 Hello, I'm Eli Velasquez. I'm Director of Venture Development at VentureWell And I will be your moderator for today's global innovation through science and technology or just tech connect program Today's conversation will be on global investments trends and best practices I would like to welcome you our global viewers around the world who have joined us to learn more about current trends in global investing The experts panel here today will provide their combined experience and expertise in investing best practices in the global city Join our discussion by sending us your questions or comments through the chat roll next to the video player or through Twitter at hashtag just tech connect. I would especially like to thank those of you hosting viewer groups and Encourage you to submit your questions and live photos for a chance to be featured during the program as well Now let me introduce our panel of experts. First, let me introduce Pat Gehwen. He is the new CEO of the Angel Capital Association Next to him. We have Tara Kankaru He is the Foundering Chairman of the Mediterranean Business Angel Investment Network and here we have Caroline Bresson She is the Director of Social Investments at Open Road. So welcome all of you and thank you for joining us today Why don't we take just a quick second for each of you to introduce you and your organization while we wait for the questions to Come in from our viewers. Pat, start with you. Sure. Pat Gehwen from the Angel Capital Association Headquartered in Kansas City and we've got about 14,000 members that come from 250 angel groups and we are the professional society of the angel investing community Tara, I'm Tara Kankaru coming from Alexandria, Egypt. I'm representing two entities Alexandria Angels, which is an Alexandria based Angel Investment Group of investors and also the Mediterranean Angel Network, which was just launched last month Which focuses on cross-border investment and syndication Caroline? Hi everyone. I'm Caroline Bresson. I work with Open Road We are out of a family office. We provide venture debt to social enterprises globally Thank you. What I'd like to do is frame the discussion in two parts I'd like to spend the first half of the discussion addressing investors who may be watching us around the world and in the second half of the discussion I want to focus on startups and founders and best practices that they can implement for approaching investors So my first question to each of you is what is what are some things that investors should be thinking about? Who have never invested in before and they're thinking about Engaging in this early stage investing world, but have never thought about how to go about doing that. So Caroline Why don't we start with you? Sure. So as a bridge finance provider I see a lot of stalled investment raises and one of my biggest recommendations as a new investor is find other investors in your ecosystem that has the ability to lead a deal That's one of the biggest delays we've seen is just finding somebody that's comfortable pricing based off their experience So don't worry out of the gate. You don't have to do that But make sure to reach out to your local community to find other people you can work with Sir and so so angel investing is not for everyone. It's it's a different kind of asset class and Talking from Egypt and traveling in different places each country has its own needs and requirements But it's also a very important role because angels come in not just the truth as traditional investors They come in with their network. They come in with their know-how with their expertise. So it's not just about money It's also about giving back and supporting and becoming actually Partnering with the startups that their investors are investing in Yeah, I would you know say it really starts with portfolio diversification and making sure that you understand the level of risk here And you know, we would advise maybe five to ten percent of your overall portfolio should go into angel investing And then from there figure out what your thesis is what your strategy whether you want to do it as an individual Whether you want to get involved with a group whether you'd like to be in a network or a fund There's a lot of different options. So there's no need to go into a blind Excellent one of the key best practices that we've learned in the just program is this notion of an investment thesis Tell us what your groups investment thesis is or investment thesis that you have seen. Why is it important? And how does that add value to an ecosystem? Sure, so open road ventures provides one-time cash infusions and bridge loans when they're unexpected cash crunches for social enterprises So we specifically did not have a sector geography focus I think there can be over sectorization in this world where you miss out on some really good opportunities because the company doesn't fit into a clear bucket And then just being really clear about what value you're providing to the entrepreneurs So open road comes in and these very specific moments where there's a cash crunch that people know what an open road moment is So so I believe that in two organizations and Alex angels were focused on Investing in Egypt right now, but we have members that are in different countries They're also investing in Egypt with the Mediterranean angels We're the seven countries that we're working with each country has They invest in their own geography, but we're joining in that's called investment So so for us we in Alex angels were sector agnostic. We invest in early-stage startups who are looking for C funding angel funding and Have an actual product or service. They are not in the idea stage So it's very important to the startups that are coming to us We have to screen them and see which stage we're looking at because we are investing around Let's say from $50,000 up to a hundred and twenty thousand dollars as an individual angel group But we're also with the syndicate they have in Egypt. You can go up to 250 or 200,000 so so we're sector agnostic We invest in sectors in any sector as long as we have members who can help and support in that You know, I'm gonna answer that question from the perspective of the individual rather than a fund and I really think of the C thesis as your guiding principles and Figuring out, you know, what your expectations are and then making sure that you've got the discipline to stick to that So it might be you know anything from what industrial sectors am I comfortable with and do you need to have knowledge in that? If not, are you willing to pass on a deal even if it seems really good right on through? The time horizon of when you might expect to get a return to the type of deal structure and all those things go into It's really about that self-reflection before you make a commitment to make sure that you know You stick to the principles that you had put in place It's like gambling and saying I'm gonna gamble until I you know lose this amount of money and then I'm out or win This amount that I'm out, right? So discipline is definitely a key component