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Structuring Exits for

Competitive Returns

October 14, 2015

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• Mission: Fuel the success of angel groups and accredited individuals

active in in the early-stage landscape

• World’s largest trade group for angel investorso 220+ angel groups

o 13,000 accredited investors

o Voice of accredited individuals, portals, and family offices

• 50 US states + Canada

• Research/ education partner

MEMBER GROUPS & ACCREDITED PLATFORMS

New Dominion Angels

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ACA PARTNERSGOLD

OUR MODERATOR

Alexandra LaForge

Director of Strategic Programs, Investors’ Circle

• Evangelist for Impact Investing since 2009

• Co-chair, Young Women Social Entrepreneur,

San Francisco

• University of Notre Dame

Add Photo Here

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OUR SPEAKERS

David Gitlin

Co-leader of the Emerging Technology Practice and

Shareholder with Greenberg Traurig, LLP

• Recognized nationally as a leading M & A attorney

and a leading Venture Capital Attorney

• Internationally recognized for his work across

borders

• Philadelphia, PA and Tel Aviv, Israel

OUR SPEAKERS

Aner Ben Ami

Co Founder and Managing Director

Pi Investments

• Committed to investing 100% of its assets in support of a more sustainable and just economy, including investments in clean energy, sustainable food and global supply chain

• San Francisco Bay

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OUR SPEAKERS

Dave Bisson

CEO

Big City Farms, Inc.

• A Baltimore-based urban farming venture that

creates good jobs for worker-owners,

revitalizes urban landscapes, and produces

ultra-local, sustainably-grown food

• Baltimore MD

TOPICS WE’LL EXPLORE TODAY

• Why Structured Exits are Attractive to Angels

• Which Types of Businesses and Investors Benefit Most

• Standard Terms for Structured Exits

• Approaches to Consider

• Challenges and Opportunities

• From the Entrepreneur Perspective: Big City Farms, Inc.

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STRUCTURED EXITS DEFINED

Investment structures designed to achieve a

desired investment return without reliance on a

traditional exit.

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• Suitable for:

o impact investments.

o revenue generators but not exit candidates.

o exit candidates but ownership interest in long term play.

o geographies with few exit options.

o traditional investments where parties view structure as win-win.

WIN/WIN

• Little or no dilution to entrepreneur when valuation is

low in exchange for growth capital.

• Safer return to investor without risks associated with the

need for a significant exit.

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TYPES OF STRUCTURES

• Redeemable Preferred

• Demand Dividend

• Cash Flow Loan

Coupled with Exit Warrant:

• pay now for nominal exercise price later.

• pay nothing now for today’s FMV price when exercised.

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FLEXIBLE NATURE

• Flexibility is Key:

o Can be tied to immediate or future cash flows.

o Return can be partially fixed and partially variable based on cash

flow.

o The return multiple can be fixed or progressive – can be tied to x

times investment or IRR.

o Can be capped or uncapped.

o Can be equity or debt.

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Big City FarmsBaltimore, MD

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Big City Farms Value Proposition

• 3 full-year growing cyclesOperating track record

• 80-90% lower CAPEX per sq. foot vs. hydroponic greenhouses

• $3.25 / sq. ft. when built at scaleLow CAPEX hoophouses

• Local restaurants, institutions, online & physical grocers

• Strong and growing farmers’ market presence

Strong, diverse customer relationships

• $2.50 / sq. ft. when purchased

• Free or nearly free when leased from CityAccess to affordable inner-city land

• >45% gross marginSolid unit economics

• COO: 15 years exp. with specialty veg.; 6 yrs. exp. managing 3,000 acres of organic citrus

• Front-line team: between 2 and 4 years experience each in sustainable veg. productionExperienced grower team

• First “network farm” partnership formed in 2012 with ex-offender assistance org.

• Talent recruitment partnerships with workforce/career development groups

Strong community & NGO relationships

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AMOUNT DESCRIPTION

$150,000 SALES of produce per unit

$80,000 COGS per unit

$70,000 Gross profit per unit

46.7% Gross margin %

$64,350 CAPEX per unit

$3.25 CAPEX per square foot of growing area

0.92 Avg. years to payback of CAPEX ([Unit CAPEX] / [Unit Annual Gross Profit])

115.8% 5-year IRR per unit

Unit = 19,800 square feet inside hoophouse greenhouses (approx. 1/2 acre)

Big City Farms Unit Economics

Why should entrepreneurs care about structured / alternative exits?

1. Improve chances of finding well-aligned investors & getting capital you need to grow

2. Flexible terms and realistic expectations increase chances of financial success

3. Maintain focus on original mission and impact goals

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AUDIENCE RESOURCES

Alexandra LaForge – alaforge@investorscircle.net

• Investors’ Circle - www.investorscircle.net

Dave Gitlin - gitlind@gtlaw.com

• Greenberg Traurig Law -http://www.gtlaw.com/

• http://www.gtlaw.com/News-Events/Publications/Published-Articles/187859/Structured-Exits-A-New-Universe-of-Potential-Funding-for-Companies-in-Undeserved-Markets

Dave Bisson - dave@bigcityfarms.com

• Big City Farms, Inc. http://www.bigcityfarms.com/

Aner Ben Ami - anerba@gmail.com

• http://www.transformfinance.org/blog/2015/7/26/square-peg-round-hole-innovating-finance-for-social-enterprises

Forbes.com -http://www.forbes.com/

THANK YOU!

UPCOMING

WEBINARS

November 4: DEMO of Seraf

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November 18: Best Practice Series:

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December 2: ACA Leadership Forum

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December 16: Best Practice Series:

Valuation of Pre-Revenue Companies

Webinar programs archived

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Audience

Questions

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ADDITIONAL RESOURCES

Marianne HudsonExecutive DirectorAngel Capital Association

Christopher MirabileManaging Director, Launchpad; Board Chair, Angel Capital Association

http://www.angelcapitalassociation.org/news-forbes/

http://www.angelcapitalassociation.org/news-inc/

UPCOMING ACA EVENTS

• October 21, 2015: New England Regional Meeting – Boston, MA

• October 23, 2015: Southwest Regional Meeting - Tucson, AZ

• November 9 – 10, 2015: Angel Insights Exchange, New Orleans, LA

• May 9 – 11, 2016: ACA Summit, Philadelphia, PA

• http://www.angelcapitalassociation.org/events/