Angel investors share tips on how to grow a startup biz
MANILA, Philippines — It isn’t easy to start a business, much less maintain it and keep it profitable all the time.
It is your dream to put up and run your own business venture, and there is no better time to take that leap of faith than now now that the world is seeing better economic growth forecasts pegged at 7.2% at the end of the year. If you pass up on this once-in-a-lifetime opportunity, it might not come again. It is now or never.
So you finally decide to do it. But, like many startup businesses, you lack the generous funding that a startup business demands, the generous funding that will allow you a little margin for error so that you do not easily fall. The solution is to take on angel investors. There are a lot of them because, as startups pop up in different industries one after the other, so do angel investors.
Angel investors are high net-worth individuals who provide capital for startups, usually in exchange for equity in the company. Angel investing is no easy feat, though, if you think they simply “invest” and then “collect” later on. Angel investors have to possess a combination of business acumen, willingness to take risks, and networking.
“Seeing the business take shape and grow into a real revenue contributor was an exhilarating experience,” said Alfonso “Chito” Zulueta, angel investor and chief executive officer of CZ Ventures, a venture capital firm.
Zulueta is referring to his first attempt in angel investing.
He and other angel investors share important tips on how to grow your startup business.
Tip no. 1: Welcome new ideas.
Don’t keep yourself closed to what you want to happen. Keep an open mind and listen to your angel investor. Who knows? Your angel investor may have a creative idea that might work for your startup business.
“A startup is more likely to achieve success if he/she is willing to listen, learn, adapt and act on advice from those who have either succeeded or failed in the market they are venturing in,” said Claus Karthe, chief executive officer and founder of German Entrepreneurship Asia.
He added: ”Similarly, an angel investor who is open to listening to new ideas and building on them and, at the same time, be able to manage risks through due diligence has higher chances of success.”
Business and technology are constantly changing, so no one should be stuck with rigid ways of doing business.
Tip no. 2: The business has to make sense to you.
Both the proponent of the business and the angel investor have to know the business by heart so that they would be able to run it with proper knowledge and understanding. “I choose a business that I can understand and which I can assist in some form,” said Carl Bautista, who is backed by a 25-year experience in banking in New York, Hong Kong and Singapore. He is now in specialty coffee and human resource technology.
Bautista also pointed out that apart from providing funding for startups, angel investors share their business expertise to contribute to their growth.
Tip no. 3: Tap the right people to drive the business.
“The most important quality of a successful startup is its people. You can have the most groundbreaking idea in the world, but without the right people with the right mindset driving the business, they won’t work as planned,” said Manila-based recruitment industry entrepreneur James Gundry.
Zulueta agreed: ”Apart from a strong business model, a startup has to have a leadership team who can execute and get things done.”
Lara Lorenzana, who has been in investment banking and structured finance in Manila and New York for 20 years, added: “The startup must demonstrate to the investor that the money entrusted to the founder is used wisely and as promised.”
Thus, successful angel investors, with their keen eye, do not simply look for profitable business models but people who they can trust with their money.
Tip no. 4: Join an investment network.
A single angel investor can only do so much. Since there are so many risks involved, investors can join an investment network that pools capital together, screens startup applications, and provides investment training and support. One such notable network in the Philippines is the Manila Angel Investors Network (MAIN), a group of private investors that is actively supporting several startups.
“Angel investing is less daunting when you do it with a group that shares the same due diligence as you,” said Karthe, who is passionate in helping startups grow. “MAIN has a very experienced group of people as angel investors. I firmly believe that an active angel investor network is necessary for the country to develop its nascent startup ecosystem that is growing rapidly.”
Seeking to bank on the Philippines’ expected growth, Lorenzana and her husband, a seasoned investor from New York, returned home to invest in “our generation’s land of opportunity. With MAIN as our guide, we hope to apply what we learned and observed in the US to the Philippines.”
Bautista and Gundry are also part of MAIN, which conducts various activities geared towards promoting knowledge and expertise sharing among angel investors, new and old, and for startups.