of early stage investing designing your investment pieces sticking to that investment pieces another key component that we've learned about in our just work has been the importance of education And where you can get that information because you can get it from all sorts of different resources How do you know where to start where should you start? What are some models and resources that you've seen that have been effective in helping you or your or your members get educated? On angel investing well This is one of the things that we do within the angel capital association is really try to Create that network share best practices smart practices and really learn from each other And so like I just said, there's really no point for anyone to go in this blindly You can kind of go one toe into the water the time until you get to that level You're comfortable with and then ultimately you have to make a decision and make an investment But but there's plenty of information and resources out there and perhaps none better than talking to the network that you can Build it's that's out there people are more than willing to share I agree and I think education in that specific part is very important a lot of people come in without the know-how and they You know just step in either they Do a lot of wrong things for them or for the startups So it's really important to focus on that That's why when we first started the first thing when we started the group We decided that we're going to you know get the best practices out there and see how this network should be structured How who are the members that we're starting with we only started with six members I'll give them you know They have the money to invest and they were ready to jump in and guys I told them hold your horses Let's just do this the right way see how this should work And and that's what we you know We spent a whole year just doing capacity building for our six founding members and then onwards We added invited more people to come and we're doing a lot of so we have the fourth pitch events annually And we also every pitch event we invite an expert so that they can talk about what they've been doing best practices from their side We also have separate events ones that we've done Just program and other partners that we're partnering with so that we can also do standalone events that Would actually add value to the investors that either are joining our angel group or any angel group in the country Or in the region now that we're having them at the end Yeah apart from events I think two other things that I would recommend if you have picked specific sectors you want to focus on there are some great Resources and kind of deal books that will update you on what's gone on and ag tech this quarter that you can stay abreast of The second thing I'd recommend is if you do have some sectoral expertise, but not an investing In Africa, which is where the majority of our investments are there's a big need for independent directors So you could actually take a role a board seat Learn about a company as the sectoral expert and kind of be exposed to the venture network from there So let's keep walking through this kind of the evolution of an investor one person wakes up one day and says You know, I have some some extra resources that I want to put to work I've been hearing about investing early-stage investing. I've gotten educated What are some of the next steps today? Should they invest the loan should they connect into a network? What are what are some things that they should be thinking about when they as they're learning as well? You know, I would say I would first look to kind of the failures and the worst Stories that I could find from the network that's out there meaning you need to really calibrate your expectations If you think that you're smarter than everybody else and are going to be able to pick winners 70% of the time and average a 50x return probably not going to happen So I think you know if you can get a bunch of data points and then look at the numbers and then say is that acceptable to me? This Eric, I think your point earlier. It's not for everybody So the more knowledge you can gain the better equipped you're going to be to say is this right or wrong? And then kind of the level of risk that you want to go into it. So that's where I'd start I Agree totally and I think it depends on the person so the person has the time and resources to do that alone And they can you know join some events get to to learn start with a book start with best practices Of course live practices and failures if they don't have the time or if they want to join just a network to get to learn It's always very good to join a group because this is where you get the deal flow You'll get to understand how this works. What's wrong? What's right? What have been how what has an after that we've been doing definitely capacity building sessions So it's it's it's also I think joining group would be the best choice for most of the people unless you have the time and resources to You know do that on your own. Can you expand that little bit card? What does joining the group mean? So joining a group would be looking at usually groups work locally They work for the startups and are involved with the ecosystem in their cities So probably you'd go and see what's the angel network or angel group most of the group groups that we have our act as clubs So they invest their own money, but some of them are also structured like as funds Which is fine, but they're the members also take part so joining the group It's like a club of investors which is having membership fee to pay you get all the resources you Want for educational get access to the deal flow that's happening you get access to the people who've been doing that In our network, we have at least five or six people have been doing that for from seven to fifteen years So they're experts here. They also get access to other events you get Outside of the country people like to travel Deal flow is very important and as a group we have a management that they do the deal sourcing They allow people to apply and come in and guide them even if they're not going to be pitching to our investors They tell them where to go There's also people who are doing the due diligence the valuations So they're doing most of the stuff that an individual angel would be doing himself But on behalf of the whole group and then we present these opportunities to our investors and the people would decide What they want to invest in and what not and I've been traveling Quite some time and attending some pitch events from New York and Europe and Egypt in the Middle East and most of them operate in the same way Which is you know getting all the expertise together and the beauty about having an angel group is that you're getting you know All the know-how from different people you're getting backgrounds from different industries from different also levels of Management so so it's it's very quick which may be good or bad Dependent upon your personality and whether you want to lead yourself or