Worthworm Wisdom

Insights for entrepreneurs & investors

4 Ways Angel Investors Can Make Their Lives Easier with Worthworm

Posted by admin on 2013-12-03 03:51:40

The life of an angel investor may seem glamorous from the outside, but behind the scenes, it’s often fraught with stress and pressure. Entrepreneurs usually feel that they are the ones putting themselves on the line in funding negotiations, but investors have equal amounts of anxiety – some related to similar issues the entrepreneur is concerned with, like business valuations, and others that are unique to the investors’ role, like whether they will get their money back. Whether this is one of your first angel investments or you’ve funded numerous ventures, Worthworm can make the process faster, easier, and more successful.

Here are some of the ways angel investors can benefit from using our tool:

1. Standardize due diligence in the screening phase and beyond to facilitate an apples-to-apples comparison of companies seeking funding.

As an investor, you are likely bombarded with requests for funding and mentorship. How do you tell which ventures are the most likely to succeed? What’s the best way to decide which ones will make the most return on your investment? Worthworm helps answer these questions and more by standardizing due diligence and providing an easy way to compare ventures side by side in order to determine the best opportunity for you.

By requiring entrepreneurs seeking funding from you to go through the Worthworm questionnaire before meeting, you will save time and help them prepare by thinking through questions you will likely ask. Our interactive tools and reports also help identify ways to minimize risks and maximize opportunities so you can feel confident in your investment.

2. Decrease the pre-money valuation gap between you and the entrepreneur. 

By nature, business valuation conversations are typically one of the most contentious parts of the funding process because both sides are coming in with somewhat competing positions. In addition, many entrepreneurs are not familiar with how to calculate a credible valuation, so investment discussions often turn into disagreements about the valuation methodologies used.

Worthworm solves this problem and makes your conversations more comfortable by providing a simple way to calculate a credible PMV. Our sophisticated system combines the top valuation methodologies used by angel investors with relevant valuation comps and proprietary Real-Options technology. The result is a sound valuation that you and the entrepreneur can agree on quickly, which reduces negotiation time, improves confidence on both sides, and sets you up for a positive relationship.

3. Promote transparency and collaboration.

Collaborating with entrepreneurs to work through funding negotiations often involves a significant time investment and coordination among several parties. Worthworm makes this process easier and builds confidence in all stakeholders involved by offering collaboration functionality that allows account holders to invite investors, partners, accountants, and lawyers to have a “seat” at their table. Then, as an angel, you can help complete the questionnaire, assess risks and opportunities, and develop strategies to drive the venture toward success. Getting involved early and seeing the inputs underlying the company’s valuation helps build trust between you and the entrepreneurs, as well as feel more confident that you have all the information needed to make a wise investment decision.

4. Make post-funding oversight easier and more effective.

In addition to providing credible PMV calculations, Worthworm’s interactive tools and reports allow you to unbiasedly evaluate a venture’s risks and opportunities. These resources are invaluable when initially analyzing a business, as well as overseeing it after funding is secured.

Prior to monthly board meetings or reviews with you and other investors, request that the entrepreneurs revisit their Worthworm questionnaire and reports, update the information to reflect the venture’s current state, and bring the reports to the meeting. This process keeps them accountable and makes it easier for you and other stakeholders to manage the venture on an ongoing basis.

Want to see how Worthworm could help with your due diligence? Or curious about how much your venture could be worth? Or looking for a world-class teaching tool? Then try a subscription to Worthworm, and let us help you.