Arrears, an innovative startup specialising in AI-driven global payments and finance operations, has been named as AIN’s Startup of the Month. The pioneering debt collection platform developed by Arrears leverages advanced AI technology to streamline and enhance the debt collection process for SMEs across the USA.
It was selected from close to 150,000 startups currently raising on the platform with AIN’s expert panel of judges praising the business for ‘effectively utilising innovation to solve a real-world problem.’
It is also witnessing substantial interest from investors. Arrears’ solution tackles the pervasive issue of late payments, which amounts to trillions of dollars in the United States alone. The startup addresses this challenge by offering a cloud-based solution that grants SMEs access to enterprise-grade software and seamless integration with OpenAI’s GPT-4 technology.
Startup of the Month is an initiative from AIN to champion and celebrate businesses on the platform with great potential and to help raise their profile. In showcasing these startups, AIN’s aim is to highlight the qualities of investable businesses to inspire and educate others. The team at AIN were impressed with Arrears’ utilisation of innovation, product-market fit, and potential for scalability.
According to Arrears founder and CEO Trent McKendrick: “We are delighted to be recognised by Angel Investment Network. Our platform enables efficient debt collection at scale, eliminating the need for a labor-intensive workforce or complex integration. In a short period, we have witnessed significant investor interest in our mission to drive positive change in the debt collection industry. Initially managing just over $20 million of accounts receivable on our platform, we have seen this number double in the past two weeks alone. We’re actively engaging with more investors to highlight the growing demand of our business and our revolutionary platform.”
Olivia Sibony, Head of Impact at Angel Investment Network, shares her insights on how impact-led startups can navigate the current investment landscape.
Investor interest in impact-focused startups has grown in recent years. According to research by Dealroom, impact startups are now worth a combined $2.3T. At the same time we are seeing a new tougher investment climate, with angel investors far more cautious about deploying capital. Q1 was the slowest quarter for startup investment since 2020.
For impact-led startups where profitability is balanced with making a difference, this can make fundraising a tough and challenging endeavour. Especially in a climate of higher interest rates and ongoing inflation.
While the short term picture is tough, impact led startups need to focus on the long term, something they are naturally good at! The changing profile of investors should be one source of comfort. More than 4,000 investors have become signatories of the Principles of Responsible Investing (UNPRI), a United Nations’ supported organisation. This is responsible for more than $120 trillion US in assets under their management. The UNPRI has a commitment to “incorporate ESG issues into investment analysis and decision-making processes.”
So impact-led startups should take heart and have a laser-like focus on the key factors that could win over investors. Having helped hundreds of impact-led startups raise investment I think there are five key factors that should be considered.
1) Profit should be paramount
One of the key reasons impact led startups fall down as often as profit can sometimes come across as an afterthought. In order to be able to make the change you want to see in the world, a business model needs to be able to scale and win the backing of investors. Therefore the potential for profitability needs to be paramount. Investors will need to see how they can make a viable return even if they are also motivated by other factors. By having this front and centre of your proposition will ensure your pitch and proposal can stand out.
A great example is Beyond Meat, the Los Angeles–based producer of plant-based meat substitutes founded in 2009 by Ethan Brown. The company’s initial products were launched in the United States in 2012 and just seven years later, the company went public in 2019, becoming the first plant-based meat company to do so. They tackle the challenge of meat consumption, one of the largest contributors to carbon dioxide, but also were able to demonstrate to investors the huge global opportunity in meat substitute products. The early investors were smart to back it.
At an earlier stage is Twin Science, an award winning education company that develops children’s STEM skills for sustainability, with both physical kits and a digital app as monthly subscriptions to schools as well as families. A clear profitable pathway is baked into their model with ongoing subscription revenue. They are achieving this while boosting the next generations’ science skills and potential to build a sustainable future.
2) Don’t be afraid to make the case for ‘patient capital’
However at the same time you should feel emboldened to make the case for the sustainability of the long term, versus the traditional hockey stick growth that could be at the expense of environmental concerns. Indeed perhaps the downturn in tech valuations could be the right moment for a re-evaluation of how we assign value? After all Unicorn births are at their lowest level for 6 years.
In this new model, profitability is still central, but the growth trajectory would look very different in the future. Impact founders are likely affecting systemic change at a fundamental level and this requires a new way of working that is more collaborative and non-linear. In the long term, this makes a business more agile and able to navigate uncertainty, thus making it a more attractive investment with ‘patient capital’.
3) Make sure you can measure the impact
Investors are now becoming increasingly wary of claims not backed up by evidence. Whilst in the past ‘self certifying’ enabled many companies to commit a lot of ‘green washing’, the move to more recognised standards is moving apace. The “Big Four” accounting firms — Deloitte, PwC, EY, and KPMG now have a new reporting framework for environmental, social, and governance standards (ESGs).
Sustainable Development Goals are a good framework for understanding where the focus is needed to address the world’s biggest social and environmental challenges. But it’s not a measurement tool. Start-ups such as Vested Impact are bringing together Big Data, automation and qualitative input to create holistic impact measurement tools for companies.
When you talk about metrics to investors, make sure to put equal weighting on your impact metrics as your financial ones. Investors will want to see clear evidence of how your startup is measuring up in the claims you are making about the impact you have.
4) Ensure your processes are as purposeful as your business model
It is critical to avoid having good intentions being let down by a flaw in your operations and processes. One that could be quickly exposed by a knowledgeable investor. This involves a rigorous assessment of your supply chain to ensure there are no loose links that could shatter your credentials. Investors, alongside conscious and well informed consumers will be able to shine a light on anything that doesn’t add up.
Think through the end to end life cycle of a product or service. For example, it is not enough to merely produce solar panels if they are not produced in a way that is in itself carbon-efficient or that they might end up unrecyclable. if you run a mental health app, what are your people policies like around recruiting, benefits and inclusivity?
Similarly if you create sustainable building materials that use a Circular Economy model, are the machines you use to transform your materials energy-efficient? Are you paying a fair price for your materials and paying your suppliers in good time and are you treating your employees well?
5) What collaborations can help you grow?
Impact founders are often tackling the “wicked problems” which are particularly challenging to address. And doing it alone is just not an option. Impact founders would benefit from thinking outside the box in a non-linear way: thinking about the system they operate within, what other organisations, entrepreneurs, groups or movements also care about this? It is a fundamental move from competitive advantage to ‘collaborative advantage’.
Are they maybe in a different industry, contributing to the same big challenge from a different angle? Think of all the different stakeholders who care about the same broader challenge and how you could join forces with them, whether as a one-off or bigger collaboration, to get more traction, kudos/reputation and find new ways to move the dial. This could delay the need for immediate investment and indeed put you in a stronger position to get investment as a result.
The need for impact-driven startups to win financial backing for their problem-solving innovation has never been greater. With the right approach they can win the backing of investors and ensure profit and purpose can walk hand in hand.
In a more competitive funding landscape, angel investors are critically evaluating startups with a more ruthless lens than ever. It is crucial that founders don’t get their fundraise off to a false start by having something that is a fundamental red flag for a potential investor. Understanding and addressing these common concerns can significantly boost a startup’s chances of securing funding.
We spoke to angel investors and experts on our network to get their take. From a lack of passion and commitment to inadequate industry knowledge, we delve into the key indicators that may raise doubts in the minds of angel investors.
1. Lack of passion and commitment
Angel investors want to see founders who are deeply passionate about their business idea and are committed to making it a success. If a founder appears disinterested, lacks conviction, or demonstrates a lack of dedication, it can raise concerns.