are willing to follow That's actually exactly and it's also a little bit slow because you are doing that alone Then you'll be making your own decision and not waiting on anyone else This is you know, it's always has its pros and cons But I believe that most of you know the pros come in with the angel group Rather than individually. Yeah, I think one of the things that that gets lost in In early stage investing is the amount of time that is necessary to engage deals engage with networks You know do due diligence so Caroline Can you talk to us about kind of the timeline for your group from when you meet an investor? What does the engagement look like? What does it do diligence process look like? Can you walk us through that experience? Sure, so Working for a family office actually we very much took kind of a hypothesis based approach to investing So we started out small and we said looks like there's a gap in this impact investing sector Where a bunch of deals aren't happening as fast as they should and so these companies aren't growing as quickly as they should What if we provide this bridge financing mechanism to fill that gap? We tested it out with a ring-fence amount of money and then gave ourselves a set amount of time before we judge whether or not It was a success or not Lucky for us it did work out And so then we went all in and scaled it into a full fund But to all of your points the family office I work for it did have the benefit of being able to hire staff that could go to and learn From these venture capital associations and communities in the different markets we are working in But for open road because we're solving for these cash crunches. We move very quickly So we very much deeply rely on Local networks of investors that can say I've been working with this entrepreneur for four years He or she is good for it. You guys should go ahead and jump in with them What's the process look like for Alex angels or the med angels? Yeah, so so many angels operates in a different way for Alex angels Usually the process then we we open the app We have an open application all year round so people can just apply on our website And then we beat screening them and the people who are accepted We invite them to come for a pitch event usually from five to eight startups to pitch to our investors And then we would show interest in around maybe three or those depending on the people if we get more than Five or six people were interested in a startup And we would take it forward and then do more on the due diligence usually takes from you know from start to end around three months on average to six months at most it depends on on You know the startup and then the investors involved and if there are any issues, but it's it's more or less that time So this is how long it takes A lot of stuff happens in between in all a lot of you know taking all the legal stuff the commercial stuff the technical stuff and and If you look at it from a point of view that you're just criticizing the start of their startups So they're full of flaws. So it's just understanding what kind of flaws or what kind of Areas of weaknesses that you can work with and develop and help the startup to you know Overcome these challenges to be better. This is the whole thing. No, that's great Again, what are the key areas? There's the importance of conducting due diligence So the investor's role is more than just money What should the investor do once they write the check? What how do they keep engaged with the startup and what is their role in that startup and how can they engage with the startup? following the fact Yeah, so let me just kind of tag on to that last point first and that is that We're still a relatively young community But now we're collecting a lot of this data and without question We can say that the more time that goes into due diligence the better returns that a group or an individual or a fund You know, we'll get so time spent is it's very important into your second question there You know, this is one of the fundamental difference between the angel community and the VC and that is that by and large Angels are passionate about their local community They want to return on their investment, but they want to get back They want to mentor talent and again, we have evidence that shows the more engaged They are the more active of an investor the higher the probability that they'll get better return sooner If you're not willing to put in that time or you don't have any interest Then maybe the fund route is a better way to go because you can be a more passive investor there But the sacrifices you got to be willing to go with whatever the decisions are of the collective community All right, I think it's really important to understand, you know, what What are the returns and what was the most challenging thing is that we're getting new investors on board is All of them are saying what are the returns? What am I getting out of that? And we're talking about Egypt or the Middle East. We don't have we have like two exits in the whole region Maybe maybe a few more but two significant ones So this is one of the the main thing is that what what are the returns? And if it's only about the money, it's not the best thing for you. So angels are also, you know You know by by by default always wanting to give back so it has to be both It's always a double bottom line Some people would take that as you know, they want to give back more than make money Some people don't make money but still want to give back, but it still has to have both components Otherwise, you know, it's it's different VCs operate in a different way. My members generally say they want to make a little money and have a lot of fun Yeah, it really is about creating a relationship with the entrepreneur and we always like to say we never want to be across the table from the entrepreneur We want to be on the same side of the table and so thinking about where You bring your expertise that can help out There's also sometimes moments where it's more helpful for you to step back And so ensuring that you have clear communications with the entrepreneur with the board Just to make sure that you're being your most helpful possible and then in the next round It's incredibly important for you to vouch for the company as they're raising from VCs as you can share your experience With the management team and maybe even follow-on investment excellent We're walking through the methods of the ideal investor, right? And let's just assume the investor is going to get their money back What are some ways that companies can exit How are some ways that you have seen company exit? What should investors be doing to help Guide those companies to exit and maybe we start with what does an exit mean? Sure, so again the majority of our investments are in Africa and we've seen a pickup in in exits What we call strategic exits, so there's only been one IPO to date but the there is a growing interest from the corporate sector of coming in in Renewable energy and agri-tech and specifically So an exit basically means I own part of the