström

Funky Business tells us that difference rules, and difference comes from the way people think not what companies make. In this world, we can no longer do ‘business as usual’ we need funky business.With its fresh thinking approach and updated with the latest business messages and new examples, Funky Business will ensure you are always on the right side of change.Only talent will allow you to be unique. Forget what has come before. The new edition of Funky Business will rewrite the future for organizations and leaders.

Movie Flash of genius Donald Petrie 2008

Flash of Genius is a 2008 American biographical film directed

by Marc Abraham. The screenplay by Philip Railsback, based on a 1993 New Yorker article by John Seabrook, focuses on Robert Kearns and his legal battle against the Ford Motor Company when they developed an intermittent windshield wiper based on ideas the inventor had patented.

The film’s title, the phrase “flash of genius,” is patent law terminology which was in effect from 1941 to 1952, which held that the inventive act must come into the mind of an inventor as a kind of epiphany and not as a result of tinkering. Although this test lasted little more than a decade, it was most likely an appealing and easy standard for judges and unsophisticated jurors to apply to any given patent dispute when the technology being disputed was beyond their scientific acumen

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