angel investors

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harrisonaero

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Any of you HBA folks have strong experience with equity investing for early startups such as what angels would take into consideration for a new aircraft or product? I'm not pitching, just looking for some information.
 

pictsidhe

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Investors are primarily interested in return and risk. You exaggerate the former and play down the latter to attract them.
They tend to be fallen angels, you should bear that in mind and be wary of any mention of pounds of flesh in contracts.
 

TFF

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The question comes, "Are you the investor or one seeking investment?" The answers are different on each of these sides.
 

BJC

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Any of you HBA folks have strong experience with equity investing for early startups such as what angels would take into consideration for a new aircraft or product? I'm not pitching, just looking for some information.
A market survey for the product. Skill set, technical, development and manufacturing experience of the startup personnel. Life insurance on all critical personnel. Financial resources of the startup. Detailed development, certifying, and production cost assessments. Detailed business plan to produce and market. Sensitivity analysis to the primary factors affecting the business plan. Controlling interest of the business. Point of net cash flow. Point of break even. Return on investment.

Probably some other items too.

The startup is looking for someone with more money than business sense (hard to find, unless they inherited their money), and a passion for aviation.


BJC
 

harrisonaero

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What would be the difference between an angel investing on an equity basis compared to what's been done in the past with aircraft deposits to hold slots? Advantages and disadvantages of each?
 

Pops

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Having ran and sold one aviation business, I would not start another in a dying industry as GA. I would start a new aviation business IF I had a very good chance of getting government aviation contracts.
 

BJC

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What would be the difference between an angel investing on an equity basis compared to what's been done in the past with aircraft deposits to hold slots? Advantages and disadvantages of each?
Given the history of deposits (starting with Bede Aircraft), I suspect that it would be difficult to get unrestricted deposits for an airplane, especially an Experimental one.

It has been shown that a good web site and some slick animation, plus articles in magazines that will print anything in exchange for an ad, will draw deposits into a restricted escrow account. That account has value with lenders, at least until the bankruptcy.


BJC
 

proppastie

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The nicer the presentation the higher the risk. A good investment does not need to solicit money.
 

Jay Kempf

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HA,

Angel investors are a strange bunch. Some are benevolent pots of money trying to further projects in the world that need furthering (Gates Foundation and the like). Others are just venture capitalists in disguise. The venture capitalist types are way more prevalent and easy to find but almost all are clueless as to what you might be telling them about your product or business. They only represent someone else's money and they take control to mitigate risk. It is not uncommon to have an angel investor ask to sign over all capital equipment to a new entity that they offer to form and then ask for controlling share. It is never worth that.

Best to boot strap your idea to the point where you don't need angel investors anymore. Too many people have gone down the road of taking investors money and then running out again and then taking deposits and then getting bought out in a second round of investors. At that point it's all about who you can meet, and how much money they have and your business plan and power point presentations.

If you don't have real experience in this realm, be very wary. BTDT
 

Jay Kempf

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I got all the shirts. Never went for any Angel investors myself. I like bootstrapping. But I spent a lot of time in NYC listening to these sales types talk about how they are going to make your business amazing right after they get you to pay them to write your business plan for you. And if you don't well they can't guarantee success with their client (the person with money). Most of the industry is a giant scam. There are a few people really interested in helping real new technology to go forward but their version of risk mitigation is that you the inventor isn't going to run the company.

If your company is so early stage that you haven't figured out if you can profit from making whatever it is you want to make and you don't have the money yourself to get it past the angel stage you need to go back to the drawing board. Too many inventors are convinced that the thing they think is novel or innovative haven't done a path to market study and have no idea how to step out of themselves and look at the thing from the customer's perspective.

I get a lot people coming to me to do design work for them pro bono for some equity in their idea. Cracks me up. I got enough of my own hair brained schemes to work on :) The clients that pass the invoice test are the ones I end up working for...
 

Victor Bravo

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One story I recall is that the Darter/Lark Commander series of GA aircraft was originally produced largely by prison labor under a job skills program that had some kind of funding with it. So the labor was free or reduced cost from the mfg's perspective, and there may have been other financial incentives.

If someone is starting up an aircraft manufacturing business, there may be opportunities for grant funding, training funds, job development, and other clever ideas that could bring money into the program tangentially. For example, if you are producing an aircraft from composite materials, there MAY be grant or job development funding out there that is intended to teach high tech job skills such as composite manufacturing, and other funding tto create industries that emplopy those skills. "Workforce Development" is the general term for it.

Speaking of composites used in job training programs, having a training program that is affiliated somehow with a known and respected aerospace composite structures expert would look pretty attractive on any funding proposal. If only there was somebody in the Coeur D'Alene area who had that sort of srtreet cred...

There might be money form the "educational" side of the equation, such as creating a program for local high school kids to apprentice at the composite shop, or to create entry level jobs for the kids on summer b reak as shop assistants, etc. If there are jobs that can be created for people with disabilities, such as cutting laminate patterns from prepreg composite raw materials, or facility maintenance, or operating resin mixing machines, etc. then there may well be money available for that. If there is a program that is targeted toward "at-risk youth", or parolees, or rehabilitated substance abuse patients to get them back into the workplace, there may be money availale for that as well.

The main point I'm making here is that the aircraft manufacturing business can serve as a "vehicle" or "platform" that can qualify for funding that actually has little or nothing to do with aviation.

As with any clever shortcut or innteresting opportunity there is a lot of research and effort and money that has to be put into exploring that possibility. If you are interested, we can chat via PM about any of these possibilities, I'm a grant writer by trade.
 

Pops

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My wife grew up close to the old Aliquippa, PA airport. In 1960, ( the year we got married) the first few Volaircraft ( latter named Darter) was built at a small maybe 40'x40' metal building at the aliquippa airport. The airport was just a narrow (Maybe 30' wide) paved runway out a little ridge with part of the runway going through the trees about 2000' long. Wasn't enough room in the building, so they had a few of welded tube fuselages stacked against the outside wall of the building. Just had room to assembly one airplane at a time. North American Rockwell bought them out in 1965. No prison labor used at the Aliquippa airport building for sure. I was there at the time.
 

Little Scrapper

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Any of you HBA folks have strong experience with equity investing for early startups such as what angels would take into consideration for a new aircraft or product? I'm not pitching, just looking for some information.
You can message me privately if you'd like. I have multiple friends on both ends of this arrangement. If you're looking for advice I have one in particular who's a very good friend. West Point grad. MBA from University Chicago Booth and has numerous experiences and connections in the world of which you speak.
 

BBerson

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Quite a few startups have received cash, tax discounts, free buildings, etc. from eager public officials who were promised jobs.
Rarely works out.
 
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