Angel investment can make all the difference in getting a start-up off the ground. But what kind of people and projects are business angels looking for? Brigitte Baumann, an expert in the field, explains.
Offering often less stringent terms for young companies, angel financing is an interesting alternative to banks and venture capital. Business angels provide not only funds but also expert advice and connections. They can be a decisive factor in differentiating a company from its competitors. Brigitte Baumann is co-founder of Efino and GoBeyond Investing, a Zurich-based platform that has already invested over EUR 27 million in 107 start-ups. In this interview, Brigitte Baumann, who was named "European Angel Investor of the Year" in 2015, talks about her work, and the business models she favors and offers advice to entrepreneurs who are looking to start up.
As a business angel, what types of companies do you back?
Brigitte Baumann: Like many business angels, I first invest in a team. There is no one business model that I back more than another. I look for projects that promote diversity and values such as sustainability, for example, and that can be part of an economy for the common good. However, my goal is also to find start-ups that can grow quickly in order to eventually join an internationally known company. I, therefore, evaluate their evolution and their potential to be acquired by a large group within five to seven years.
Which sectors are attracting investors today, two years after the start of the pandemic?
Baumann: In the post-pandemic situation, which is now marked by rising inflation, the areas of health, well-being, and energy - especially electricity - are of particular interest to investors. The education sector is also undergoing a major transformation and is becoming increasingly attractive. In general, interest is turning to technologies that will help find solutions to overcome crises and respond to global economic and social issues.
What are the most important qualities of a successful start-up founder?
Baumann: You have to dare to dream, while at the same time being fully committed to taking action. You have to be very stubborn, but at the same time be able to listen. Like to work alone, while being able to collaborate in a team. Knowing how to do a lot with little means, while investing when necessary. Dare to take risks, while taking into account the reality of the market... I always qualify my answers: the secret is to find the right balance so as not to be affected by the shortcomings of your qualities!
Do you have any recipes for success that you would like to share with young companies that are just starting out?
Baumann: There are no recipes that can guarantee 100% success, but there are certain foundations that should be laid before starting a business. One of them is to examine the product-market fit. This step makes it possible to determine if the concept, the product that one wishes to develop, meets real market demand. It is also important to know how to translate an innovative idea into a coherent business model that can distinguish itself from the competition. Often, the entrepreneurs I meet do not know exactly where the economic benefits of their solution lie. A business angel helps start-ups in this respect as well. Another key to success is the ability to surround yourself with the right people.
In what way are the business models of your companies GoBeyond Investing and Efino unique?
Baumann: GoBeyond Investing is an international network of business angels that has developed a collective intelligence approach, enabling its investor members to acquire quasi-professional investment skills. Thanks to this strategy, many of them have been able to build a portfolio of investments in start-ups with proven economic, social and environmental impact. One of the unique features of GoBeyond Investing is that it has democratized this field, particularly by encouraging women to dare to invest. Efino's model is based on these same values, with an emphasis on training and coaching for business angels, managers in their networks, and entrepreneurs seeking financing. We have a global approach and collaborate with teams in Senegal, Georgia and Peru, as well as with various development agencies such as the World Bank, the German Corporation for International Cooperation GmbH (GIZ), Dutch Good Growth Fund (DGGF) or SECO via the Swiss Entrepreneurship Program (Swiss EP).
Can a start-up that is just being created do without a business angel? Will it find the necessary funds in Switzerland or should it quickly expand internationally?
Baumann: Business angels often work in networks. Contacting them allows start-up entrepreneurs to quickly meet the right people interested in their project. At GoBeyond, we put start-ups in touch with Swiss investors and at the same time open the doors to foreign national investors from our network in America, for example. For us, this is a goal in itself.