company today and tomorrow I don't because somebody else has bought my share of that Hopefully more than I put in And the most common things that we're seeing are either later stage Investors coming in and kind of taking out those early angels seed and series A Or like I said strategic investors that see how the company's Value add can fit into their larger network of a business and and come in and take out around Those are the biggest things we've seen in Africa It's very interesting to see that you know involving Corporates in the startup ecosystem is very very important and this is something that is very weak in our region in the Middle East It's I know it's weak all over but we get weaker as we go towards our country But corporates the main difference between corporates and startups is that the corporates have all the resources that they need startups Don't know startups if they don't raise funds. They die Corporates have the resources have the funding It's about where to put these resources in order to make the best out of whatever they're doing as a product or service So having both of them together is always a good thing and startups are also very innovative very agile and most of the corporates were working mainly in the innovation sector or Innovation acts as something important for them would be looking for startups to invest in or to buy out Maybe start even you know having corporate incubators having the startups in those corporates investing in them And then it becomes a product or service that is part of the bigger company because most of the exits Happening are not the hundreds of millions and billions that we're seeing every day But a lot are in the space of like 50 million Corporates that are buying out smaller startups, and this is like a faster pace even for angels because Angels, you know, it's not good for them to stay all the way because you know shrinking and It's it's always good to have an early exit for the angel, you know, at least a partial Yeah, I would agree with those I'm gonna go back to the data again say at least in the US I mean the IPO is very low single-digit, you know percentage that's gonna happen So you're really looking at that merger and acquisition possibilities. So at the very beginning, you know stages in the partnership for the marriage it's all about that exit and who are the target opportunities and What can we do as an investor to try and make sure that we keep as broad of a filter on that initially as possible And that may mean tippeting as you go, you know on the business model and what do we need to do to make ourselves more appealing to another group I think it's also going back to expectation again And are we satisfied in getting a 2x 3x 5x return in Four years seven years or are we holding out for that hundred X return even if it takes, you know A dozen years or whatever and then the last thing I would say is we're seeing kind of a new trend emerge tied to Those either on the investment side or the entrepreneurial side that are concerned about the time horizon in the liquidity of that and so RBI RBF revenue based initiatives revenue based funds are starting to evolve where the entrepreneur Doesn't have to cop up equity and the investor knows that they're gonna start to get a monthly return based on You know revenues and predetermined, you know rates So there's another angel investment opportunity in there that really is just getting some legs at this point Let's do a little bit of a reality check because in some of these ecosystems that we do work in Investors they be going with a misconceived notion that they're gonna find unicorns all over the place and they're they're hunting for unicorns Companies that are worth billion dollars or more, right? That's that's what sort of a definition of a unicorn What is the reality of? That whole concept So, yeah, and just not to disappoint everyone The reality check is that 90% of startups fail so many 90% 90% so only 10% So, you know, if you reverse engineer the numbers to see the exits You need to plan and put the right plan for your investment in pieces So if I'm one if I'm having 10% failures and I'm starting at 10% successes and I'm starting to invest That means in any company I put my money in and 10 companies one company will only make it So that's when when it comes to the screening part and what companies are we're going to invest in so the better Diligence we're doing this number can go down up to like 50 or 40 percent of you know failures So if you're getting let's say 50 60 percent of successes These companies should be making the return So half of this 50 60 percent would be you know Just breaking even and then the other half would make the decent returns and one out of the 10 Would be making the 30 X that would return, you know all the losses But also on the portfolio make around 27 percent In internal return rate, which is actually a very good number I mean, it's it's an asset class that is a very high risk But has a very high return when done correctly and when done correctly is the most important part because Most of the people are not doing it the right way and it's not easy So so that's why you know again back to the group we need to be working together seeing best practices what works I was really, you know, I'm always fascinated by startups who are CEOs and founders Who are looking founding something and looking at who is going to be my Best acquirer and not looking at you know the Google and you know the big really bigger companies were Would buy from billions, but you know the smaller checks because each company that say all these fortune 500 companies They have sweet spot of buying startups at a certain stage with a certain number So if I'm building something for them or that would be interesting them This is something that's you know important for for us to look at and tonight the startups also to to You know have not have a longer vision towards the exit Caroline what would you say to that investor that's out there getting in court? Yeah Not to be too pessimistic, but it's unlikely Again in Africa. There's been one I think in Latin America. There's maybe been two at this point And so emerging markets just aren't quite at that stage It's still a very inefficient market that you're walking into When open road launch, we thought we would be bridging to Seed in series a rounds for the most part But we've actually seen that the gap in financing goes all the way to series B series C where these companies that are Growing quickly can't arrange capital fast enough to be able to grab that market share that they need So until the market gets a little more efficient and by that I mean There are a number of people writing checks All the way up to five million dollars and the next year between five and seven million in Africa We see there's another big gap and then people willing to write ten million dollar checks So people are growing in steps. I just don't see a way that there's going to be a Number of unicorns that we're seeing or the same number that we're seeing coming out of Silicon Valley So I saw a wonderful