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This event delved into the venture investment world, offering valuable perspectives from professional angel investors. Conversations were led by Mario Peshev, a trusted investor and SeedBlink community member, and joined by two other angel investors from our community:
“As angel investors, we are trying to be more involved because that’s why we are on our own and not part of a fund.”, adds Mario Peshev, angel investor and CEO at DevriX.
Now, let’s find the key takeaways from this engaging session, packed with a wealth of knowledge about the angel investment landscape.
Firstly, angel investment was highlighted as a gradual process of building ventures over time, requiring patience and dedication.
“Angel investment doesn’t happen overnight. Angel investment it’s about building things with time.” says Dimitris Matsakis, Angel Investor & Business Advisor.
The discussion emphasized that angel investors must adopt a long-term perspective, understanding that success in this field comes from nurturing and supporting startups as they grow.
Another significant learning was the value of group investing in angel investment. Here, Mario and Dimitris discussed the benefits of collaborating with other investors in investment groups.
Working closely with other investors helps mitigate risks and create potentially higher returns. Additionally, the shared expertise and diverse perspectives lead you to a better decision-making process for your portfolio and the startups.
“I am part of multiple angel investment groups, and we practice building a portfolio together.
Building a portfolio alone is more complex, especially when starting as an angel investor. You must balance investing across the sectors that make sense for you and finding startups mature enough to invest in." says Andrea Piazza, Angel Investor & Co-leader of COREangels Femtech+.
Andrea and Dimitris also emphasized that great founders and a strong leadership team are crucial for the success of a startup. Among the essential elements was the team's capacity and coachability, as well as their ability to learn and execute.
“Great founders make great teams.
The due diligence process has many factors, and we, as investors, can adapt it based on our needs. For some people, products and strategy might value more in the final decision.
For me, team management is vital.” says Dimitris Matsakis, Angel Investor & Business Advisor.
“Management teams are building the so-called “moat in investing.” It’s about having that indistinguishable, competitive advantage that is hard to reach.” adds Mario Peshev, angel investor and CEO at DevriX.
Another aspect discussed was the strategy of constructing a portfolio and evaluating investment prospects. For example, measuring the total addressable market and determining product-market fit help you understand a product's demand.
“I apply some of the traditional approaches of assessing the total addressable market or target audience to understand if there is a product-market fit.
There are a lot of products out there that are driven by the founder's desire and are not necessarily a common problem. It’s one of the things worth paying attention to.” adds Mario Peshev, angel investor and CEO at DevriX.
One of the essential insights discussed focuses on building a portfolio and assessing investment opportunities. For example, gaining access to these opportunities can be challenging for solo investors, especially when the most interesting ones are highly competitive in fundraising.
“As an angel investor, it can be risky if you happen to be among the first angels that back the business. There is not a lot of support and capital.
If you are joining too late, the game must have more skin. Your contribution will make a slight difference.
You have to be somewhere in between to find that golden spot on the ground.” says Andrea Piazza, Angel Investor & Co-leader of COREangels Femtech+.
Additionally, having a clear investment thesis is crucial, and individuals often leverage their expertise in specific industries to make informed investment decisions. Understanding market dynamics and connecting with professionals in the relevant sectors is essential to avoid missing crucial factors, such as particular regulations or cultural differences, that could impact a startup's success in different regions.
“Doing your due diligence ahead of time is one of the core challenges. Understanding whether the numbers startups give you make sense and whether they are real.
In many cases, we have to deal with fake numbers or projections that are really out of the market magnitude, especially around AI startups." says Dimitris Matsakis, Angel Investor & Business Advisor.
There are many ways that investors can use to stay up to date with the market. However, let’s see what Andrea and Dimitris prefer and why it makes a difference in their portfolio-building strategy.
Attending conferences and staying updated on emerging technologies and market trends can provide a broader view of the industry and economic landscape. At the same time, understanding the dynamics of specific industries is crucial, as barriers and challenges may exist that could affect the success of startups.
“I subscribe to a series of newsletters about the macro economy. These give me market and business briefs or daily market advice. For certain industry-based content, I try to find the best sources of knowledge in newsletters, courses, or online communities.
I also use Twitter a lot and Linkedin, where you can find some thought-provoking discussions from international investors.” adds Mario Peshev, angel investor and CEO at DevriX.
While the expectation is to seek exponential returns, it is acknowledged that financial projections and forecasts are often uncertain. Instead, the focus is on evaluating the capacity of the founding team to assess and work with the numbers.
“Evaluating the founding team's capabilities and their approach to financial analysis is crucial in assessing the viability of an investment opportunity. It's not just about the numbers, but also the qualitative elements that determine the success of a startup."
Although significant numbers are appealing, the discussion between Andrea and Dimitris suggests that the qualitative aspects behind the quantitative data are equally important considerations.
In the future, angel investors expect to see a more fragmented startup landscape with increased participation from individuals who want to support innovation and new business models.
The evolving nature of work and technological advancements allow for more excellent connectivity and the ability to invest in early-stage startups while working as freelancers.
“I expect more people will join angel investing because I think it’s a significant role that helps you nurture innovation and bring new business models to life.
I also expect the market to become more fragmented, and some people who work for a startup as a collaborator or freelancer, to also join to invest in it.” says Andrea Piazza, Angel Investor & Co-leader of COREangels Femtech+.
Despite the current downturn in valuations, angel investors believe that if a startup has solid fundamentals and makes sound decisions, it can navigate challenging periods. While valuations remain essential, the focus should also be on the long-term potential and the impact investors can make by supporting promising companies.
“If you have a solid base with good fundamentals and make the right decisions in time, you can survive difficult periods.
When valuations are down, it’s an excellent opportunity to get into a business. However, it’s also riskier because you don’t know how long these companies will be able to float through the crisis. It’s the investor’s job to figure this out." says Andrea Piazza, Angel Investor & Co-leader of COREangels Femtech+.
The excessive inflow of money and high valuations in the past may now be replaced with more cautious spending by venture capitalists. However, the availability of funds for investment is still present, indicating positive prospects for angel investors.
"Amidst changing valuations and market conditions, it remains crucial to recognize the potential of a good company regardless of its current valuation.
While we have seen excessive funding and inflated valuations, the current macroeconomic situation calls for a more cautious approach.” says Dimitris Matsakis, Angel Investor & Business Advisor.
The best startups, capable of attracting funding, will likely thrive in this environment. While the situation is subject to change in the future, it is an excellent time to initiate or continue angel investing, particularly in Europe and specific regions, such as Central and Eastern Europe.
“Venture capitalists are now spending their funds more wisely, and the best startups capable of attracting investment will endure.
It presents a positive outlook for angel investors, who should seize the opportunity in the European startup landscape over the next few years." says Dimitris Matsakis, Angel Investor & Business Advisor.
Whether an aspiring investor or a seasoned professional, these takeaways will enhance your understanding and inform your investment strategies. However, investing in startups involves inherent risks, and it is essential to recognize that trends in the startup landscape are subject to fluctuations.
The information provided in this article or any investment-related content should not be considered financial advice or a recommendation to invest in any specific company or industry. Investors must conduct thorough research and due diligence before making investment decisions.
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