According to Xavier Ballester, Director at Angel Investment Network’s Startup and Property Divisions: “Investors want founders that are passionate and committed to their startup. This comes through so clearly from the investors I speak to and is more critical than ever in today’s tougher funding landscape. Investors want to see that the founders they back are willing to work hard, make sacrifices, and persist through challenges.”
2. Inadequate industry knowledge
Investors expect founders to possess a deep understanding of their target industry and market. If a founder demonstrates a lack of knowledge about key industry trends, competitors, or customer needs, it may raise doubts about their ability to navigate and succeed in the market.
According to experienced investor Noel Duigan: “The lack of experience of the founders, or their team is the main red flag for me. Often you are investing in the founders rather than the company. If the founders don’t have any skin in the game, that’s pause for consideration.”
Noel Duigan
3. Not having your finances in order
Founders asking for too much money can be a red flag for investors. Similarly overly optimistic or unrealistic financial projections can also set alarm bells ringing. If the numbers don’t align with industry benchmarks or seem too inflated without a clear justification, it may indicate a lack of understanding or a willingness to mislead.
According to Ballester: “It it really important to be realistic about valuations, particularly in the present climate. Many businesses are now needing to re-evaluate their plans and potential funding pathways. What was 8x last year may now only be 5x. It is vital valuations are rooted in fact, not fantasy. You will be far more likely to gain the interest of prospective investors with this approach.”
According to angel investor and acclaimed author David Pattison: “Some pre investment red flags for me include: When the opening conversation is just about how much and when? Also if a team that is rewarding itself too well on other people’s money.”
David Pattison
4. Lack of traction
Investors look for evidence that the startup’s product or service has market demand and validation. If a founder cannot demonstrate any customer traction, industry interest, positive feedback, or a well-thought-out go-to-market strategy, it may raise concerns about the startup’s potential for success.
Duigan says: “Lack of traction in their space will often mean stalled growth and is a red flag. Have a look at their runway and burn rate, you don’t want it short and wide. That could spell either bad margins or high overheads.”
5. Poor communication skills
Effective communication and active listening are essential qualities for startup founders. If a founder struggles to articulate their ideas clearly both in person and through vital communication tools like the all important pitch deck, this is a big red flag. Similarly if they fail to actively listen to feedback or input from others, or exhibit poor interpersonal skills, it may hinder their ability to build relationships with investors and stakeholders.
According to Marla Shapiro, CEO of HERmesa – a UK based angel syndicate: “Investors want a super clear, concise story that gets us excited to ask more questions and set up the first call. As one of our members says, “pitch decks are meant to be commercials, not novels!”
Marla Shapiro
According to Addy Windsor-Clive, investment manager at Regenerate Ventures: “A pitchdeck that isn’t in a suitable format asking the typical questions a VC would ask is a red flag for me.”
Ultimately people buy people and Shapiro puts it succinctly: “We really try to invest in nice people. We are putting our own money into the business and we are going to be with these founders for the next 3, 5, 7 years. Life is too short to invest in jerks!”
While these red flags can raise concerns, it’s important to stress that they are not necessarily deal-breakers. Founders can address these issues and improve their chances of securing investment by being transparent, receptive to feedback, and continuously learning and improving.
The reality is many won’t learn. But by recognising and proactively addressing any red flags, startup founders can ensure they can have a head start in attracting angel investors. Putting rocket fuel into their fundraising strategy and turning entrepreneurial dreams into reality.
“Never give up” was the message businessman and former jewellery magnate Gerald Ratner delivered at the launch of the Scale Up Awards by Business Leader magazine. AIN were in attendance to watch the launch of the awards with several prominent speakers discussing the challenges and opportunities faced by scaling businesses.
Ratner is the former chief executive officer of the British jewellery company Ratners, who famously demonstrated the power of negative PR when he notoriously made a speech jokingly denigrating two of the company’s products at an Institute of Directors conference.
He detailed his Icarus-like fall from the glittering heights of business leadership that saw the company’s value plummeting by around £500 million after his blunder. He then described the obstacles he faced in launching a new fitness chain and how perseverance saw him through as he went on to sell the business for £3.9m in 2001. Following that he launched an online jewellery business, after he was turned down by 15 banks for funding, before a 16th agreed. He used the example to highlight the need for startups to persevere no matter the odds.
Irene Graham, CEO and a board director of the ScaleUp Institute also spoke at the event. She highlighted the real need for the UK to invest in more scale ups, pointing out that the UK is third in the world for startups but 13th for scale ups. She told the audience “You are the future, we need to get behind you”.
Founder of Business Leader Andrew Scott highlighted that there had been a record number of entries for the awards so far.
The Scale-Up Awards are open to UK based entrepreneurs and trading businesses, celebrating business achievement and growth. There are still time to enter.
When it comes to investing in startups, investors are not only evaluating the potential of the business idea but also the qualities of the founders behind it. Startups can have an innovative product, a large market opportunity, and a sound business plan, but without the right team behind it, success can be elusive. This is even more the case in 2023 with investment more difficult to secure.
Based on several interviews with prominent angel investors, we explore the key traits that investors look for in startup founders. From passion and grit to adaptability and communication skills, we delve into the qualities that can make a startup founder stand out and increase their chances of securing investment.
The life of a startup is exciting but also tough and this past year has seen a combination of challenges. Many tech firms’ valuations have been radically reduced and we have a more difficult funding climate with investors having more strenuous criteria in the startups they back.
Many founders are needing to change plans quickly, look at longer runways andmake really difficult decisions on staffing. All the while working harder than ever to raise funds. This can create real pressure and have a negative impact on mental health.
So how can startups support their mental health during challenging times? We spoke to a leading psychologist working with startups and several successful founders in our network to get their top tips and advice.
In June 2022, MASTER Plant Holdings (“Master Plant” or the “Company”), an emerging force in the European cannabis industry, raised £500,000 in a seed funding round with Angel Investment Network (AIN), the world’s largest online angel investment platform.
Following this investment, Master Plant will aim to licence and redevelop a pharmaceutical distribution facility in Guernsey designed to develop high quality medical cannabis, unique strains and wider products for European distribution.
The European cannabis market is rapidly growing with Germany leading the way. Currently, the market exists via medical channels with limited psychoactive THC quantities (Cannabis Light). In fact, 89% of cannabis use cases involve this product for medicinal and therapeutic purposes. The European market is predicted to reach €13bn by 2027 according to Market Data Forecasts. In comparison, the United States market was estimated at approximately $65bn in sales in 2021, of which $21bn were from legal sources creating $4bn in tax.
After the first £500k round of funding, Master Plant is intent on remaining ahead of the curve. The Company is in the process gaining their cannabis licence for research, development and manufacturing of 300+ strains and formulations on the Island of Guernsey. Already, the company has consolidated decades of research and development into its proprietary cannabis genetics bank. This research will provide diversity in major and minor cannabinoids, as well as other beneficial molecules that will contribute to a vast assortment of future products. The licensed facility is set to distribute high quality medical cannabis, launch unique strains and products and develop deep tech enabled growth.
AIN’s funding will also enable the expansion of Master Plant’s senior team with seasoned experts joining from the North American cannabis industry. The commercial operations of Master Plant and Mee CBD, with groundbreaking water-soluble formulas, will also see wider development.