presentation the other day and the main point of it was that you know You can spend your life chasing this mythical creature and you may never come across a unicorn, right? So if you change your expectations come down a little bit and you hunt for zebras They're you know, not everywhere, but you can find zebras, right? And zebras might be in the 50 million to 100 million. It's it's a nice exit, right? But even more prevalent than zebras are Clydesdales, you know They're your workhorse and if you have a whole stable full of Clydesdales that are giving you two x3 x returns Maybe that's a better strategy. And so if you think of it in terms of those three animals That kind of gives you maybe a different perspective on what's acceptable and what's good look like No, this is great. Uh, so one more question on on on the investors audience And then we'll switch gears here for founders You you are a champion out there in your ecosystem and you want to start an angel network You want to start an investor network? You want to start a fund? What are some things that you should be thinking about as you go about embarking on this endeavor? Uh, well, I think it's going back to that investment thesis, right? So, uh, what specific value are you looking to add in the industry? What what problem are you solving? Where is there not enough capital that you can really step in and capture? Um, and then also who are you willing to get married to maybe for a second time? These people are going to be People you work with for seven to ten years minimum. And so thinking through How incentives are set up and back to? realistic expectations making sure you're on the same page and just having a portfolio approach to investing Sorry, you've been at this Yeah, so so it's quite interesting. So the first thing would be I've asked that person. Why? Why do they want to set up this angel group? So I've seen people who aren't checking boxes They just want to start, you know an angel group because it's someone else's mandate or you know, he heard it's cool But it's it is cool, but it's not easy It's it's like starting a startup. So it's it's the same thing Also, if you're doing like an investor squad, so so why are you doing this is very important if you're passionate about angel investing You can just join a group or do it yourself, but if you want to you know, create a community that will be You know completing or flourishing the ecosystem that you're part of this is something to consider So so this is an important question to answer And also, how are you going to do it? So it's you need you need a lot of resources You need the people who are going to be managing At least you know at least one person to manage this network Deal flow, how are you going to manage that? How are you going to be doing the due diligence that the term sheets that contracts all these things? So a lot of questions there's a lot of support a lot of people can help But if you do not know why you're doing that then everything else, you know, it doesn't fall in place Yeah, I think that's great advice. Um You know, I would start with the word smart practices as opposed to best practices and And I say that simply because there's a lot of different options and alternatives out there and really understanding what those are But for me at the end of the day, it would come down to the basic, you know question of supply and demand in wherever you are at looking at the supply and demand of both investors and capital and then also deal flow, you know What's the entrepreneurial community? And I would say that a very different dependent upon where in the world you are but I think that changes with time too So as you think through the future and the options and that I think you really need to look at What if it's a time of high supply low demand or the other way dependent upon whether you're looking at it from the investor's perspective Of the entrepreneurs and how are you going to mitigate that risk? Yeah, I think one key learning from my experience in forming an investor club is Keeping returns at the very front of the list where yes, we want to add value to the community Yes, we want to help support startups But at the end of the day if the investor run out of money, you know, that's the end game And so so into the game So we have to always be thinking about returns to the investor community so that they can keep growing that capital Keep reinvesting it in the community So let's let's switch gears now and and we have a lot of viewers that are out there They're starting companies They're out there hustling trying to connect with investors trying to connect with resources We have, you know, 29 startups from the just incubation program that are also watching the program And they've been in the us for for six weeks now Four weeks in their home incubator across the us and then two weeks here in Washington DC And they are out there actively trying to connect with those investors So let's start with from that perspective and kind of walk through the same sort of steps What should it as founders start with when they start thinking about Connecting with investors Realistic expectations, you know, can you come back to that time and time again? But I think what that really means is that each group I found really has a unique culture of its own And so and that's hard for the entrepreneur to kind of get in there and understand that But I would encourage them to do everything that they can to Talk about and around that network to try and understand what they like to see what they don't like to see So that you can position your company and your opportunity in a way that will appeal to them And I'll tell you what the number one, you know thing that I hear time and time again from a group is that We have templates on how we want information provided or how we want to see the pitch deck and they think they've communicated that clearly But then, you know, the entrepreneur will come in And follow their own format or whatever and maybe they've been given advice someplace else But the key there is you got to tailor your message to the audience you're talking to Yeah, it's really very very important to understand the stage that the entrepreneur is at and Who's the investor they're talking to? So and number one I investors don't invest in ideas. So if you have an idea and you're looking for funding Just do something about that idea. Don't you know, yeah, I we all have ideas I wake up in the morning have a billion ideas But they're all worth nothing because I have not actually done any taking any steps to execute them They start having getting value once I start getting going on ground and I'm doing some work. So so As of here when you have some something to show to an investor This is where you can think about getting the investment before that It could be an incubator of course could be any other any other entity that can invest in your idea Uh, the second thing would be understanding the stage and what kind of investor you're going to what What stage do they invest in how much money are they? Do they usually