AURORA ANGEL NETWORK
FREQUENTLY ASKED QUESTIONS
Q. Is Aurora Angel Network an investment fund?
A. No. Aurora Angel Network is an angel investor network. Aurora does not make any decisions to invest. It facilitates the deal sourcing process for angel investors who then decide whether to invest as individuals with their own money.
Q. Is this a grant for companies?
A. No. Aurora Angel Network connects angel investors with Puerto Rican startups looking for equity or debt investments. Aurora members usually invest in companies in exchange for a pre-negotiated ownership stake (equity) in the company.
Q. How does Aurora Angel Network evaluate companies?
A. Aurora evaluates companies on a quarterly basis. Companies interested in receiving investment from the network submit an application, which is initially evaluated by Aurora’s administrative team. Select applicants are invited to pitch their company to Aurora’s screening committee. At most one of these companies will be selected to pitch to Aurora’s general membership each quarter, using investment terms which are pre-negotiated between the company and the screening committee. Aurora will provide its members general company information, but it is the responsibility of each individual member to conduct its own due diligence. Aurora does not emit an investment recommendation, it simply facilitates the deal-sourcing process for its members.
Q. What is a typical deal size?
A. Deal size is always dependent on the stage of the company and the quality of the pitch. Some of our portfolio companies require larger rounds of funding to execute, and the total funding “ask” may include involvement from other equity investors and non-dilutive funding sources.
Q. What are the requirements for membership?
A. There are two main requirements for becoming an Aurora Angel Network member: (1) You must be an accredited investor as defined by Rule 501 of Regulation D of the US Securities and Exchange Commission. This means that you must have a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income of at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year. (2) You must be sponsored by a current Aurora Angel Network member.
Q. How does the AAN process work and how many investments can I make?
A. Aurora's goal is to present 3-4 investment opportunities per year to its membership. All investment decisions are made on an individual basis.
Q. What do I receive in exchange for my investment?
A. Aurora typically provides funding support in the form of equity, although certain types of debt instruments may be considered in certain situations. Members receive equity in the form of common or preferred stock as negotiated with the company.
Q. What is the annual commitment?
A. Members commit to conducting at least one $10,000 investment per year.
Q. Are there any membership fees?
A. Yes. Members living in Puerto Rico must pay a $1,000 annual membership fee, while those based outside of Puerto Rico must pay a $500 annual membership fee.
Q. Why are there different fees for out-of-Puerto-Rico members?
A. We do not want to be membership fees to deter potential members. Since non-Puerto-Rico residents have to cover their expenses when traveling to Puerto Rico for membership meetings, we have adjusted their annual fee.
Q. What does my membership cover?
A. As a member of the Aurora Angel Network, you gain access to exclusive networking events, educational opportunities, and pre-screened investment opportunities.
Q. Does AAN take an administration fee from my investment?
A. No. AAN does not charge a management fee or administration fee on investment funds. AAN does charge each company a fee based on the capital raised.
Q. I don’t know anything about investing in startup companies- Is AAN right for me?
A. One of the main benefits of joining an organized angel group is the exposure you have to a wide pool of knowledge and expertise. You can learn from others who have more experience in the startup investment space, discuss each deal with other members, and AAN manages the heavy lifting on your behalf (deal sourcing, due diligence, deal structure).
Q. How involved do I have to be with my portfolio companies?
A. It is up to each individual member to decide how active or passive they would like to be with their angel investing. Many angels prefer to mentor their portfolio companies in a formal board capacity or on an informal basis. Others prefer a more “hands-off” approach, only receiving post-investment communication via the quarterly portfolio updates provided by AAN.
Q. Why should I become a member?
A. As a member of the Aurora Angel Network, you gain access to a growing community of Puerto Rican investors who are interested in giving back to the Island’s entrepreneurial community. Through Aurora, you will have access to exclusive networking events and educational workshops. Furthermore, you will have the opportunity to join fellow investors in pre-negotiated deals, thereby streamlining the deal-sourcing process for you as an investor.
Q. Can I bring my spouse?
A. Yes! Aurora firmly believes that members’ families are an essential part of our community.
Q. Does AAN deploy debt or convertible debt?
A. No. AAN typically provides funding support in the form of equity (preferred stock), although in some situations certain types of debt instruments may be considered.
Q. What kind of companies does Aurora Angel Network invest in?
A. Aurora Angel Network only invests in companies headquartered in Puerto Rico. The network does not restrict investment into specific industries or market segments. Rather, we support companies that have demonstrated the potential for growth.
Q. How do I apply to present to Aurora Angel Network?
A. AAN is pleased to discuss investment readiness and access to capital with any entrepreneur at no cost. If you would like to set up a meeting prior to submitting an application, please email firstname.lastname@example.org
To apply directly to AAN, submit the following documents:
Q. What happens if the application is accepted?
A. If your initial application is accepted, AAN will set up a meeting to get to know your team and learn more about your company. AAN will also start an initial due diligence process (see our website for details).
After this initial meeting, if both the company and AAN feel your company is a fit, several companies are selected to present to AAN’s screening committee. No more than one company can be selected to have the opportunity to present to AAN’s members each quarter. AAN member volunteers will complete the due diligence, negotiate the term sheet, coach the company on its pitch, and schedule a presentation to the members.
Our model is that only one company pitches at a time to the members, therefore all attention is focused and there is no competition during that period.
Q. What are the terms associated with accepting AAN investment?
A. The terms of any AAN investment are negotiated by AAN with the entrepreneur. Every deal is unique, and every term sheet should involve conversation between both the investor and the management team.
Q. What are the costs associated with accepting AAN investment?
A. Each company will pay a fee based on a percentage of the funds raised at closing. This fee is part of the support AAN, which is a not for profit organization, receives in support of its mission.
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