European angel investors back the people behind the ideas
European angel investors gathered in Brussels on 15 October for the European Angel Investment Summit. The event discussed investment trends, emerging sectors, and sparred with innovative startups.
The Brussels seminar was attended by 450 participants from over 40 countries. The City of Jyväskylä Business Development Services was present at the event to pitch the Jyväskylä Business Rally Investor Day, which will celebrate its 10th anniversary next year, and to meet new and old acquaintances from the European Business Angels Network (EBAN). Jyväskylä is the only city that is a member of EBAN.
Courage is needed in Europe
The seminar was opened by Janne Jormalainen, President of the EBAN Board. He spoke about Europe's position in relation to the United States and China. He emphasised courage, the importance of investing in European companies, and risk-taking as essential to keeping up with the fierce competition. "Entrepreneurs are heroes who can solve tricky global problems. It is the angel investors role to believe in these heroes". Kerstin Jorna from the European Commission emphasised in her speech the importance of seamless financing, i.e. how capital should be allocated from different sources throughout the entire growth journey of a company, in cooperation between private and public funding. Jorna considered financing for the scale-up phase of companies critically important.
DeepTech and the environment are trending in investing
New sectors emerging in investing include DeepTech and DefenceTech. In the latter, dual use is often talked about, which means that the same solutions are applicable for both defence and civilian use. Among investors, investing in DefenceTech sparks opinions for and against, even though the difficult situation with war in the world gives the sector momentum. "My wife said that you shall not invest in defence technology," said one Norwegian investor at the lunch table.
DeepTech can be defined as unique solutions that solve difficult problems in large markets. Deep tech startups have enormous potential to revolutionise entire industries, combining ambitious, frontier-breaking research with innovations that remodel mindsets. There is a great and long-term need for financing.
DeepTech entails: environmental technology; software, AI and cybersecurity; photonics and quantum; health technology; biotechnology and space technology. In these sectors, there is potential to solve major global problems, such as the sustainability challenge, the challenge of increased life expectancy, or the energy transition. DeepTech companies have the potential to make hundreds of millions in profits by protecting their technology and aiming for large, targeted markets. They create high-value-added jobs and have a clear exit strategy.
Selma Prodanovic, selected as one of the 100 most influential women in startup and venture capital investing, spoke at the event about the acceleration of change and touched on the new generations of investors to come. Prodanovic said that 95% of millennial investors want to invest in green transition solutions and sustainability.
Market entry lessons for startups
Also known from Jyväskylä's International Venture Academy (IVA) programme, investor Marcel Dridje—a business coach and President Emeritus from Sofia's Business Angel Network—took startup founders to heart and shared tips on growing a business in new markets and understanding investors' wishes.
Marcel Dridje having a session for startups
Dridje started with the customer, explaining how extremely important it is for an entrepreneur to know the customers on the most precise level possible and to target sales to them. With the precise level, he meant that the decision-maker for this particular solution must be identified and understood. Marcel also emphasised the importance of discipline, i.e. he advised people to do their homework carefully before entering a new market. "Market research is very important. Market selection should also be done wisely and with focus," Dridje stated.
The importance of networks and partners is paramount for an entrepreneur. No one can survive alone. Similarly, investors always emphasise the importance of the team, which encompasses expertise in both the substance of the solution—the technology—and in the management of the business. Not all wisdom resides in one person.
Entering a new market often means finding a retailer and negotiating the terms of sale. Dridje warned against giving exclusivity to any retailer in the market entry phase. "Situations change, the market is dynamic", so exclusive agreements will come with time and must be earned.
He described the relationship between an investor and a startup as a marriage. Constant discussion and sparring is important, as is reviewing objectives and results together at regular intervals. It is also good to admit mistakes, learn from them, and move forward together.
Angels' wish list
So, what do business angels wish from their startups and investment targets? Marcel Dridje listed the wishes of investors as follows:
Angel investors want:
- a team that delivers x times the return on investment
- a team that never gives up and is capable of changing direction
- a team that already has a product or a prototype ready for the market
- a team that has invested its own money in the company
- a large market that the company is targeting
- generally, the company has a patent for its solution
- hot sectors at the moment are AI, robotics, renewable energy, space, science, MedTech (not research or idea incubation)
- companies that can generate profit, scale up, and provide an exit opportunity
The seminar culminated in a panel discussion of EBAN's Presidents Emeritus. Renowned serial entrepreneur, angel investor, author and teacher Peter Cowley said investors invest in people with an idea, not an idea with people around it.
Image and texts: Taija Lappeteläinen
