What Businesses Are Angels Searching For?
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. According to Brigitte Baumann, some of the factors that business angels search for are:
When Brigitte Baumann looked at big deals before investing her own money, the majority to look at was the business itself, she looks at businesses that are innovative in their content and their processes, those that have a sound economic model and those that can scale.
2.A management team
Business angels look much into the team handling a business, they look for teams who can deliver, and also teams which they can work with and add value
Business angels also look at the structure of a business, they also check if the business fits their portfolio, values and if they have a good exit strategy. In addition, angels like to find businesses that enable them to participate
Some of the things that business angels don’t like are:
• Founders and other investors they don’t trust
• Founders not putting any cash into the company or, too much of their net worth, or no money from friends and family
• When there is not at least one founder who is working on the business fulltime
• Managements that ask for too much money and are not specific on what it will be used for
• Too much promises
• Businesses that are not scalable
• Entrepreneurs who say “there are no competitors”, “The market is big so it will be easy to get 5% of it”, and “it is a finance question, speak to our finance person”.
Business angels check out entrepreneurs through a number of ways including direct contact with the entrepreneur, documents, and through third-party contacts.
Brigitte mentions that the good news is that more people in Europe are becoming entrepreneurs, but the bad news is that the number of investors is not growing at a fast rate. The numbers will likely not get a lot of entrepreneurs financed. Brigitte also adds that entrepreneurs are not encouraged to fail in Europe, once you fail, you tend to not try again, but in places like Silicon Valley, they experience a lot of ups and downs, and keep trying even after multiple failures. She also emphasizes the need to build the investor community because of the huge number of entrepreneurs that will spring up in the next few years, she also advises corporates to buy startups.