Posted on

What Does an Angel Investor Look For?

Dear Superpreneur,

This week, I gave a webinar about angel investment and what investors are looking for.  I am pleased to give a written version of it here in this post.

I will explain what I’m looking for when considering investments and while these are my personal views, I do think that most investors, and particularly business angels, have similar expectations.

The first thing I’m looking for, and that any investor should look for, is what your mission is!  What get you off the bed every morning, what passion do you have.

In that respect, I like the framework of the Singularity University, called MTP – Massive Transformative Purpose!

Is your mission as an entrepreneur enough bold, big and able to inspire others?  Will you be able to attract people around your idea?  Investors but also collaborators, partners and clients of course.

Can you make a real breakthrough?  Disruption is a word which is often misused … but can you transform the market where you want to be active.  As Peter Thiel says in his wonderful book Zero to One, do you have identified a secret sauce that can cause that transformation?

And finally, what’s your purpose?  Why are you doing this?  Is it just to have a job, to become rich or to solve a big problem that can impact a billion lives.

Think about these questions and be prepared to explain your MTP to investors.

Once you have identified your MTP, focus on a specific moonshot.  The specific idea, project that will allow you to sky rocket and go to the moon!

A moonshot, so your project, has 3 characteristics:

1. It solves a huge, or at least, a big problem  … Remember that an entrepreneur is someone that identifies a problem and comes with a solution!

2.To solve this problem, you use a breakthrough technology or solution, something that’s really innovative … To be complete and intellectually honest, you are not obliged to innovate by the technology, some companies innovate with a new business model for example.  However, generally, the most exciting companies have an innovative technology combined with an innovative business model.

3.You come with a radical solution which really disrupt how it was done before, or which brings a solution to a problem that was not solved so far.

How you can make it is paramount for an investor.  It’s all about a value proposition. You will need to show how you create value, how you capture value and finally how you deliver it.

This is why the 3 most important things that I’m checking as an investor are:

-Your idea, technology linked to the value creation

-The market, linked to the value capture

-And the organization/team that allows you to deliver the value

Typical questions that you may be asked will be:

-If you want to create value, the investor will look at the potential traction for such product or service.  Also how much revenues you can generate.  Are there clients ready to pay for such product or service?  You can have the best technology, but if nobody wants to buy it, forget about it!

-With respect to the market, is there an attractive market size?  What is the competitive landscape? What are your competitive advantages?

-In terms of value delivery, do you have the right team to execute your plan?  How many full-time people?  Is their background relevant?  Can the investor trust you as a founder?

Now that we have seen the 3 most important things an investor will look for, let’s dive in into more detailed expectations.

You must understand that investors may have quite simple or straight expectations while your reality is and will be much more complex.  So when you deal with investors, before they invest, but mainly after they have invested, try to speak their language, you must understand their expectations and answer their questions as much precise as you can.  Always try to be accurate, honest and never never lie!!

You may face, and probably you will face situations where an investor asks you something you know you cannot achieve.  But listen to what the investor says, maybe it’s a good suggestion, maybe not.  Perhaps he/she is a bit provocative to push you, so that you over achieve.  Think about it.  You are partners, it’s not a war.  He wants you to succeeed.

Be prepared to receive a lot of questions about many aspects of your business.

– Did you make a well-thought research about your business idea and plan?

– What is your organization

– What is the market potential?

– What your plans for financing?

– Do you have a clear exit strategy?

-Have you put your heart into the project?  Or is it a side business?

-Do you have and will you keep skin in the game?

Also an investor will consider very carefully your leadership qualities as a founder.  Are you able to lead and inspire others?  Or are you just an executive that wait for others to make the job?

Are you honest?

Are you able to delegate on teammates?

Are you a great communicator?  Able to sell your idea to investors but also partners and clients?

Do you have a great amount of confidence?  In turbulent times, will you be able to resist to stress and panic, and keep moving.

Are you fully committed to what you are building?

Do you always have a positive attitude?  Being optimistic is probably one of the first qualities of any entrepreneur.

Are you creative able to come with new ideas if necessary?  Sometimes, you will need to pivot to continue your business.  You need to be enough flexible and creative to adapt the our fast changing world.

Of course, as a leader, you need to have some level of charisma … Most people thing that one has charisma or not, but actually you can develop your charisma. I strongly encourage you to read the Charisma Myth by Olivia Fox Cabana where she gives a lot of tips and exercises to improve your charisma. So please read this book … you will enjoy it.

So be prepare to have several meetings with investors.  During these meetings, be prepare to answer a lot of questions.

So, PREPARE, PREPARE, PREPARE !!!!!

You must know your technology, your business model, your market and this is very important, KNOW YOUR FIGURES!!!

