Monday 23 July 2018

Startup investment success: how to get an angel to fall for you

Angel investors such as Peter Cowley and Christopher Mirabile are looking for the next startup that’s Nasdaq material. Picture: Bloomberg
Angel investors such as Peter Cowley and Christopher Mirabile are looking for the next startup that’s Nasdaq material. Picture: Bloomberg
Christopher Mirabile
Peter Cowley
Louise Kelly

Louise Kelly

Adhering to strict investment criteria can guide an angel investor to success, but there are always exceptions to the rule.

That's the view of serial tech entrepreneur, and now angel investor, Peter Cowley who has developed a set of rules applicable to a startups's team, their product and their finances.

Angel investors are private backers who come in with finance in the early stages of development of startup businesses.

With experience of over 60 investments under his belt, Mr Cowley tells hopeful entrepreneurs: "Please don't email for investment unless you can justify the [criteria]."

Mr Cowley was named UK Business Angel of the Year 2014/15 and Best Angel of the World by the World Business Angel Investment Forum in February 2017.

His investment guidelines are based on his own experience and from absorbing knowledge from other investors, but Mr Cowley acknowledges that it's the people within a firm who can change his mind.

"I started with a great group of people [Cambridge Business Angels] who taught me all I know. My criteria are based largely on learning from this group, based on what I'm comfortable with, and at least to some extent understand," he told the Irish Independent.

"People do point out to me that some of the investments I have made over the last eight years don't fit the criteria. And there are exceptions that I invest in and that's because of the people.

"I like to know the entrepreneur. I invest in people, I like to spend time getting to know the people and I believe mentoring is extremely important."

Super angel Christopher Mirabile agrees that human capital investment in a budding startups can be just as, if not more, crucial to success than a cash injection.

"There are three different kinds of mentors: one who really knows the industry; one who generically knows how to build a company; and then a leader who is invested in the person. You need all three in diminishing capacities," he told the Irish Independent.

"Many small businesses that can make their own way while running on ordinary petrol but if you're running on rocket fuel (fund injections) you can't afford to 'dilly-dally'.

"You can't afford to move slowly or make avoidable mistakes, you need to have the right advice to take rapid steps assuredly." US-based Mirabile, previously CFO of Iona Technologies, joins Mr Cowley on the panel of keynote speakers at an angel investment-focused event taking place next month.

The Halo Business Angel Network (HBAN) event in the Royal Hospital in Dublin's Kilmainham, is targeting new angels who are looking to invest in high potential startupss.

Mirabile, who was named one of the "Top Angel Investors in New England" by Xconomy, said that his speech will involve talking about the power of leveraging community to get started in relation to angel investment.

"For a startup I've never met, I'd like to have seen them use their networking skills and see who is willing to spend a bit of associated human capital investment on their behalf," he said.

"It's not that investors are so elite but this effort is important to stand out from all the background. Startups who take the time to research the investor that's right for them will get noticed."

He also offers advice on understanding what the difference is between a 'proper deal' and a syndicate 'just based on grouping people together'.

"Having a group of intelligent potential investors together willing to part with money is not enough," he said. "The deal lead needs to be competent enough to marshal the process and set the company up for success. Anyone can get involved in investing once the deals you're in are well-led".

Mr Cowley, who is now chair of the board of the Cambridge Business Angels, agrees that the absence of a deal lead can result in a promising investment falling through the cracks.

"Of course I have FOMO [fear of missing out] and I've missed out on some things, but you cannot regret things. In saying that, it's very important to learn from the ones that get away," he added.

One that got away was a potential deal in SwiftKey, which creates keyboard apps for Android and iOS devices, and was sold to Microsoft for an estimated $250m in April 2016.

"There were a number of reasons that it didn't happen, not least because the guy who was leading the deal went on holiday in Ireland, and it just fizzled out."

The HBAN conference is on Thursday, February 8, and is open to non-members who want to see how the HBAN network works, connect with HBAN angels and listen to pitches from high-potential startups. Tickets for the conference are €50.

Irish Independent

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