Angel investors and accelerators are one of the essential layers of the CEE and SEE tech ecosystems, providing support and financing for early-stage startups. Since financing resources are fewer than in Western Europe or the US, angel investors and accelerators are instrumental to ensuring that startups can achieve the desired growth and expertise necessary to attract a round A investment.
Because we recognize the importance of angel investors, we decided to dedicate a special track to exploring the best practices in the field, along with our friends from Angelsbootcamp and representatives from top accelerators from all over the world and, of course, top regional angel investors.
Learning together how to better support early-stage startups
Angel investors are the people with financial resources that can boost a startup in return for a small equity. But often so do the accelerators. So that’s why it’s essential to get together and discuss key issues such as:
how the scouting process for investment opportunities works
how to approach the due-diligence process
how to make sure your investment is well managed
types of investments in early-stage startups
angel investors working with each other and with accelerators and more.
Angel Investors are well aware of high risk. They know that 9 out of 10 business ideas often fail, so they scout all the time, are present at events like How to Web Startup Spotlight, around accelerators and dedicated events like tech angels meetings, they are open to direct contact and always keep track of recommendations.
“Our ecosystem is quite small and the tidings about new startups are spreading quickly” says Technology Consultant and Angel Investor Adrian Gheara. “I usually follow closely the evolution of a potentially interesting startup, the chemistry between founders and their ambition and of course the product itself, before I make an investment decision.”
You will often hear angel investors saying that in an early-stage startup the team counts even more than the product itself. If you you’re running lean, you can always pivot.
“I always look to find a common vision about the product among co-founders and if there is an opening to learn”, adds Gheara, who will get further into these details at the Angel Investment Track at How to Web Conference 2014.
When approaching an early-stage startup with an investment proposal there’s no need for a complicated due-diligence process either.
“Once the term sheet is signed I usually get into the legal aspect first, then I look through the financial/accounting sheets and finally I ask a colleague to analyze technically the product (quality, scalability, metrics etc.)”, explains Malin-Iulian Stefanescu, CEO at EEU Software and Angel Investor.
Usually when it comes to a startup, the company itself is not legally established, so the due-diligence makes sense only from the intellectual property, legal and technical perspective.
“For me it is important that the startup is in my area of interest, that it has a well-defined market willing to buy the product the next day and if it’s a software startup it has a functional prototype and at least two co-founders”, adds Adrian Gheara.
From the startup side, the most important thing to attract investors is to show growth and the most important aspect of the due-diligence is transparency, argues George Lemnaru, Founder at Green Horse Games.
“It’s about a long term partnership therefore extremely important to show openness. You don’t want to have a circumspect or even distrustful partner besides you right from the beginning”, says Lemnaru.
For those companies with no access to seed investments, accelerators partnering with angel investors can become incredibly appealing opportunites for growth. A lot of discussions at How to Web’s Angel Investment Track will be centered around this topic.
Choosing the right investor – a startup founder’s dilemma
“Accelerators can be both competitors and partners for angel investors”, says Adrian Gheara. “Let’s not forget that accelerators have demo-days where they invite investors. In some cases accelerators offer financial resources in exchange for some equity and, in this case, can be considered our competitors, but in most cases it’s an investment in ‘services’ rather than cash.”
Even so, Gheara adds that he would like to consider accelerators as partners if they can join teams on the same stage of a startup development and the evaluation and expectations are the same.
Malin-Iulian Stefanescu of EEU Software argues that a good accelerator could be a great advantage for a startup, but a bad one could be extremely harmful. “Founders should be very well informed who they will give their equity to, including accelerators.”
For those at their first startup, George Lemnaru recommends an accelerator. “You will learn a lot more in a lot less time, but as an entrepreneur you should look for as many financing opportunities as you can.”
The chances that a startup would be in position to choose between an accelerator and a VC are small. In the end, an accelerator could be a good alternative to seed money in early stages and angel investors could “take over” later on and a VC fund can follow consequently.
So that’s why we’d love to have you on board at How to Web this year, to find the answers to this question and many others. Beside Malin Stefanescu, Adrian Gheara and George Lemnaru you will also hear great presentations from Simon Jenner, UK Entrepreneur & Investor and Rune Theill, Co-Founder at Rockstart Accelerator. Legal issues will be addressed by Ana Maria Andronic, Attorney at Biris Goran SCA and Alina Stavaru Counsel at RTPR Allen & Overy, with more speakers to be announced soon.
The How to Web’s Angel Investment track is co-curated by Angelsbootcamp. Its Program Director, Mike Doherty, will moderate a panel talk with George Lemnaru and Malin Stefanescu, sharing his expertise gathered from working with angel investors from all over Europe. This track has been initiated and developed in partnership with VIBE (Venture Initiative in Balkan Europe), a regional eco-system accelerator supported by the European Commission. VIBE is one of the projects of the South-East Europe (SEE) Programme.
Very Early Bird tickets for the Angel Investment Track – available now, starting EUR 49!