According to Master Plant CEO, Oliver Osgood: “We are delighted that angel investors have backed Master Plant’s vision as we continue to break new ground in the cannabis industry. As we look forward to the future, we are confident our cannabis licence and market proposition is unique. Combined with our proven track record and global cannabis credentials we are ambitious to become a key player in European cannabis.”Master Plant will aim to launch their next round of Series A funding in 2023. The £2m Series A funding will go towards retrofitting the Guernsey facility and developing commercial operations. Sign up for further updates here.
A pioneering Australian payment platform for hospitality called Payo has been named as AIN’s Startup of the Month. The platform was singled out from close to 150,000 startups currently raising on the AIN platform for having ‘a winning formula’ as an investable proposition. The business was given the accolade after a judging process involving AIN’s expert panel, combined with a high number of connections from investors.
Payo is a payments and software solution for small and medium restaurants. It solves the problem in hospitality of venues needing to use 4-6 different payment systems with an all-in-one solution enabling venues to make payments more simply and cheaply. The Payo founders came up with the idea following more than 10,000 conversations with venue owners and operators over the past decade in various roles.
Startup of the Month is a new initiative from AIN to champion and celebrate businesses on the platform with great potential and to help raise their profile. In showcasing these startups, AIN’s aim is to highlight the qualities of investable businesses to inspire and educate others. The team at AIN were impressed with Payo’s innovation, clear evidence of traction and experienced founding team.
The Payo team are looking for funding to complete the front and back end development of the platform, as well as supporting sales efforts to further growth. The startup has more than 1,000 venues signed up so far.
According to Mike Lebus, co-founder of Angel Investment Network: “AIN is the world’s largest online angel investment platform and Startup of the Month is about showcasing businesses that have a winning formula to gain investor interest. Payo demonstrates that in spades, with a solution to a real world problem for many smaller hospitality businesses, genuine traction and an experienced founding team. We hope other startups seeking funding can learn from what they have achieved and we wish Payo well on the rest of their fundraising journey.”
According to co-founder and CEO of Payo, Taf Chiwanza: “I’m extremely grateful to AIN for this recognition. It is testament to our hard work and the problems we are solving in the hospitality industry. A lot of the problems we are solving are certainly not just an Australian problem. This is a global challenge and we look forward to scaling this and helping restaurants save time and money.”
In our latest Guest Post, Justin Eames, Head of Innovation at digital product development studio fish in a bottle discusses how startups can create an ideation process to boost innovation.
Many studies show that startups who adopt an ideation process are more likely to succeed than those who don’t.
If coming up with great ideas is key to the success of your startup, then considering how you can manage and improve that can give you the competitive edge.
This is particularly true for digital startups, where the complexities of software development makes getting from ‘great idea’ to ‘great product’ especially challenging.
In this short article I want to encourage anyone leading a startup, whether they consider they are inventing something new or not, to build an ideation process into the fabric of their business.
To get that off the ground you don’t need to make a big investment in time or money, or adopt complex processes. The benefits of a structured approach to innovation can come from just a small number of easy to implement steps.
The typical picture of a digital startup has a visionary founder – the entrepreneur – at the helm, driving the direction of a product while a team around them are tasked with delivering it.
The visionary founder usually works at the highest level of the concept while the team around them are responsible for making decisions about technology, design, customers, marketing and finance.
For the product to succeed, each of those areas must align and have input into the ideas that drive the business. Doing that without a process can be very challenging.
For startups, success requires them to identify where the needs of their users, the requirements of their business and the possibilities of design and technology meet. Once they find that point they are on their way to finding success. This is where an ideation process comes into play.
84% of executives say that innovation is important to their growth strategy, according to a study by McKinsey. Given that statistic, it’s surprising that so few identify it as an activity that someone within their business should own. So all businesses should consider assigning someone to the role of Head of Innovation. Even the most resource-poor startup can do that as this doesn’t have to be their only role, or a major time drain. All that’s required is that there is someone with the authority and responsibility to ensure that the process of generating ideas is managed, in the same way that any other mission critical aspect of a business are managed.
Setting this up need not be a daunting task, there are tried and tested ideation processes from which to draw on and plenty of case studies demonstrating their success. For a long time, organisations that rely on ideas for their success have recognised that ideation, when untamed, is a chaotic and time consuming activity with hit-and-miss results.
As far back as 1942, Alex Osborn (the O of famous advertising agency BBDO) proposed techniques and strategies for generating creative ideas. His book, “How to Think Up”, argues that creativity is not an innate talent but a skill that can be developed through methods and practice. More recently, IDEO (famous for inventing the first computer mouse for Apple) coined the term “Design Thinking”, applying it to their set of ideation methods.
By using lead generation for law firms to reach potential clients, they can establish themselves as experts in their field and build their brand. This can help them to attract more potential clients, generate more leads, and ultimately, convert more of those leads into paying clients.
Any ideation process for digital products will do well to draw on those “Design Thinking” methods including empathising with users to understand their needs and experiences, formally defining the problem, ideating and prototyping possible solutions, as well as testing and iterating on those solutions based on user feedback. This approach has proven to be highly effective and there are many case studies to support that.
For instance, Airbnb used design thinking to completely redesign its website and user experience, turning them from a failing business to a thriving business. An ideation process for digital products should segway comfortably into project management methodologies like Agile Scrum, joining up the complete digital product development process from vision to ideation and through to production and iterative delivery. It’s certainly never too late to build an ideation process into any business, but there is no doubt that doing so from the earliest stage brings huge advantages.
My advice is to keep your ideation process simple and appropriate for the outcomes you need. As your business grows you’ll find you naturally add stages and people to the ideation process. As your business grows, you can start viewing it as a part of a wider innovation function of your business. — Justin Eames is Head of Innovation at digital product development studio fish in a bottle. He’s the creator of The Ideation Framework, an open methodology that’s designed to improve innovation within startups and small teams.
At AIN we believe that promoting female entrepreneurship is central to economic growth and meaningful innovation.
This IWD we wanted to celebrate female entrepreneurs and at the same time, acknowledge the need to boost both the number of female startups and also female investors to ensure we can truly democratise angel investment.
According to research from Pitchbook female-founded companies in Europe have received just 1.3% of VC funding since 2017.
Having more diversity across the whole startup ecosystem would help. Research by Beauhurst and the UKBAA found just 14% of female angel investors are women, but having more women investors could help to shift the dynamic.
AIN Head Of Impact and exited founder of GrubClub Olivia Sibony launched our Female Founders page to provide our audience with access to companies led by one or more female founder on the UK Angel Investment Network.
This is the first step in our journey to bring together a community interested in funding and supporting women-led businesses. Check out some of the innovative startups currently looking for funding.
According to Sibony: “Women represent 51% of the population. By far the largest under-served population in the world. In an increasingly uncertain world, we cannot succeed if we carry on with the status quo. A key to change, is to bringing new voices in to the narrative. Women have such a powerful voice that can help balance the perspective and help bring about fresh thinking.”
Over the past year we have been thrilled to support exciting businesses with female led founding teams including Period care and sexual health brand Here We Flo who raised £1.7m in an angel funding round, supported by AIN.
Here We Flo’s mission is ‘shamelessly natural care for life’s messiest moments’. The brand intends to challenge, shame and disrupt the period, bladder and sexual wellness markets with organic and vegan products. Here We Flo was created by university friends Susan Allen and Tara Chandra. (pictured at the top of the article.)
We also saw another incredible business, Birmingham-based smart-EV and energy storage startup WAU (We Are Universal) raising £650,000 in a pre-seed funding round. Crystal Drury (pictured above), co-founded the business alongside Linas Pozerskis.