The best tip I can give you is to make your business plan and financial plan yourself, I mean with your co-founders, but don’t rely on an external freelancer, advisor … They can of course help you, but you should do it yourself.  This is the best way to master your project and your figures.

Now that I explained what you should focus on as an entrepreneur, what an investor shall look for, and what he/she will expect from you, I would like to give you some specifics about angel investors.

First of all, keep in mind that a business angel

– Invests his/her own money

– Has relative limited capacity vs funds/VC’s.  For example, most business angels invest tickets between 10,000 and 50,000€.  A VC may invest between 250,000€ and several millions.

Also, remember that a business angel generellay wants to exit as quick as possible.  Why?  First of all, since he/she has limited financial capacity and since he/she is investing at very early stage, the business angel cannot generally follow up in the successive rounds and can then be dilluted quickly.  Also, his/her interest is to help entrepreneurs at early stage, so better to have his/her money back to invest in other companies, or to start a new company, is for example the business angel is also an entrepreneur.

One more thing.

Can you offer a reasonable return in a reasonable short timeframe.

  • 2X after 2 years is 41% IRR but 2X after 5 years = 15%
  • 5X after 4 years means 50% IRR
  • AND 10X after 1 year is 900% IRR !!!

One important point is also the valuation of the company.  You must have a number in mind, even if it will be negotiable.  Come with something reasonable.  There are different ways to value your venture: the Discounted Cash Flow method or the VC method, or anything you feel appropriate, but have in mind a figure.  Because business angels want to know how much shares they can get with the money they put in your company.

Last but not least, know if you want to offer equity or convertible loans.  Some investors will prefer one or the other.

To terminate, let me give you one final advice:  be brave, don’t give up.  Fundraising is hard, true, but with persistence you can make it!

Look at Bill Gates who said having showed his plan to 1,200 people, out of which 900 said ‘no’, 300 signed up … out of which only 85 did anything at all. Out of those 85 only 35 were serious, and out of those 35, 11 made him a multi-millionaire.

So, be brave and I wish you the best of luck!

Build the world you love!

Fab

twittermail
Posted on

Your Exponential Journey with Abundance 360 Community

Dear Superpreneur,

What is Abundance 360 Community?

Abundance 360 is Peter Diamandis‘ community of bold exponential entrepreneurs who collaborate and take “moonshots” at creating a world of abundance.

Dr. Peter H. Diamandis is an international pioneer in the fields of innovation, incentive competitions and commercial space. In 2014 he was named one of “The World’s 50 Greatest Leaders” – by Fortune Magazine. In the field of Innovation, Diamandis is Founder and Executive Chairman of the XPRIZE Foundation. Diamandis is also the Co-Founder and Vice-Chairman of Human Longevity Inc. (HLI), a genomics and cell therapy-based diagnostic and therapeutic company focused on extending the healthy human lifespan. He is also the Executive Founder of Singularity University, a graduate-level Silicon Valley institution that studies exponentially growing technologies, their ability to transform industries and solve humanity’s grand challenges. In the field of commercial space, Diamandis is Co-Founder/Co-Chairman of Planetary Resources, a company designing spacecraft to enable the detection and prospecting of asteroid for precious materials. He is also the Co-Founder of Space Adventures and Zero-Gravity Corporation. Diamandis is the New York Times Bestselling author of Abundance – The Future Is Better Than You Think and BOLD – How to go Big, Create Wealth & Impact the World.

Peter is amazing and a great source of inspiration. I consider him as a mentor.

Abundance 360 is an online community that has exclusive access to:

–Peter Diamandis and other abundance-minded people from around the world.

-Interviews with CEO’s of organisations that are exploring AI, Robotics, Human Longevity, Blockchain, Cryptocurrencies, Genomics and Brain-Computer Interfaces.

-Feedback on your boldest ideas from an experienced, supportive community.

-A range of courses and content about exponential technologies and how this will impact you and your organisation

-The Livestream of Peter’s annual Abundance 360 Executive Summit, (which is typically priced at $15,000 for those that attend in person)

(For more information about A360D and Peter Diamandis, click here)

Is it worth joining?

It was actually my best investment in 2017!

First of all, having interactions with successful serial entrepreneurs gave me the strong confidence that the world can become better and that collectively we can make it! It was also very helpful to define my MTP (Massive Transformative Purpose) and my moonshots, i.e. the projects on which I want to dedicate my time … and this also means to be able to say “NO” to many other ones.

Furthermore, having direct access to the latest technology updates allows me to fully understand what is possible and how the technology can be efficiently used to solve big problems and impact the lives of millions if not billions of people.

How to join?

