How Angel Investing Works: Courses on Startup Economics

Angel investing course on exitsAs the Seraf Compass was approaching its four year anniversary, our attention turned to more active learning. We collected Compass insights and developed them into a suite of comprehensive courses allowing active learners to access the Compass materials in course form. As the project progressed, we partnered with the Angel Capital Association to co-brand the materials and allow the ACA to use them in their education efforts. Since we share the same mission and values as the ACA, we are very proud to be their official Education Partner. There are eight basic courses organized into four collections. Each course is available in electronic format or as part of one of several hard-copy books, all of which are available in both a student edition and an instructor edition with detailed teaching notes and classroom exercises.

What material is covered in these Angel Finance courses?

Building Portfolio Success will introduce four key topics that all angel investors need to understand as they make investments and ultimately build a successful portfolio of early stage companies:  

  1. Asset Allocation: Portfolio Size, Risk and Diversification

  2. Investment Returns: VC and Angel Returns, Capital Allocation Strategies

  3. Portfolio Management: Portfolio Construction, Tracking and Exits

  4. Maximizing Returns: Tax Issues and Board Compensation

Startup Economics: Capitalization and Exits discusses how early stage companies are financed from inception to successful exit. The course will provide detailed material in five main areas:

  1. Financing Companies: Key Milestones, Long Term Financing Plans

  2. Capitalization Tables

  3. Types of Exits

  4. Timing and Planning Exits

  5. Alignment: Keeping Investors and Management Aligned

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Classroom Exercises

To help increase engagement with students and to improve their retention of the course material, we encourage the course instructors to add one or more exercises as part of the classroom experience. The Instructor Edition of each course contains extensive descriptions of suggested classroom exercises. Exercise descriptions should be reviewed in detail prior to teaching a class and an appropriate version of each classroom exercise should be developed for your particular teaching scenario.

The Angel Finance courses cover a lot of material in a short period of time. Students will benefit from taking a deeper dive into one or more of the topics covered by these courses. For example, we talk about the importance of keeping investors and management aligned. Because this is such an important issue during a company’s life cycle, it deserves a more thorough discussion by your students.

Building Portfolio Success

Classroom exercises in portfolio construction are helpful for new angels to better understand the pace and amount of investing they will need to undertake as they build their angel portfolio. The exercises assume you have your students download their own copy of Seraf’s Early Stage Portfolio Modeling Tool.

Startup Economics: Capitalization and Exits

Classroom exercises on financing companies from seed stage through to exit help angels understand the paths a company might go down before returning capital to the investors. One of the core concepts angels need to understand relates to the company’s Capitalization Table. Start by having your students download their own copy of Seraf’s cap table tool.

Based on the amount of time you allocate for the classroom exercise, you should be able to rely on a couple of tables to help you pull out one or two key insights on each of the key issues in the exercises. And depending on the amount of available time, these reports should bring a number of interesting questions and talking points forward for the instructor to comment upon.

Well executed classroom exercises will have a big impact on how your students perceive the value of the course in their personal experience. Make sure you take time in advance of teaching these courses to review this exercise plan and prepare engaging exercises. And, don’t be surprised if you learn something new from your students as they report out their results from the challenges you gave to them!

Notes on Accessing the Content for Classroom Instruction

There are several documents that are part of the course content for these two classes. The student slide decks are in PDF format. They are published online and can be downloaded at the following URLs:

The instructor slide decks, which include speaker notes, are in also PDF format. They too are published online and can be downloaded at the following URLs:

Embedded within the speaker notes you will find web links to more detailed content on the topics covered in the slides. For the PDF files, you can click on these links to access the in-depth content. If you prefer a hard copy edition, you can purchase the printed books at Amazon.

To learn more about portfolio success, startup economics, capitalization and exits:

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