invest what sectors are they usually investing in? So there's a lot of homework that needs to be done for the startup or the entrepreneur Before just you know knocking on all doors and going to all investors And it's really something that's not good because if you're just going You know sending your pitch deck to each and every investor in the in the city or In the country then, you know, it doesn't look good for your brand when one day you'll you'll grow and You need to have a good reputation for that. So that's number one advice A lot of other advice Yeah, I I would underline that a tailored request Is worse 50, uh, just you know email sent out blindly um, I'll speak from, uh The side of where we've seen actually investor behavior cause harm and so kind of things to look out for as an entrepreneur One area where we've seen significant issues like I said is is securing a lead investor So if you think about like all the penguins on the ice flow, like somebody has to jump off first and sometimes it feels like that corraling investors together um, secondly, we've also seen an issue where As one east african entrepreneur said it. I feel like i'm a consultant that should be paid for my time Because she was talking to so many investors that were trying to get to know the market That didn't actually have money to put on the table Ask the investor if they've made their first investment yet That's a big hurdle that a lot of investors need to get over before they're willing to do more And so so is not to waste your time. Make sure you know who you're talking to as well So so far we have unicorns, zebras, five dales and now penguins. Yeah We have a theme emerging here. I can see this So this question comes in from hycom, uh from algeria. He says, how should you prepare when going to your first investor meeting? Okay Yeah, I think it's very important to be your authentic self in in that moment. So Obviously know your model and know the value that you're creating but Why is it you that's best positioned to start this company? And really selling yourself as the entrepreneur. That's what somebody's going to be investing in So looking to connect to the investor personally and and having them Feel confident in who you are and why you're grounded in this business model is a good way to start Yeah, it's pretty important to showcase what problem is your startup Solving uh or what area that you are addressing what added value that you're providing and this is number one Who's doing that and what have you achieved so far? You're asked how much are you asking for and what are you going to use that money for? So to take your startup from point eight to point B because you're not going to take funding that's going to last year Ten years it's going to be for a year or two Probably year year and a half. That's the normal. So it's very important to know exactly what you're asking And you know what you're going to do with that Yeah, it's all those standard things, you know, what's the problem statement? What's the size of the market? What's the intellectual property? You know, what are you going to use the funds for all of those things? But you know the one question I think sometimes entrepreneurs get tripped up with is when the investors say well Well, tell me about yourself or you know, tell me what you've done and you may have done all these wonderful things But what they really care about is the specific need relative to that company And do you have the skill set that's needed at this point in time to take it to the next level? So the more you can focus in on that question and provide a crisp clear response that gives them confidence that you are the right person You know, then you go on in the conversation to the next step the next hurdle This is from Sayed Abarata of Pakistan. How can you convince an investor of your business's upscale potential? Well, you know, that's funny because everybody comes in with the hockey stick, right? Oh, I've had it for a hundred billion Explain what the hockey stick is Good point. So, uh, it's this issue of we haven't seen significant growth yet, but tomorrow Instead of having a five or 10 growth rate We're going to have a hundred percent growth rate and you know, look at my revenue projections three or four five years out Well, that's all like the unicorn, right? It's a mystical, you know, kind of Animal that's out there that we're trying to bring back in temperature reality So it comes back to the assumptions you make in those projections because I think 90 percent of the investors are going to say well, okay I'm going to cut back assumption in half and this one Totally wipe out and then they're going to in their mind kind of make their own projections on that That are going to be way less than than what you provided most of the time you have to expect that You know, I mean, it's negotiating it's selling right but understand the reality of it which is bringing it back to earth I totally agree to that the only exception to that is that if you are like a serial entrepreneur who's done that several times And now you've got Anything so you've done that so that's that's enough Yeah, I would just add Helping the investor understand your customer with customer testimonials and really demonstrating Kind of this idea of a customer lifetime value So you've gotten some money out of your customer so far But they're so excited about your product that you can imagine them staying with you for x amount and creating x amount of dollars That's going to really give me confidence and then any trend line you can show an ability to control costs Is the other kind of thing that I've looked for It's interesting. It's really nice This comes in from our business incubation viewing group. Again, they're here in washington dc How do you negotiate investment when your product is still in the testing stage and may be in that state for some time Given these are early stage science and tech ventures. So card. I'll start with you on this one I'll look at it from our angel group. So usually we would not be investing in that stage We usually we wait for them to go to market first and then see how we can help out onwards So the best thing would be, you know, just either bootstrapping crowdfunding finding An accelerator maybe at post incubation another accelerator That's probably going to be investing in a smaller amount to to take that out to the market I've seen on my view on that Yeah, and we've seen a lot of kind of hardware companies get tied up in ip Issues for a long time, especially if they've been spun out of universities. So as early as possible to Really make sure you have a clear understanding of the timeline of figuring out ip issues That is what can really scare off investors And then other than that, I would just say thinking about Even though you haven't been able to go to market yet Can you break the current stage down even into further stages so that you can demonstrate progress? However small along the way so the investor feels like there's a clear roadmap to to to scale You know, I don't actually see that as being as big