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“You can’t ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”

      – Steve Jobs

FAQ

What is an Angel Investor?

Angel Investors are individuals who invest a portion of their wealth in early-stage companies. Due to the high-risk nature of such investments, angel investors can obtain higher returns with these investments than with traditional investment vehicles.

What is an accredited investor?

 An accredited investor is one that meets certain requirements under securities law, for example:

  • has a net worth (with spouse) that exceeds $1 million (excluding principal residence)
  • has individual income that exceeds $200,000 in each of the two most recent years, OR
  • has joint income with spouse that exceeds $300,000 in each of the two most recent years

What makes Xaphan Group different from other Angel groups, Venture Capital groups or early stage funds?

  • Xaphan Group is a small, stable and committed investor group whose members have all agreed to dedicate a significant portion of their time to assist the companies we partner with become highly successful businesses.
  • We meet weekly, not monthly, to review new investment opportunities.
  • We do not charge any fees to present
  • Your business is reviewed and the due diligence is carried out by interested investors, not consultants looking for business opportunities
  • Whether or not we choose to fund your company, you’ll find working with us to be an invaluable experience for you and your business.
  • Often, the value we provide through our hands-on approach, experience and industry connections significantly exceeds that of the funding provided.

What categories of companies do you invest in?

Xaphan Group members prefer to invest in high technology companies but are open to a variety of sound business opportunities.  That said, we do not invest in real estate, franchises or retail stores.

What is the average stage of the companies that present to Xaphan Group?

Xaphan Group likes high technology companies with promising technology, large potential markets and solid barriers to entry.  Since we like to be the first "outside" money in the deal, we recognize that being certain of all of these characteristics is not possible in an early stage company - that is part of what makes investing at this stage risky and why we expect valuation and potential ROI to reflect this.

Do you sign NDAs?

Since we receive so many plans our policy is not to sign NDAs (non-disclosure agreements) or confidentiality agreements during the early stages of due-diligence.  Xaphan Group prides itself on our practice of the highest respect and care of the confidentiality of all information received; aiming to treat you as we ourselves wish to be treated.

How do I submit my Executive Summary and/or Business Plan?

Please submit your name, company and a brief summary of what your company does using the contact form. You will then receive an email from XaphanGroup asking you to reply with your Executive Summary and/or Business Plan.

What language must my Executive Summary and/or Business plan be in?

The information you submit may be in either English or French.

How long does it take to receive funding?

When Xaphan Group is the only group involved or acting as "lead" on financing, you should anticipate that it will take between 2-4 months for a deal to close.  In most cases, the specific date is directly related to the time and resources the prospective investee dedicates to the due diligence process.

What are typical deal terms if an investment is made?

Since we value each business based on its own merits and treat it as unique, a simple answer on term expectations is not possible.  Our guiding principal on terms is that incentives of everyone be aligned.  Entrepreneurs must be motivated to make superior returns for Xaphan Group investors.  Likewise, Xaphan Group investors must ensure that entrepreneurs are consistently and substantially rewarded for their ongoing contributions.  Additionally, Xaphan Group seeks terms that reflect the total value (financial and human capital) all parties bring to the business.

What is the pre-money valuation?

Pre-money valuation: The pre-money valuation is quite simply, the dollar value ascribed to your company before a round of outside investment is made. This might include amounts for intellectual property owned, assets, investment made to-date, the dollar value of time spent on R&D to-date, and other items.

What is the post-money valuation?

Post-money valuation: The post-money valuation is the pre-money valuation plus the investment. Once the investment has been made in the company, those funds are added to the value of the company.

What is dilution?

Dilution: Dilution refers to the reduction in the proportion of ownership due to bringing new investors on board. Dilution occurs at each round of investment.

An example of how valuation works:

A simple example

  • During investment round #1, Company X has a pre-money valuation of $6000 and is looking for an investment of $4000. The post-money valuation would be $10,000 with founders holding 60% of shares and Investor1 holding 40%.
  • During investment round #2, Company X has a new pre-money valuation of $40,000 the company is looking for an additional $10,000 of investment. The post-money valuation would be $50,000. Investor2 (who is putting up the $10,000) would then own 20% of the shares, Investor1 would own 32% of the shares (40% x 80%), and founders would own 48% of the shares (60% x 80%).