When asked about the importance of gender balance in founding teams they said “Diversity allows you to see the same situation from multiple powerful angles.”
Meanwhile sisters Katie and Amanda McCourt are co-founders of sustainable underwear disrupter Pantee. They raised successfully on the AIN platform last year, with investors buying into their creation of the world’s first underwear brand made from deadstock t-shirts. The duo are currently raising again. Check out their pitch.
Co-founders of Pantee, Katie and Amanda McCourt
We hope these successful startups can help inspire other women to launch their own businesses and potentially go on the become angel investors themselves.
According to Head of Marketing at AIN, Marisa Scullion: “We understand platforms such as ours need to help push the dial and make funding and supporting women-led business accessible and achievable. There are now many fantastic fundraising platforms made for women, led by women, inspired by women which is motivating. Women have a huge role to play in the growth of the tech industry and we want to help bring together our community interested in funding and supporting women-led businesses. It will benefit the whole startup ecosytem”
Becoming an angel investor can be a hugely rewarding way of using your experience and capital to support innovative startups and potentially earn a return on your investment.
As this involves deploying your own personal capital this is of course, not something you want to tackle lightly. We’ve spoken to a series of experienced angel investors and investment experts to give you the low down. Here are their top tips for anyone considering the high octane game of backing early stage startups.
1) Educate yourself
Before going down this path, it is really worth taking the time and effort to learn about the startup ecosystem. Also learn about the different types of investments available, and crucially the characteristics of successful startups. This can include doing online research, reading books, attending conferences, and talking to other investors. It also means really understanding the minutiae of the various Government schemes to support investment like EIS and SEIS and their global equivalents. Particularly given there will be significant changes in April.
There are also hundreds of global podcasts covering the world of angel investing in more detail with in depth interviews with founders and investors. Well regarded ones include Riding Unicorns, EU StartUps, Pitchdeck, StartUp Microdose, Desi VC.
Ed Stephens, Director at AIV Capital and AIN
2) Define your investment strategy
Once you have educated yourself, it is crucial to then think about the types of startups you want to invest in, the amount of money you’re willing to invest, and how involved you want to be in the company’s operations. It is crucial to consider whether what you want to bring is a sector expertise that would lead your investment strategy or whether you will become more broad based.
According to Matthew Louis from the AIN brokerage team: “According to investors I speak with, I would say most investors are involved in 6-8 projects. However those more involved in specific industries tend to be 2 or 3. With F+B it tends to be broader. With software there will be more of a specific criteria.”
Having a broader base for your investments rather than a focused expertise can provide more opportunities for areas of passion, which can be a great motive. However it is imperative to not let this cloud any judgement in your cool headed investment strategy.
According to experienced investor Noel Duigan: “I think you really need to be paying attention to both the head and gut, I don’t tend to invest with my heart, at all. I will always look at the business case first to see the potential. If that checks the box and my gut is off then I pause and try to work out what the problem is. If I can’t find it, but still keep that feeling that something isn’t right, I don’t usually invest.”
3) Network
Building relationships with other investors, entrepreneurs, and industry experts is crucial for any investor in learning about new investment opportunities, conducting due diligence, and getting insights into the startup ecosystem. Angel Investment Network was set up as an online platform to shrink the globe and connect investors with the exciting businesses of tomorrow and others in the startup ecosystem. There are a variety of online and offline forums for meeting people in person.
Roxane Sanguinetti is an experienced investor who works with Alma Angels and is co-head of the London chapter of Women in ETF’s. She advises: “Ask loads of questions and ask for help from experienced angels – what do they look at? What questions do they ask during due diligence? From my experience, angel investing is a collaborative environment. I am yet to meet an angel who hasn’t been open to discussing their journey or their investments. As a first step, joining a community or a syndicate can be of great help for those who feel they need an organised structure. You get to ask your questions in a safe space and see dealflow more easily.”
Experienced investor Roxane Sanguinetti
4) Do your due diligence
Once you are at the point of backing a startup, doing due diligence on any startups is essential. Evidence suggests that investors who spend longer on DD get higher returns. Indeed UKBAA research has shown that at least 20 hours due diligence has a positive impact on the likelihood of a multiple investment return.
AIN has produced a series of check lists on how to do your due diligence. The key areas of focus should include the team and management, business, market, technology (if applicable), finance, tax and legal. Red flags should be front of mind at all stages. The more experienced you become the quicker you can spot them.
For Noel Duigan the founding teams’ experience or lack of it is key: “Often you are investing in the founders rather than the company. If the founders don’t have any skin in the game, that’s pause for consideration. Lack of traction in their space will often mean stalled growth and is a red flag.”
Meanwhile according to investor Addy Windsor-Clive: “Red flags include a pitch deck that isn’t in a suitable format, failing to cover the typical questions a VC would ask. Also not knowing their market size or having a product fit.”
5) Think how you can add value
Finally (and to slightly mangle a famous quote by JFK) an investor should ‘think not what a startup can do for you, but what you can do for the startup.’ As someone with experience in either building a business or some deep sector knowledge you can offer your invaluable knowledge to a startup building the next game-changing business.
Xavier Ballester, Director at Angel Investment Network’s Startup and Property Divisions has worked with hundreds of angel investors over the past 17 years. He says: “Over the years I have seen the different ways angel investors can bring more than money. This includes: Industry contacts, Industry know-how, business skills (many have been CFOs, CMOs), help with strategy and potentially other investors.”
Meanwhile according to Stephens: “Adding value as an advisor/angel is always complex – there have been many examples of angels adding considerable value. For example, someone I worked with helped an FMCG business, as he already had a company that runs one of the UK’s largest warehousing facilities for Ebay. So he helped with supply chain and logistics leveraging his existing assets. More broadly, investors should and normally do always make intros, roll up sleeves and much like charity trustees pitch in where their skillset permits.”
To summarise, if you are thinking about becoming an investor ensure you first educate yourself with the wide variety of online and offline resources. Next define your investment strategy based on your skillset andnetwork with others (in particular experienced angels). Once you are ready to invest, do your due diligence and really think about how you can add value.
In January 2023, AIN hosted a webinar with Anna Gordon from HubSpot on how startups can use a CRM to manage your fundraising process and investor relationships. If you missed it, here are the top takeaways.
Top takeaways
View the investor fundraising process as a sales proces One common mistake that startups often make is not treating the investor fundraising process as a sales process that needs to be managed.
Deal pipelines aren’t just for sales Deal Pipelines aren’t just for sales. Indeed you can use a pipeline to track your fundraising process. You can also use a sales dialer software that can provide sales teams with valuable customer data, which can be used to generate more sales and better serve customers.
Leverage a CRM to facilitate your outreach You can leverage a CRM to facilitate your outreach to investors by using tools such as templates and sequences.
Quality investors early Similar to sales, you should quality investors early on with Sales Methodologies such as BANT. The questions you need to ask are: Does the investor have budget? Do they have authority to make the decision and are they willing to spend time with you?
Use CRM tools to establish regular email updates with your existing investors. Finally, in addition to helping you communicate with your prospective investors, remember to use CRM tools to establish regular email updates with your existing investors. To check and clean up your email list, you can use an email validation by Zerobounce.
HubSpot is the All-in-One CRM that Scales as Your Startup Grows. If you are a member of Angel Investment Network, you can apply for a discount of 30%- 90% off HubSpot. Learn more and apply here.
