Deal Handling for Entrepreneurs
Our intent is to find a few local start-ups per year that have the potential to build real wealth. The goal is that the founder becomes modestly wealthy within just a few years of starting this business. That is how the early investors reach the high returns appropriate to the risk they accepted. This process is about evaluating a good business opportunity. The experienced entrepreneurs that make up NTAN know how to recognize a good plan when they see one. Most good plans turn out to be very simple.
6 Major Steps
Initial Contact and Evaluation
Occurs any time, via email, phone, or in-person. Initiates exchange of non-confidential summaries and direct conversation about current status and near-term plans. This is a two-way communication with the purpose of determining if there is mutual benefit to further engagement, and if so what the next action item is on each side. This activity is usually done by the NTAN Executive Director who makes no decision about the ultimate investability of the Company.
Opportunity Review and Selection
On the 3rd Tuesday of each month entrepreneurs explain their investment opportunity to our Selection Team of about 10 Members. Can be via web, but in-person is better. Total time per company is 15 minutes, no more than 7 of which is the presentation. This step makes the company an NTAN Applicant for Funding and requires a once-per-company-lifetime fee of $250. Often companies present multiple times as they make progress.
Selected entrepreneurs (2, maybe 3 per month) ask Members for their money. Occurs on the 1st Thursday, usually 30 Members in attendance. Each company has 30 minutes to present and answer questions. The Applicant Company getting the most interest moves forward into Due Diligence. Runners up are always welcome back as they make progress. Requires a once-in-a- company-lifetime fee of $500. Some companies present multiple times at this level also.
Analysis conducted by interested Members and takes about 60 days. We use a time tested workplan very typical of the type. The goal is to identify the unique Fundamental Factors that will make this company successful or not. Often more and more Members become interested as this effort progresses.
Quality companies can expect 10 to 20 Members to invest $25,000 each and a few to risk larger sums. We want terms that build strong alignment among Founders, Investors, and Management and typically buy Preferred Stock. If $100,000 is invested by Members and their associates there is a $1,500 Administrative fee due at closing, if more than $250,000 invested the Admin fee is $5,000. In 2012 the average NTAN investment per company was $550,000.
If the NTAN activities result in a material amount of risk capital injected into the company we will expect representation on the Board of Directors. It is common that the early investors have contractual control over assumption of debt, sale of additional capital stock, and management compensation. Seldom do these investors own a majority interest in the company. NTAN investors are a benefit to any Cap Table.
Additional information firstname.lastname@example.org Chuck McCoy 214-394-5832