You too can become an angel investor and invest in startups

“There are no female angel investors” I was sitting in a meeting with an investment bank and the CEO had a firm opinion. Instead of arguing with him, I decided to investigate the matter further. Were there any women interested in investing in unlisted companies? Pretty quickly I found a handful of women who were already investing in unlisted companies.

A few weeks later I stated in an interview that women absolutely invest in other companies that are not listed on the stock-exchange. After the article was published, many interested women got in touch. What struck me then is that women who see other women investing begin to invest themselves, in the conversation a seed is planted that contributes to normalization, that creates curiosity and results in a change. Feminvest’s angel network grew with over a hundred women – which I proudly remembered telling Erik Wisterberg, who now works at Svenska Dagbladet, over lunch. There are certainly women who invest. Today Feminvest has more than 300 women in the network who invest in unlisted companies in various ways. Some invest millions every year, others invest hundreds of thousands a year. There are also some who invest with their time and others with their network – so-called sweat equity.

The market is currently tougher for early-stage companies, it costs more to get financing. It is an exciting time for those who have capital, skills or time to invest. For the companies that manage to survive and grow during the next two years, they also have an excellent position to expand further. In October, we will hold the one day education “Become an angel investor” again with a large group of curious investors, all women. Then the follow-up course “Financial Modeling”.

The new course we are launching now is the half- day course “Sweat-equity – use your time or skills in exchange for co-ownership”. You register your interest in all the three courses here.

The evaluation process before you make an investment in an startup/scale-up is important, there are other components to look for in comparison to investments on the stock exchange. Where the liquidity is higher most of the times.

Here is a checklist of questions I want to share that I ask myself when investing.

• Are you passionate about the problem the entrepreneurs are solving?
• Before investing, take the time to get to know the entrepreneurs, do they have the right skills to carry out a strong growth journey?
• Are they attracting the right people to the company who can contribute their skills and ensure that the company grows?
• Does the product/service have a large market potential?
• Is there a mega-trend that supports the company’s ambition?
• Does the company have any paying customers – i.e. have they found their customer who is willing to pay for the product/service?
• If the business model is stuck, is the entrepreneur flexible enough to explore new business lines in the company? It is rare that a company’s initial business activities turn out exactly like the final product.
• Does the entrepreneur think big from the start? If an entrepreneur shows a pitch where the company should have a maximum turnover of 30 million in five to ten years – then it will be a fine company – but if the ambition is to reach an annual turnover at those levels, it may be more difficult to get the money back as the VC companies will not invest as they expect a 10x return and the turnover is too small. Hence how will you get the money back?
• Is there a uniqueness in the business-model or a strong brand in place?
• Are there trademarks or patents to consider?
• If it is a technical product, is there a technical person who is operational in the company who has competence in-house?
• Does the company have strong owners on the cap table? What happens if the money runs out?
• Does the founder have a large ownership – a large influence in the company? This should be evaluated in each funding round. It is important that the entrepreneur has a motive to continue running the company through his ownership.
• Are there legal documents in place. A small or large number of shareholders?
• Taxes etc. must be paid and I think it is in its place with a proper DD of the team working in the company ??

Feel free to share your thoughts or email me if you have any questions about the above. There are many different questions and requirements to ask dependent on the business. I only want with this text to inspire you to get started and to inspire you to know what you are looking for. You are welcome to join our angel network if you are curious to learn more about investing in women-owned companies and if you want to network with others in the same situation. Our next meetup is in November.

Michaela

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