For our latest Behind The Raise interview we speak to Moses Rashid, founder of online marketplace for Limited edition Sneakers & Streetwear, The Edit LDN. He reveals how he had his lightbulb moment at a sneaker festival, his huge focus on service and the impressive partnerships and celebrity backers that have helped propel the business forward.
He also reveals his top tips for anyone raising investment for the first timeand why he initially thought a call from Harrods wanting to partner with The Edit LDN after just 18 month of operating was a prank…
Tell us about The Edit LDN?
At The Edit LDN, our mission is simple. Making the inaccessible, accessible. Helping our diverse, fashion-hungry community across the globe access the best in limited edition fashion and sneakers from the biggest brands in high-fashion.
How did you come up with the idea?
I’m a sneaker head at heart and would spend my days at sneaker festivals buying shoes. One day I was at a sneaker festival buying a pair of shoes that were £600/700. I asked a simple question, do you have a plastic bag? And the guy selling them said no. It blew my mind that I was paying for a premium product but I wasn’t getting a premium service. That was the lightbulb moment. How can we create the most premium sneaker platform globally?
How are you different?
Smashing the restrictions of traditional online shopping, our product specialists work hard to maintain a market-leading, unparalleled range of sneakers and streetwear unique to The Edit LDN. So customers will never be short of exciting new pieces to discover.
In a market which traditionally takes 2-6 weeks for delivery, our service level was about delivering this in 1-5 working days. A few months ago we become the first global reseller to achieve same day service. We are also all about creating a Personal Shopping service. Offering a tailored styling experience, and access to a product sourcing service, where we take on the hunt for the perfect piece on behalf of our customers.
What initially attracted investors to your company?
If you think of our business like a FarFetch premium retail environment powered by tech. For us it’s all about creating real value for our customers. Our mission statement was about becoming the most disruptive, innovative sneaker streetwear platform globally. I’m pleased to say we’ve achieved that.
We were the first to accept crypto. We were the first to achieve same day service in a market that normally takes 2-6 weeks. We were the first to donate sustainably. For every single sale on our platform we take 1 kilo of plastic out of the ocean. Investors have bought into our vision and record of delivery so far. We also have a number of sports celebrities who have invested, such as New York Giants captain, Xavier McKinney, basketball legend PJ Tucker and Premier League football star Jesse Lingard.
What has the funding enabled and your top priority going forward?
Part one of our funding was about personnel and putting the right people in the right places. Part two was about testing the technology. Making sure it was user friendly, both for the reseller and the consumer.
Part three was marketing and there are two parts to that. Paid performance/ affiliate to support customer acquisition. But also the brand piece as well. How can we continue to create PR moments and elevate our brand? You’ll see we have just signed a 2 year Global Partnership with Chicago Bulls.
Part four was warehousing, so making sure we could deliver everything in-house. That was really important from a cultural and environmental point of view. Making sure we can really accelerate the business.
And then the fifth strand was about building the pre-loved market place to tackle a $60BN industry, and make a long lasting sustainable impact.
Why did you raise via Angel Investment Network?
I was introduced to AIN via my brother and out of the angel networks we’ve worked with, it’s delivered the best results. It’s been the most fruitful.
What are your top tips for anyone raising investment for the first time?
It’s really important to get out there, be flexible, have lots of conversations, but know that only a few are going to convert. Make sure you are chasing down those conversations where something might come through. The same approach you would have with any sales process really.
When you are pitching, having real clarity on your USP. What’s your vision/ mission, really where is the business going? Of course understanding that investors are going to want to know what is their return on investment.
You are the first business of your kind to be welcomed into the legendary Harrods, London. What was your approach to getting a such a prestige listing just two years after launching?
We were actually approached by Harrods after just 18 months of trading, on the back of great media coverage we had secured in Forbes and GQ. At first I thought it was someone playing a joke, but then there was realisation that Harrods were really serious and could see the power of our marketplace and that we could really deliver for their high end customers.
We started off with one small section on men’s which has now expanded to three floors. It’s testament to our positioning, but also how well we’ve been received by their customers.
We are also thrilled as part of our global expansion to be Galeries Lafayette (Doha) and Harvey Nichols (Riyadh) and as reported in Esquire we partnered with the legendary Chicago Bulls in a multi-year partnership. They spotted the great synergies with their sports fans and sneaker heads.
The new year offers everyone a great opportunity to reset and renew. For startups seeking investment this could be the perfect time to evaluate your approach and see if it needs tweaking.
After all, we are in a very different climate in 2023 and investors are being far more careful with the deployment of their capital. To boost your chances of a successful raise, ensure your strategy is tailored for now, not last year.
So what key resolutions should startups focus on in 2023?
1) Revisit your elevator pitch
The life of any startup is varied, stressful and relentless, wearing so many hats and juggling so many balls. All the while, trying not to let any drop or run out of cash. However in this maelstrom of activity it remains crucial to not lose sight of the eureka moment that led you to quit the day job and come up with the idea in the first place. The start of the new year offers a great chance to refresh your core pitch for investment as clearly and articulately as you can.
According to AIN co-founder Mike Lebus: “One of the key mistakes entrepreneurs make is not explaining the concept clearly enough. Entrepreneurs are often too close to their own business, so don’t give enough information for a stranger to understand exactly what their business does.”
Why not start with a blank piece of paper and make sure you can get the pitch down to a paragraph? A clear articulation of a real world problem, how your startup solves it and what it actually does. You need to be able to story tell.
Having the right credentials, the perfect team and a beautiful pitch deck means nothing if you can’t explain to a stranger, simply and convincingly, why your company needs to exist. Test it out on more critical friends and contacts who you trust to give some honest feedback. Is it as straightforward as it could be?
2) Critically review your pitchdeck/ pitch materials
The new year could also be the perfect time to review your pitch materials and pitch deck. According to Lebus: “A common thread running through unsuccessful pitch decks is startups not focussing on their core product/service. Some business plans say “we plan to do this. and this, and this, and this…”, which can become very confusing for potential investors. Feel free to mention your long-term product pipeline towards the end of your pitch, but the main initial focus should be on your current/initial offering to keep things as clear as possible.”
Another reason many pitch decks fall down in Lebus’ view is the failure to differentiate what they do from the competition and how they’re going to gain market share.
Use this time at the start of the year to review your pitch deck and ensure there is a clear narrative, focus on the core product and how it stands out from competitors. Investors will want to see that your nascent business is learning to walk before it can run and that the promise of a decent future return is tangible.
3) Consider a lower valuation in the current climate
In the current climate many businesses are needing to alter their plans and potential funding pathways. Early 2022’s valuations already seem like a different era with layoffs in the tech industry and an uncertain medium term economic outlook. What was 8x early last year may now only be 5x.
According to Alexander Caparros, analyst from the AIN brokerage team: “We are seeing a lot of pushback from investors, less willing to back companies whose valuations are based on the uncertain promise of future revenues. It is vital that valuations are rooted in fact and not fantasy. Proof of concept is now a must have. You will be far more likely to gain the interest of prospective investors with a more realistic approach.”
It could be time to consider whether you might change your strategy and raise a smaller amount at a lower valuation. You will still be giving away a similar amount of equity but are more likely to get the investment.
4) Traction, traction, traction
With investors less willing to bet on unproved models, fabled traction is more important than ever, particularly in a more restrained climate for investment. Xavier Ballester is an experienced broker who has worked with AIN for 15 years and works closely with investors across the globe.
