- June 11, 2020
- Posted by: Ajene Watson
- Category: Coffee Talk
In the Inc.com piece titled “What to Expect When Innovation Accelerates,” author Molly St. Louis declared our PAI (Public Accelerator-Incubator) business model “one innovational masterpiece that’s a joy to watch.”
It has been three years since Inc.com unveiled our PAI to its readers. This was likely the first introduction of the idea that Angel Investors could access liquidity from private investments much sooner than their typical 7 to 10 year time horizon (for a liquidity event), without giving up any of their private equity investment. The program’s name wasn’t mentioned then, but shortly thereafter, we introduced Angels Plus (Angels+).
The idea of Angels+ is simple: accelerate the funding process between angel investors and qualified startups.
The benefit to angel investors? Access to faster liquidity.
To DigitalAMN? The equity from those companies accelerated would make up the composition of our DAMN equity portfolio and contribute to its overall value.
The trick however, is not to execute Angels+ with just any investor, but instead with what we call ‘Smart Money’ investors. These are angel and early stage investors that tend to enjoy a higher rate of successful returns than traditional investors. Take for example an angel investor who had the foresight to invest in Facebook, Amazon, or Uber, while they were still young. Who are we to argue with their instincts to pick good opportunities?
Vezt, Inc. became our first Angels+ transaction. And yes, while there is an interpersonal relationship with management, what gave us the comfort and inspiration to execute our first Angels+ deal with them, is that they had one heck of a ‘Smart Money Investor’ behind them. Who were we to argue? But don’t take our word for it, the stats speak for themselves…
Between 2016 and 2017, Vezt raised over $3M and launched their App in late 2017. By mid-2019 the company reported:
(i) over 70,000 app downloads;
(ii) average users spent approximately $110.00 per investment;
(iii) reorder transactions grew to 65%; and
(iv) the average customer purchased the rights to 4.2 songs
While they still have a long way to go, the last noted estimated valuation of Vezt, Inc. was $15M. I do believe that adding this company to our equity portfolio using Angels+ was a worthwhile endeavor, one that we look to further expand.
Now that we have more data around the Angels+ process, with the value proposition to both the startup and DigitalAMN shareholders, as well as angel investors showing results, we will look to complete additional Angels+ transactions. However, as we look to supercharge the size and value of our DAMN equity portfolio, in addition to Angels+, we will also roll out Angels+ Pro and Angels+ Premium.
Both the Angels+ Pro and Premium model provide angel investors with even greater risk mitigation and liquidity tools than our basic Angels+ program. What’s most attractive, however, is how much more value is delivered to DigitalAMN through these transactions. Angels+ Pro increases our investment and working capital substantially, while also increasing the size of our equity portfolio. Angels+ Premium significantly increases our equity portfolio size and value with more seasoned and established companies, mitigating our own transactional risk.
We are currently in talks with a well-connected ‘Smart Money’ investor who anticipates their likelihood of using both programs in the upcoming months. We’ve worked diligently with this particular investor to initiate both the Angels+ Pro and Angels+ Premium capital formation liquidity programs and we’re hopeful our efforts will soon come to fruition. Stay tuned for our next announcement on this exciting endeavor!