What This Female Angel Investor Looks for in a Startup
More often than not, when startups connect with me via Linkedin pitching their businesses, they start with, "There are so few female business angels out there, it’s amazing to pitch our business to one of them." For some time, I ignored the statement as just another trivial ice breaker until, at a conference, I had to endure a long and rather annoying conversation with a VC partner sharing that women are risk-averse and due to this reason, there are hardly any female business angels or startup founders out there. Well, I left him in the dark without letting him know that he was actually speaking with one!
Thank God, he was wrong. The number of business Angelina/s is constantly increasing and so are the organizations and syndicates helping them to scout promising businesses and invest wisely.
Being in touch with two such organizations, it was possible to see first hand the impact they have on the society. Sharing knowledge and experience openly and letting others learn from their mistakes was not something you could hear from speakers at mainstream events but that was the takeaway from Investorinnen.com.
GoBeyond and The Rising Tide Europe aim to increase women’s participation in angel investing as an asset class. The program combines learning, investing and networking. The Rising Tide program are a cooperation between EBAN, Go Beyond Investing and the Next Wave Foundation. The participants are led by Deal Leads and learn how to develop a diversified portfolio, participate in discussions with the Deal Leads, witness investment decisions being made and network with more than 200 women from the Rising Tide Europe community.
Having said all this, I do believe that risk appetite has to do with one’s experience, domain knowledge and financial expertise, it’s barely driven by gender.
Team dynamics and background
Team members shall balance each other out emotionally and expertise-wise. It’s their persistence and cold-blooded reactions that can save them in hard times which will come sooner than later.
It is also vital that at least one team member has managed a small team before in an established organization. This experience will help to set the pace and design the processes later on.
Ability to interact with and influence people
Even if none of the founders has sales, business development or PR experience, someone will have to communicate the vision, interact with the media and attend events. Hiring externally a team member early on to fill in this role is a high risk.
Unique value proposition
Even a ‘’red ocean’’ market can be penetrated if the product adds value to the target customers. Revolut and Monzo are a good example in the U.K. and the severe competition didn’t stop their investors. It’s the way the value proposition is defined that can grab my attention.
Marketing and commercialization strategy
"We will invest in social media marketing and instantly build a funnel because 'X' did it" is something that I will definitely turn down. Marketing strategy is key to the successful launch, and if the team has not done any research, it is definitely a red flag. Of course, some teams will have no marketing expert among the founders and that can be compensated but having no idea how to reach out to the potential customers and even who these potential customers are is a clear "no."
Freedom to operate
Some great ideas may be limited by existing patents, changing legislation or the need to access, store and process personal data in a way non-compliant with GDPR. Even if the business model is fantastic and the team is capable of leading a fast-growing organization, it is highly unlikely for such ideas to receive funding.
Last time in Vienna, I met a solo founder who had a promising MVP but whose ambition was to grow the company to a point when he would be able to pay himself three times his current salary, move to Bali and live carefree until the end of his life. Although most of us will be happy to live carefree in Bali, his pitch is highly unlikely to entice any angel investor.
It is the expertise, experience, network and willingness to help and support the founders on their journey that will result in a high return on investment for any business angel. Gender has little to do with the risk appetite and probability of success, if anything at all, and it is great to see that the number of female business angels in Europe is increasing. Diversity encourages more people to invest and more innovative ideas have a chance to be funded having a strong positive impact on the European economy overall.