He says: “Evidence of traction is always critical for startups seeking funding, but in 2023 it is king. With investors less willing to bet on unproven concepts, it is crucial startups can demonstrate the viability of their proposition through evidence of success. All the more hard won in recessionary territory. If you can show there is appetite for your proposition now, this will show a clear pathway to future profitability and investor returns.”
Take the time to revisit your traction points and make sure they really stand out and are relevant.
5) Re-appraise your communication strategy with investors
January is a great month to connect with investors with a fresh update on your business. If you are reaching out cold, think how succinct you can be while covering off some vital points.
According to Matthew Louis from the AIN brokerage team: “Investors are busy people and likely to be inundated with pitches and proposals. Make sure yours gets to the point quickly with the information they need. Think top level information about the company and what you do, the problem you are solving for, why it is different, the traction, team, how much you are raising, the valuation and what you are planning to do with the investment.”
For investors already on your database is this the time to give that perfect ‘nudge’ on what has been going on with the startup. Perhaps it is a new product launch? New staff hires, new clients or traction point such as a revenue milestone. Perhaps something has happened in the news that provides a reminder of the need for your business. Something with context and relevance will ensure this isn’t just spam and likely to get your startup noticed.
The new year is a good time to plan a content pipeline for your investors and outreach strategy for new potential investors.
Following these five resolutions could help you supercharge your fundraising in 2023. Perhaps there are others you would add to this list. The key things is making sure they are realistic and that you can stick to them. Happy new year from the AIN team and good luck!
Businesses are missing out on huge commercial opportunities due to a lack of gender diversity in early stage business investment. This is the message from experienced investor Roxane Sanguinetti in our latest Meet the Investor interview. Tackling the gender funding gap was her motivation in joining Alma Angels, which backs female and/ or minority founders. It is now 350 angels strong. As well being an investor with Alma Angels she is co head of the London chapter of Women in ETF’s.
In a wide ranging interview she discusses how to create a more level playing field, why it matters, the sectors that she is drawn toward investing and the common qualities of founding teams she has backed. Why dedication is what you need…
What led you to angel investing?
A few years back I was advising start-up founders on their fundraising decks and financial models, as I had realised it could be helpful to those who do not have a finance background. I kept coming across some very interesting business models and I started thinking “oh I wish I could invest in that one!” but I lacked confidence. I started with a few investments via crowdfunding in businesses I had met or supported, but I wanted to get more involved.
I went looking for an angel community, or mentors who could guide me. One thing I knew for sure, I wanted to focus on female and/or minority founders. And that is exactly what I found with Alma Angels. December 10th 2019, I attended the first meet-up where we exchanged ideas on how to support female founders. Now 3 years later, we are a community of 350 angels who have collectively invested a few millions, and I’ve had the opportunity to learn alongside some incredible people.
You back businesses (co-)founded by women. What drives you to do this?
I want to see more wealth in the hands of women, be it on the fundraising side or the investing side. And these go hand in hand.
We have all seen the horrendous stats – only about 1% of VC funding goes to all-female teams. There is a fundraising access gap for female-led businesses, and I have pledged to bridge that gap by investing and introducing the founders to my network. I also spend a lot of my time educating on angel investing. Women are more likely to back women, but less than 15% of angel investors in the UK and Europe are women. And this isn’t about charity, research shows that investments in female-founded start-ups perform better than in all-male teams. Ultimately, we want to create a virtuous cycle: successful exits to bring more wealth to reinvest.
I want to do everything that’s in my power to better the ecosystem and level the playing field.
From a business perspective, what are the benefits of ensuring we have more gender diversity in the start up ecosystem?
There is now a lot of research and data on the financial benefits of diverse leadership teams. Businesses are potentially missing out on opportunities and revenues from half of the market when products and services are not adapted. One sector I know well is WealthTech: Over the last few years, we’ve seen an explosion of businesses such as roboadvisers and trading apps. What all these apps have in common is that women are rarely involved in building and testing, and it now shows in the user base. 70 to 90% male. Which is an opportunity for female-led businesses to come in and make a killing.
To build long-lasting inclusive technology AND businesses, we need diverse teams involved in the whole process – from ideation to development, testing and distribution. And by diverse, I mean gender-wise, racially but also cognitively.
And if I can expand the question to the investing landscape: diverse investment teams will back a more diverse portfolio of founders, which is beneficial in terms of returns but also means that they are more likely to support builders of inclusive technology.
What sectors particularly interest you for investment?
I am naturally drawn to FinTech and WealthTech due to my background. I understand the pain points and I feel that I can be more helpful to the founders. However, now when I look back at my investments, they are all from various sectors (I added Sexual Health, Recruitment, Impact…) but they all have in common that they are making the world a better place for women and minorities! And as new sectors emerge, my curiosity gets tickled. I have recently been looking more into web3 businesses.
What are the successful traits and tactics of founding teams you have backed?
I think my founders all have in common an insane sense of dedication. They are so incredibly passionate about their cause and are the most hardworking people I have ever seen. They have all brought in impressive results with limited financial backing. A successful founder can also be one who realises their own limitations and know when it is time to sell or to step away from the business, even when it does not maximise their profit, but it ensures their team and the business can carry on.
Female investors are twice as likely to invest in women than male investors. What advice would you give to those interested in getting into investment for the first time and getting active?
Ask loads of questions and ask for help from experienced angels – what do they look at? What questions do they ask during due diligence? From my experience, angel investing is a collaborative environment. I am yet to meet an angel who hasn’t been open to discussing their journey or their investments. Angel investing is a game no one plays on their own, as we are there to support the founders through their early fundraising journey so we coinvest, we help each other out, we connect with later stage investors. As a first step, joining a community or a syndicate can be of great help for those who feel they need an organised structure. You get to ask your questions in a safe space and see dealflow more easily. By the way, Alma Angels is 70% women.
Does the current national and global context, and the outlook of an increasingly uncertain world change your investment thesis?
I wouldn’t say that it changes my investment thesis. Female-founded businesses generally have had to build with very limited funding which tends to make them much more resilient, much more cost/ cash-burn conscious. BCG released a report stating that female founders generate twice as much revenues per dollar invested than male counterparts.
What has changed however is the way I look at the business models. I might focus my due diligence questions on some risks that seem more prevailing due to current market conditions.
For our latest Meet the Investor Interview we chat with Addy Windsor-Clive, an investment manager at Regenerate Ventures. Regenerate Ventures is an EIS VC fund focusing on Early stage AgTech investments.She discusses her motivation in supporting startups tackling the ‘broken’ agri-food supply chain, her desire to see a more diverse set of founders within agriculture and the trends transforming the ag-tech sector.
What led you to investing in start-ups?
I started my career in Venture Capital and that’s where my love for it began and helping startups reach their true potential.
You back businesses that drive systemic change in the food system. What drives you to do this?
The agrifood supply chain is broken and all the pressure is being put on farmers so we are trying to alleviate that issue as well as producing food without ruining soil health to ensure it for future generations.
What is the gender and ethnic make-up of the founder population you look at? Does this impact how you invest in businesses and the way they work?
We are seeing more and more female led companies but we would like to see a much more diverse set of founders within agriculture.
What interesting trends are you seeing in the Agtech sector?
Precision agriculture to improve efficiency of crop prediction and yield and decarbonisation of the agricultural sector.
How are these trends changing the system?
Helping reduce chemical and fertiliser inputs that are helping to improve soil health but also to reduce GHG
What would you like to see more of, to accelerate the change in this field?
I would like to see more around soil testing and also data aggregation in the sector.