Till end 2018, you can benefit a 10% off the membership fee by applying the coupon code FTESTA10. You can also simply follow this link: http://bit.ly/2D3ireF, which takes you straight to the checkout page with the code already applied.

You are not interested but what can you do if you know people that might be?

That’s easy. Simply like and/or share this post.

I hope to see you soon within the community!

Build the World You Love!

Fab

twittermail
Posted on

How to identify stakeholders of the future Space Resource Utilization (SRU) eco-system and how to develop viable markets and business models?

Dear Superpreneur,

The below post is published on behalf of the think-tank group of Luxembourg SpaceTech Angels.

Who are the natural stakeholders in a future Space Resource Utilization industry in Luxembourg and internationally?

Luxembourg SpaceTech Angels (LSTA) believes that it would be natural to consider such industries as terrestrial mining, oil and gas and related equipment industries as well as other players including, but not limited to, materials science, manufacturing, additive manufacturing, remote sensing, communications, robotics, data analytics, artificial intelligence as having key roles in building the SRU eco-system.

Stakeholders could be both national and international companies, public entities, private entities, institutional and private investors, different types of R&D organizations, universities.

There is a high potential for value creation from of R&D activities, Spin-in, Spin-out (e.g. 3D printing, robotics, AI) for public and private organizations in Luxembourg. It is important to identify potential cross-over effects in the area between terrestrial mining and space mining and general space technologies.

Which primary competencies do Luxembourg and the current space industry in the country possess which makes it natural to focus on building a future SRU eco-system?

LSTA believes that the needed competencies must include all assets i.e. organizational, financial, know-how, IP, technological, that the stakeholders have at their disposal to carry out value added and profitable activities. The model below shows that the value chain is a function of the market(s) which the stakeholders are targeting. Depending on the available assets and the alignment between these sets of assets and the configuration of suitable activities, different types of business models are formed. Within the frame of the market, or different markets, this makes up the eco-system of different business models.

Sketch of how valuable assets and activities interact in creating a market of different space eco-systems and business models

 

LSTA is approaching this on the assumption that the market(s), either celestial or terrestrial based, give impetus to formation of different eco-systems with varied characteristics. This could also be seen as the familiar problem of “the chicken and the egg – which comes first” – the market or the eco-system. At the present this seemingly paradoxical problem will not be discussed, but we assume that we need to have a viable market in order for investments to become profitable.

It seems apparent that many stakeholders are striving to develop an appropriate “business paradigm” for their future space resource activities, with reference made to the basic roadmap from the International Academy of Aeronautics’ study (see the link to:  https://www.amazon.de/Space-Mineral-Resources-Assessment-Opportunities-ebook)

How can appropriate and viable business models for SRU be developed?

LSTA´s initial approach is to focus on the process of identifying the value drivers in the different domains of the asset and activity side of the model presented above. By utilizing value diagrams to conduct the more detailed value analysis, one can try to identify existing ecosystems, or the need for developing future ecosystems, for desirable markets to emerge. These markets can of course be markets for pure space resources, but they can also be markets for non-space resources, such as supporting technologies enabling the realization of space resource utilization, either in-space or on Earth.

It is important to note that stakeholders can be active in the space resources market, or in different space markets, with different business models depending on the characteristics of the eco-system and the corresponding combination of specific portfolios of assets and activities needed to create positive return on investments.

The conclusions from the IAA study referred to above, regarding basic roadmap, indicates that the future players should try to assess the status of emerging markets for space resource utilization as well as to which degree the stakeholders are ready to enter or support these markets, be it at Earth or in space.

In that respect, LSTA proposes to assess the following elements:

  •  Type of existing markets, and what kind of markets can emerge
  • Time to market
  • Market size
  • Added Value/ROI
  • Job creation
  • Investments to enable the market(s) formation

It can be challenging to assess the size of these markets since the required data is difficult to get hold of, or the available data might be of poor quality. LSTA suggests to develop different scenarios and apply different forecasting techniques. This can allow to incorporate the above elements as well as additional factors to build different market scenarios which can serve as a basis for future policy making related to building a viable SRU eco-system.

In this respect we will be following the Luxembourg Spaceresource.lu program (see link to http://www.spaceresources.public.lu/en.html) with great excitement as Luxembourg embark on its future endeavor to develop the space resources industry.

This article is a result of discussions and thoughts within the think-tank group of Luxembourg Space-Tech Angels. We encourage anyone who have comments and opinions to this article to express his or her view, and we will surely incorporate this into our further thought process.

Please circulate this to persons whom you think would be interested in the topic and to persons whom would be willing to contribute with their views in order to develop these thoughts further. If you are interested in becoming a member of Luxembourg SpaceTech Angels we encourage you to visit our site; www.meetup.com/Luxembourg-SpaceTech-Angels

twittermail