Angel Investing & Venture Capital
This article is written by Jeremiah Uke, a Contributor Author at Etohum.
Brigitte Baumann is the Founder and ex-CEO of Go Beyond Early Stage Investing. In May 2015, the European trade association for Business Angels and Seed Fund (EBAN) named her European Investor of the Year. She is President of EBAN and Chairs the Young Presidents Organization’s global Angel Investing group. She is a seasoned venture capitalist and was present at Etohum Kafe Toplantısı, and shared her experiences and what she looks for in investing.
Brigitte is the Founder of Go Beyond Early Stage Investing, Go Beyond enables novice and experienced, small & large investors, to get access to angel investing as an asset class through its unique platform, tools, training and expert angels. Go Beyond works with individual investors, family offices, professional groups/associations and corporations. Go Beyond operates in Europe and the US. Its team is comprised of seasoned business angels and is the subject of a Harvard Business School case.
The most common type of business angels are individuals who are contributing their money, time, and know-how in exchange of shares. Brigitte started Go Beyond Early Stage Investing in Europe over a decade ago, they had 10 times lesser business angels than in the United States, but were investing 20 times more, they had a natural community of successful entrepreneurs who could reinvest.
In Europe, there two more types of business angels, those who are retired or those in transition, the third kind of angels emerging are those who wished they were entrepreneurs but are still in the corporate world. If we compare these to venture capitalists, the difference is in their behaviour.
Angels tend to invest 2-5% of their net wealth, while venture capitalists are people who third parties give money to invest on their behalf, they are given a range of 8-10 years and revenue targets to meet.
The tight timelines to give back revenue to the third parties are one of the reasons why venture capitalists are perceived to be aggressive and assertive, Europe faced a situation where more than half of venture capitalists disappeared because they were not able to show good returns to raise money. In entrepreneurship, business angels are becoming the norm, families are now investing as angels too.
Venture capitalists started leaving Europe for a few reasons, the first one being that many of the venture capital funds did not get good enough returns, it is an industry where the top 25% are very profitable, a few are okay, profitable in this context means returns of 20-30% to the investor a year. The second reason is that some investors have decided not to go into this type of investment.
The third reason is that in Europe, many of the entrepreneurs are not knowledgeable in business. There is a new breed of venture capitalists who are individuals who invest their money for years, then create an angel investor club with people, and then build a venture fund which keeps on getting bigger.