of a challenge as it might appear on the surface And I say that because I think probably most of the competition for funding Is at that same level, you know early stage companies So I would say spend a good bit of time really focusing on the valuation and not the valuation of the company You think but how the investors are going to value that company And from what I've seen the great majority of them are going to put the highest emphasis on the management team And again, do you have the experience? Have you done this before do we believe in you? Have you surrounded yourself with others that can make up for whatever your weakness is and that can I think Really overcome, you know those other challenges of well, you know I haven't worked through all of the technical issues yet because I mean a big part of what they're buying into is You and your team So as we see these Global companies start to be more mobile, right? They're moving in regional. You've seen this in the Middle East. You see this in southeast Asia What are some opportunities that you have seen and sorry your perfect setup for this for cross-border investing So so investing and you know, we talked earlier. It's it's a local thing So if I wanted to invest in a company in the u.s. And I'm not in the u.s. It's it's just, you know Making my chances more it's limited to have a return on this investment so the best way to do that is to Hang along with another investor someone who's local someone Who has been doing that knows what he's doing and I'll be co-investing with him It's as simple as that, you know, just do as basics. So what we're doing as angel groups our members They want to invest in another country We we have other members who are in this country in these countries and they would be investing in startups that they believe have High potential opportunities. These are the hippos. So that's another animal High potential opportunities So and and and once they decide to invest The other members of the network would join it. So So it's the same on that we've been doing in Egypt with all our four angel groups We've done that several times. We're trying to standardize that across countries on the Mediterranean And eventually I've been in talks in the past week with other angel groups that they're they're also willing to to join Med angels, but you know, we don't want to rush that which is closing a few deals initially But in order for our members to invest in u.s. Companies. This is what we need to do We need to partner with another angel group and join their investment What advice let me follow with that. What advice would you give Caroline to a startup that says I'm gonna Go on a fundraising circuit and I'm going to go through all these different countries in these different regions And see how I can target some of these investors. What advice would you would you give to those? kind of fundraising strategy Yeah, I I mean that sounds like a hard way to go what we've found is Companies that often expand from say Africa to Latin America end up creating whole new entities because Of the cultural differences in those places. And so they've ended up if they're an African company, for example fundraising from Early stage investors in Latin America that really get the local environment because it can be so different and had some traps involved If you are fundraising from all of these countries, I think you should expect things to take a little bit longer because you don't get that kind of High mind of one person that knows somebody goes and then the other person goes and everybody's closing the deal all of a sudden So I would recommend going deep rather than broad So if you want to add more to my talk Yeah, that's also perfect But you know for people who know exactly what they're doing if they're expanding some people would go like I'm just going to invest in different countries to get more money like just going to Saudi Arabia because There's an event next month that a lot of investors are going there but You know, if you're looking at the angel round You won't get anyone who's going to not local to invest in you It's very hard unless that person is like a super angel or individual angel that travels a lot and you know has presence and you're In the country you're operating in and some other people would say, okay, I'll I'll be operating in that country soon but that's not a good enough excuse to get Investing from from that country. So it's always good to look at the You know when you're first starting looking local and then if you're moving to another country You would be you know targeting those some other entities would be investing So a vc And in Egypt would be investing in some countries in Europe and some countries in the u.s Because they have people who are going there. So this is fine But otherwise it's not really a smart thing if you're not really known Well, I concur I think that you got to be careful if you're going to take that shotgun approach And I think you know a few minutes ago main point you made was really trust Is at the center of all this and caroline you had talked about kind of having that that lead investor So I think the entrepreneur is much better off if they've got a lead investor that's out there because that immediately You know increases the level of trust and then you know, I would say be strategic from that supply and demand curve Again, if you can go to an area where deal flow may not be the greatest and you've got a trusted lead investor You probably have a higher probability of you know Getting some funds from that group then if you're just doing the shotgun thing the you know, 50 different groups around the world So so one of the so we are our final question on from the founder side is When the investor makes the investment he or she Has expectations of that company right to perform to meet certain milestones to keep generating Getting customers x markets and let's put it from the founder side What are the expectations that the founder should have of the investor and what asks should that investor be making of those investors Yeah, it's a good question and it's really dependent on what's going on with the business. Um, I think Again, if they have some sort of expertise Absolutely make that ask if they have contacts into local corporate networks. Absolutely make that ask and then again going back to my earlier point of Money runs out quickly especially In the early days and so Ask early how that investor will be helping them raise their next round Unfortunately, once he closed around I've often found founders realize that their job's just to go about and raise more money again Sorry So it's uh, you know, it's very interesting when you see that mentorship is really really important And this access to mentorship is most of it's something that the startup really needs more than anything I would say that this is even more than funding So imagine you have a mentor who's actually a shareholder in your company So this would be something that will give you a lot of access to the resources that you might need whether it's network