WHAT IS ANGEL INVESTING? WHO ARE STATELINE ANGELS?

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1 WHAT IS ANGEL INVESTING? WHO ARE STATELINE ANGELS? April 2013

2 What is Angel Investing? The term angel comes from the practice in the early 1900 s of wealthy businessmen investing in Broadway productions. Investors look for a high return in return for taking a high risk. Usually a bridge from self funded financing to VC financing or a strategic buyout.

3 Most Angels Invest close to home. Invest in small start up companies. Provide mentoring and consulting to start ups. Accept high levels of risk. Require a 5 to 7 year exit strategy. Want right of first refusal for next round.

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5 Angel Groups Invest mostly in Startup & Early Stage Deals Angel Groups

6 Growth in Number of American Angel Groups Sources: Center for Venture Research (pre 03 data) and Kauffman Foundation/ACEF (04-10 data)

7 Angel Investments in most Industries Biotechnology Business Products/ Services Computers & Peripherals Consumer Products/ Services Electronics/ Instrumentation Financial Services Healthcare Services Industrial/ Energy IT Services Media & Entertainment Medical Devices & Equipment Networking & Equipment Other Retail/ Distribution Semiconductors Software Telecommunications Source: ACA Membership applications - 40 groups reporting ( )

8 Midwest Angel Deals in 2011 v. 2012

9 Hail to the Job Creators

10 Angel Groups Good for Entrepreneurs Angel investors can be found! Pitch many investors at same time Angels pool their capital, invest on same terms Likelihood of better, more savvy investors Angel Groups provide connections to other investors

11 Investing through Angel Groups Variety of business experiences improves evaluation of opportunities Standardized processes & term sheets Greater deal flow through Angel Group networks Pick and choose the deals you like Greater potential to diversify portfolio Great camaraderie among like minded

12 Angel Investing Portfolio Strategy VCs exit in 3 5 years (assume 5) Angels invest earlier and expect to exit in 5 7 years (assume 7) A balanced angel portfolio contains at least ten companies. Consequently, angels should invest in 1 3 companies per year Build to ten plus company portfolio gradually A portfolio of companies in all stages of development Good balance for investors Angel Investing is risky One or Two out of Ten investments will bring most of return Hard to tell at start up stage which companies will be successful Higher risk with higher reward make it a small portion of your overall investment portfolio

13 STATELINE ANGELS

14 ABOUT STATELINE ANGELS Founded in Investments $7.6M invested Average Investment ~$250K (excluding NMT)

15 STATELINE ANGELS MISSION The Stateline Angels provide investment capital to vetted early stage companies with leading edge technology in the IL/WI region. We utilize the combined expertise of the group to co invest with the objective of positive risk adjusted returns. Members of Stateline Angels may also participate in angel investing to support economic development, to mentor and advise start ups, to learn about innovative new technologies and to network in a highly engaging entrepreneurial environment.

16 SLA Investments (thru August 2015) Investment Sector Business Stage Advanced Materials 3 Energy/ Industrial 4 Medical Devices 4 Software 5 Consumer Products 1 Growth 3 Early Revenue (<$2M) 5 Pre Commercial Dev. 4 Exit/ Inactive 5

17 What Stateline Angels investors look for: 1. A market opportunity sufficient to create a business with at least $50 million in revenues. 2. A compelling, well-articulated strategy for capturing and defending a significant market share. 3. Proprietary technology or other strong barriers to market entry. 4. Strong management (not necessarily a complete team) with relevant and successful experience. 5. An exit strategy for the investors. 6. A desire for advice and coaching. 7. Lastly, the company valuation must fit within our risk/reward expectations for the investment.

18 Beloit WI based NorthStar will become the first US producer of Mo 99 (medical radioisotope) in early The NorthStar process does not require the use of highly enriched uranium, and has received support from the Dept. of Energy.

19 Formed to commercialize Mayo Clinic s innovative approach to patients undergoing hemodialysis Advanced software manages individualized patient dosing of Erythropoietic Stimulating Agents (ESAs) Reduces variability in hemoglobin levels and anemia Reduces cost and improves patient lives

20 A leader in terahertz (THz) knowledge since 2008, developing unique IP for the detection, imaging, & creation of THz light. THz Enhanced Applications: Industrial markets THz only solutions for semiconductor quality control Security & Defense Concealed object detection and aviation brownout solutions Biomedical Assessing hydration differences for cosmetic and thin tissue imaging Composites Identifying structural or layered defects

21 (ADT) harnesses the superlative properties of nature's perfect material by turning natural gas into diamond in a highly controlled, reproducible process for a variety of industrial, electronic and medical applications UNCD Components for Rotating Equipment UNCD Wafers NaDiaProbes : All Diamond AFM Probes

22 LUMEC CONTROL PRODUCTS, INC. Save space. Save energy. Eliminate downtime.

23 Our Meetings Approx. 8 meetings each year Generally from 4 7:00 pm 2 new company presentations Casual dinner and beverages

24 Our Investment Process Preliminary screening (SLA screening committee) Company presentation at meeting Group discussion follows with initial indication of interest Due Diligence report (Third party plus SLA experts) Due Diligence discussion at following meeting. Final indication of interest and level of investment Specific LLC Formed for Investment Specific LLC formed for investment

25 Individual Investment Level Example $10,000 $15,000 $25,000 $50,000

26 STATELINE ANGEL INVESTMENT FUND New option for Investors without the time to participate actively in Stateline Angels Sidecar Fund to invest along with Stateline, under prescribed terms Operates like any investment fund, but no carry for management. Increases dollars available to entrepreneurs, and provides greater leverage for terms

27 Sept. 15 Beloit Event Investors Edge: Stateline Angel Reception Tuesday Sept. 15 th at 5pm The Beloit Club Angel Investing Networks are active all over Wisconsin - why not in the Rock County/Stateline area? Accredited Investors* are invited to the foremost Angel investing event in Rock County. Learn about Angel investing, Angel Networks, and how other regions of Wisconsin utilize Angel investing for growth Hear from a successful Rock County entrepreneur that utilized Angel investment Learn more about Beloit s startup incubator - Speakers include: Tom Still, President, Wisconsin Technology Council George Messina, President & CEO, NorthStar Medical Technologies Rob Gerbitz, Hendricks Commercial Properties Please RSVP your interest to attend and confirm that you meet Accredited Investor criteria to: rsvp@statelineangels.com * Open to Accredited Investors only. For an individual to be considered an accredited investor, they must have a net worth of at least one million US dollars, not including the value of their primary residence or have income at least $200,000 each year for the last two years (or $300,000 together with their spouse if married) and have the expectation to make the same amount this year.

28 THANK YOU August 2015

29 Crowd Funding John Jacoby Founder, Flox Event

30 Linh Nguyen Kiva Zip Fellow, Kiva.org Linh Event

31 Traditional Funding Alan Larsen VP Chief Credit Officer, Peoples Bank Event

32 Q & A Event