What are the key red flags when you are dealing with start-ups that you are potentially going to back?
A pitchdeck that isn’t in a suitable format asking the typical questions a VC would ask. Not knowing their market size or having a product fit.
What has made the biggest difference among your successful investments – traits and tactics of the founding team that have made the biggest difference?
In the AgriTech sector all the founders are very mission led and pivot easily as a result of feedback from industry experts. Also founders that are not afraid to give away equity.
What advice would you give to entrepreneurs going through the fundraising process?
Have a bank of FAQs ready to go, ask friends and families or an investor that you know to help work them out. Allow yourself enough time.
Does the current national and global context, and the outlook of an increasingly uncertain world change your investment thesis? If so, how?
If anything it only verifies it more. The global food security and food safety issue is only becoming more pressing and investing in this sector as this stage is absolutely key to the future of the planet.
As both an investor in start-ups and a founder currently fundraising for your own fund, what is your top tip for anyone looking to fundraise for the first time?
Good pitch deck, all FAQs ready to go. Find out what the investor is looking for and tailor your pitch to that.
‘Founders need to be passionate, driven, and fully committed in the longevity and future of their company.’ These are the words of experienced investor Noel Duigan describing what he expects from entrepreneurs pitching their business ideas. As someone who has personally invested in 12 businesses in the past year his advice is worth its weight in gold.
We are delighted Noel has given his time for our latest Meet The Investor interview. He discusses the reasons he invests, his typical ticket size, the red flags he looks out for, how founders should update investorsand top tips for anyone raising for the first time.
What has led you to angel investing?
Independence mainly. I looked at it as a strategic step to gain financial independence and build a successful family office. Prior experience has helped me overcome a level of confidence required to interact with founders and CEO’s and not be afraid to ask the ‘stupid’ questions when I don’t know or understand something.
What do you invest in and at what stage? Any reason why you go for those investments?
I mainly lean towards tech and fintech due to the scalability. However I have also ventured into renewable energy. I prefer to get in at the seed round, but have also invested in Series A and B, as well as pre-seed. I think it’s being sensible with your portfolio and spreading the risk. Seed is attractive due to the low valuations and high potential for return, but with greater risks. So I hedge these with larger investments into Series A and B rounds, smaller returns and ‘usually’ a safer bet. But not always!
Do you invest with the head, the heart or the gut?
I think you really need to be paying attention to both the head and gut, I don’t tend to invest with my heart, at all. I will always look at the business case first to see the potential. If that checks the box and my gut is off then I pause and try to work out what the problem is. If I can’t find it, but still keep that feeling that something isn’t right, I don’t usually invest.
How often do you tend to invest per year and do you have a typical ticket size?
A few times a year, however the last year was quite busy with 12 investments. The sweet spot for me is £100k. However, I have a few at £200k and some at £50k. It really depends on the round, valuation and exit opportunities.
What are the key red flags when you are dealing with start-ups that you are potentially going to back?
Lack of experience of the founders, or their team is the main one. Often you are investing in the founders rather than the company. If the founders don’t have any skin in the game, that’s pause for consideration. Lack of traction in their space will often mean stalled growth and is a red flag. Have a look at their runway and burn rate, you don’t want it short and wide. That could spell either bad margins or high overheads.
How do you view your relationship with your investees? What is a good relationship?
At pre-seed/seed the company is smaller so the relationships tend to be more personal. You can offer networking support and help with growth. Whereas the later rounds you really are just a name on the cap table. Regardless of when you invested, a good relationship means consistent updates.
There is a challenge for founders to find a sweet spot between the management of their workload, and the stress it entails, alongside the expectations of their investors.
How often do you think founders should be updating their investors of their progress and by what method?
At a minimum a quarterly update should be emailed to investors covering progress (or lack of), metrics and financials.
What is your top tip for anyone raising investment for the first time? What gets you on board?
You need to be vested. A product or service driven from need, not greed will always win over investors. The market is over-saturated with people making a dash for cash off recycled ideas. Founders need to be passionate, driven, and fully committed in the longevity and future of their company. Hand sanitiser during a pandemic doesn’t cut it.
If you could offer an early investor one piece of business advice, what would it be?
Research. Research the company you want to invest in. Research the founders. Research their pitch deck, research also includes fact checking. Research their product, download their app, try it out, read the reviews. When you are not researching a company then start researching for self-education. As we used to say: “Time spent on reconnaissance is seldom wasted”.
AIV Capital has completed an investment into next-generation Customer Data Platform (CDP) Zeotap. Founded in 2014, market-leading Zeotap is a customer intelligence platform designed to help companies better understand their customers and predict behaviour.
Zeotap’s GDPR-compliant Customer Intelligence Platform (CIP), enables brands to unify, enhance and activate customer data in the cookieless future while respecting consumer privacy and ensuring compliance. Recognized by Gartner as a “Cool Vendor”, Zeotap works with over 80 of the world’s top 100 brands, including P&G, Nestlé and Virgin Media.
Zeotap completed a Series D in 2021 placing the company valuation at over $160Mn. The latest funding will enable the German company to cement its market leadership by developing new product capabilities, with a specific focus on the privacy-centric needs of European clients. It will also expand its operating territories and go-to-market teams.
The standalone CDP software market is expected to reach $15 billion by 2026 at a 35% Compound Annual Growth Rate (CAGR), fueled by pandemic tailwinds. The company has seen 150+% CDP Annual Recurring Revenue (ARR) growth in the past year, emerging as the outright leader among customer data platforms in Europe.
AIV Capital is the institutional investment arm of Angel Investment Network, the world’s largest online angel investment platform. Led by experienced investment manager Ethan Khatri, AIV Capital’s focus is on investing between USD10-USD250 million into Growth and Mid-Market Buyout opportunities.
According to Khatri: “We’re very excited to be partnering with Zeotap in their last funding round. Under the leadership of Daniel Heer, Zeotap are dealing with a significant pain point for companies by ensuring marketing intelligence fully informs marketing spending. We often see companies that overspend on advertising and customer retention without the ability to differentiate between new and existing customers. This has only been exacerbated by the increasing demand for privacy regulations.”
He continued: “With their CDP and ID+ platform, Zeotap provides a cost-effective way for companies to future-proof their advertising and customer interactions. Zeotap is already one of the leading platforms in the EU and we believe the last round will only help concrete their position.”
“If you don’t see it, you can’t be it” says inspirational investor and founder Andy Ayim MBE. The quote describes his philosophy in setting up the Angel Investing School with the aim of empowering a new tribe of diverse angel investors for the benefit for the whole startup ecosystem. In our latest interview this game changing investor discusses his motivations, advice to aspiring angel investors, how he finds deals and where the best investment opportunities lie in this tougher climate.
What has led you to angel investing?
I was inspired to invest into startups because I met so many working class, diverse founders who lacked access to knowledge, networks and capital. Many didn’t have friends and family members who could invest in them despite having great skills, ideas and unlocked potential.
You started Angel Investing School in 2020, with the aim of empowering a new tribe of diverse Angel Investors, levelling the playing field of investment and increasing the numbers of BAME investors. Why is this important to you?
“If you don’t see it, you can’t be it.” Role modelling is important for empowering people to feel like they belong. Whether in school, at work or within an industry. The more diverse investors we have, the more diverse founders will get funded and have the opportunity to execute on their ideas.
You recently operated as a syndicate, investing with 8 other black investors (some new and some experienced angels) into a Consumer startup. What do you feel the benefits are to startups taking on funding from a syndicate?