Whether it's like know-how whether it's industry Expertise so so it's always good to reach out the best thing, you know, the most important thing for the startup is to keep regular Contact with their investor keep them updated with what's happening always reach out whenever they need help And you know on the other side of the table investors need to be Need to be involved but not to involve so we're there to support and help But not manage not on a day-to-day level not to go into all the details But you know just guide help and let the entrepreneur make their own decisions Take you know make their own mistakes, but you know just guide them not to make a huge mistake not mistakes at your own investment Yeah, but I mean, you know that there's a big difference between like major mistakes and those small mistakes in the operations And and sorry just to add one really simple thing the best companies that we've come across have a very regular Just like newsletter update which can seem like when there's so much going on as an entrepreneur you don't have time for But a standard format updating all of your investors and stakeholders of what's going on on a monthly basis Really is worth its weight in gold Those updates are absolutely critical and I hear all the time that companies just generally don't do a good job of that But caroline earlier you kind of made this comment about we as an investor like to be on the same side of the table You know with the entrepreneur Absolutely true and and I would say well, that's really because it's a marriage And you know you have to look at things the same way and marriage is two way You know communication both ways and so I think for the entrepreneur They really need to appreciate the knowledge and the network that can come from those investors So don't push them away You know you got to show the love again You know both ways and make sure that you have the same vision and you're working together with that The number one thing that I've heard, you know from a Group that you know kind of comes in and they've nailed everything else great pitch deck And got a wonderful product or whatever if it's you know doesn't move forward the number one reason is well We just don't feel that that CEO is coachable In other words, they won't listen And you know so take that message, you know very loudly and that you got to make sure you've got your listening ears on And that if they're telling you something It's because they believe in you and they think that maybe you need to pivot a little bit to really realize optimal success We'll wrap up with a couple more questions here as an entrepreneur as a founder it can get pretty lonely Right, and they are out there just hustling trying to build this business How can you as an investor how have you? Motivated them. How do you get them to see the light that that they are not? Unnecessarily alone in this process. How do you help those founders get through that? Yeah, I mean honestly I describe my job as part-time therapist and so Actually being able to separate business problems from personal ones and actually making time for both So sometimes if an entrepreneur is feeling really stressed out and just not performing the way you've seen them in the past There's something going on at home And so if you're able to have open communications and trusted communications that they can share that with you You can be that outlet for them that they couldn't share with their staff So, oh man, we're running out of cash at the end of next month and like I'm just so worried about it Can't necessarily tell all of your staff about that But you certainly can tell your investor and kind of be that trusted partner to to get through the hard times with So it's not an easy job entrepreneurship as the investment is not for everyone entrepreneurship is not for everyone And it's it's it's tough and it gets lonely and there are you know You're spending all your time building whatever you're believing in and it's it's a long journey So if you don't have the right people on this ride, you'll definitely get very heart Whether it's the right co-founders the right team the right environment the right Let's say networking events that you're going to or business events also the right investor so And it's with the angels it's different because the the relationship is not as serious as it is with bc's or Let me say as formal serious, of course, but not as formal because most of the time The angel investors most of them are either entrepreneurs or they're you know, they're not Big in age. They've been probably entrepreneurs themselves. So So it's always surround yourself for the people with the right people You know all that said another way if it were easy anybody could do it And I'm reminded of the old saying, you know when the going gets tough the tough get going You got to be persistent can't give up It was great. So I have one final question for you for all our viewers and thank you all for joining us What is the most important takeaway that you would share with our viewers? Whether it's to an investor out there a founder or both Caroline will share with you I'm going to be a little controversial And and say that profitability equals freedom I think in particular in Africa there's been a lot of focus on growth and not enough on profitability And so the clearer your path is profitability the better So my advice would be that investment is good and you need the money At a certain point, but you also need revenue. So if you're just investing to as the main source of you know Seeking I mean raising funds as the main source of Revenue that's not that's not good. Not everyone will grow company to be to have a You know a huge valuation and we're seeing a lot of companies that are overvalued And the returns are not actually as they are But so so returns are important and it's the reading profitability is very important. They're not what you're saying. So, yeah Yeah, I mean revenue growth is job number one. No doubt about it But but let me offer a different piece of advice and that is whether you're on the investor side Or the entrepreneur side of it I would say and some may disagree with me try to take the emotion out Because you're going to get passionate about this and I think many times people get blinded because of that passion So the more you can step back and look at it emotionally. I think, you know, collectively you'll make better decisions Oh, this is excellent. So I think I think we've come close to our ending time here I want to thank each of you for committing your time and expertise to this panel We hope to see you on future just programs or future just Events. I want to thank all of our viewers and our viewer groups Today, I think you've been great with all the questions and thank you for sending those in We had with us at our audience today. We had our just incubation program attendees again here in Washington D.C. And you're in our Liberia of Monrovia. Thank you all for joining us So with that we'll be signing off. So let's just tech connect and be on the lookout for future tech connects