Syndicates put simply are a collection of people that come together around an aligned area of interest. For a startup, this is great as they get to tap into the collective knowledge and networks of the group as well as efficiently managing their fundraise. Often the angels that invest small tickets, work hardest on the Cap Table to support founders and add value.
For the investors it is also great as it allows for small ticket investors to club together and cumulatively invest a larger amount into a startup. It democratises access to startup investing so that you could build a portfolio by investing £1,000 – £5,000 in each startup.
How did you find your first 2-3 deals and do you have any advice to aspiring angel investors who want to find their first deal?
The industry-wide challenge around inclusivity is that some of the best deals often get shared from founders and investors through private networks. The majority of new angel investors don’t have access to those networks.
Therefore, I highly encourage new angels to surround themselves with more experienced investors. That’s what I did as I joined syndicates such as HoaQ Club, HERmesa and Green Angel Syndicate as well as building relationships with individual angels.
The great thing is, you learn a lot from mistakes and just having skin in the game as an investor. Then your reputation starts working for you if you are responsive and helpful to the founders you invest in. That makes it more likely for them to recommend you to other founders in their network.
We understand every project is different but looking at your career of investing, with the startups you back how many conversations do you have on average from first conversation before signing a contract?
Like you mention, no two situations are the same. One thing I will say is that I don’t give in to FOMO. If I get a deal on a Friday that closes on a Monday, I simply say no as I need time to nurture a relationship and understand the founder and vice versa so they can get to know me.
I can usually do this with 3-5 meetings but some founders I know for over a year before committing too.
Our research shows that one of the biggest bugbears of entrepreneurs fundraising is the amount of time it takes from the initial conversation to signing the contract. What advice would you give to entrepreneurs going through the process?
The tech industry over indexes on intelligence and being smart. In reality, entrepreneurship is more about perseverance, grit and luck. Fundraising is hard work for most, there is no shortcut.
However, it should also be a great learning experience to on positioning, selling and storytelling. Most founders I speak to get better at this with time. I highly encourage founders to speak to other founders they trust who have previously fundraised as they are often an invaluable source of advice.
In this more challenging climate, what new hurdles do entrepreneurs need to overcome to win investment?
The current environment has seen a resetting of valuations, return to fundamentals (profit, revenue, unit economics etc) and capital efficiency. Any business, built on this as a foundation is off to a solid start.
Founders will need to foster relationships and play the long game with investors to build trust and show they have a plan to survive and thrive throughout this climate. Gone are the days for now of investing in scooters or deep tech companies with no clear business model.
Similarly, what are the best investment opportunities for angel investors in this tougher climate?
Angel investors should remain discipline and hone in on startups that fit their investment thesis. This environment favours certain sectors more than others. We have seen layoffs in particular with Buy Now, Pay Later and speedy grocery companies. Why? Because consumer behaviour has shifted and discretionary spending has been cut.
Founders that understand the terrain they are operating in and how they have adjusted their plans accordingly are the right ones to consider investing in – in this climate.
Andrew Craissati has had a storied career with over 20 years in senior roles across investment banking, Universal Studios, National Geographic, the David de Rothschild family office and the Virgin Group.Working closely with the country’s most famous entrepreneur, Sir Richard Branson, Andrew gained remarkable insight of the world of early stage investing.
As a founding member of the Bricks, an early-stage investment firm, for the past 12 years he has used his personal experiences in supporting companies. Not just with capital but with constructively designed support and value-additive skills and knowledge.For our latest Meet the Investor interview, he discusses the benefits of angel investing, the most exciting markets for investment at this time and an unorthodox but effective approach for identifying the top performers.
What’s led you to angel investing?
Coming out of 6 years of working closely with Sir Richard Branson as a regional chairman across the entirety of his Virgin Group, I had a remarkable set of experiences in the art – and science – of early stage investing. One of the key aspects which I most enjoyed was the people part of investing: realising and accepting that a business idea is a mere manifestation of people coming together and embracing people talent. So, in wanting to deploy wealth into early stage investing, I was drawn to it because of that very premise. How could I use my personal experiences in supporting companies not merely with capital but with constructively designed support, nurturing and genuine, value-additive skills and knowledge?
It seemed logical, therefore, for me to focus on early stage investing as this seemed to be the point where entrepreneurs need or want both capital and legitimate support. I felt as though my past experiences led me to a point of focus where companies were young enough to warrant the type of assistance I’m capable of providing.
What is your most active area of interest?
I would contend that our area of interest is driven more by stage and less by sector. To the extent that I and my family office are driven by a thesis, it is focused principally on several guiding parameters: (i) the founder or founders must come from the sector which they are targeting (and with domain expertise), (ii) the company must have the ability to articulate its product or service (whether yet built or not) and to demonstrate demand, (iii) there is clear differentiation in the company’s approach and (iv) both the company and we must believe that we make a difference to them by virtue of our value add approach.
In your opinion, what are the potential pros and cons of angel investing?
Our style of investing is very time-consuming and requires a steady level of dedication and focus. To my mind, this is the disadvantage of investing in early stage companies: the time that is demanded of an investor who leads (as we do) or an investor who supports and serves. Of course, this is also the rewarding aspect: the ability to be close and remain close to the founders of a business throughout the journey, even where our investment gradually becomes small by comparison to the other investors in the company.
What has made the biggest difference among your successful investments – traits or tactics that have made the biggest difference in the startups being flops or top performers?
I believe that the tactic (by us) which has driven the greatest additive aspect to our investments is our use of our in-house psychologist. While this might be an unorthodox response, it is by far the most valuable aspect of our pre- and post-investment processes.
Pre-investment, all of our founders and lead management team members take a fun and interesting test and private 1-on-1 interview with Sylvia, our psychologist. This process (we call it Team Dynamics) allows us to have an extremely deep understanding of the founding team and their relationship with one another (and with us, too).
Given that founding teams’ collapse is so often the main contributor to company failure, we have found this process invaluable in understanding the teams we’re meeting and helping them to maximise their relationships and interdependence.
You have started, led, and exited several successful ventures. What is the one piece of advice you would now give to your younger self starting out on your journey?
Listen to your gut. Sometimes it does a better job for you than analysis.
Do you invest more with the head or the heart/gut?
We invest with our head but the gut gives a very good reason to pull the plug or change an opinion. The key is to listen to the gut when it sends you a red flag.
Do you feel that being an operator before becoming an investor creates advantages over those with experience solely in the investing space?
To my mind, angel investing is a mixture of conceptual and theoretical thinking as much as it is about building relationships and bridges. It is key to understand the human aspect of being an entrepreneur: their fear, their self-confidence, their willingness to speak openly: these come most easily to those who have been in the same shoes or who have had to face similar challenges. That said, I know many institutional investors who are rich in their knowledge and who give sage advice: this comes from their years of seeing and processing challenges.
You’ve invested right across the globe during your career, where do you think is the most exciting market for angels at the moment?
Asia is always touted to be the most important continent on the planet, if only by its sheer population and geographical spread. True, it has critical mass but it also has tremendous diversity and cultural differences and challenges. I have a tendency to prefer the European markets at the moment as the valuations are generally well constructed, the legal systems are mature and structured to minimise legal issues and litigation and the cultural divide is minimal. While we do invest in North America, it can be more challenging in terms of legal systems and valuations.
Why do you use AIN to find investments?
AIN puts thought into the deals it shares and introduces. There is a genuine level of care and professionalism in what it does and how it does it.
