Gender bias or how investors are missing the best investment opportunities
By Selma Prodanovic, EBAN Vice President
The overall assumption is that investors seek the highest return on investments. If this may sound like common sense, it is certainly not common practice as investors tend to invest in startups who generate half the possible revenue for every dollar raised!
Let’s take a closer look:
A global study by BCG shows that for every $1 of investment raised, women-led startups generate $0,78 in revenue, compared to $0,31 for male-run startups! First Round Capital found that female-led companies it had funded performed 63% better than the all-male counterparts. The Kaufmann Fellows Report reports that women-led teams generate a 35% higher return on investment than all-male teams.
Combining the assumption that investors are always seeking the best investment opportunities and the above data, one would imagine the majority of VC funding would be allocated to female-led or mixed-team startups. Well, the opposite is the case! According to Crunchbase, female founders received only 2.3% of VC funding in 2020. In Europe, female founders received 0.7% of the total VC funding according to Pitchbook.
This incredible discrepancy is simply illogical in today’s data-driven world.
The next decade will bring a major shift in funding as LPs will no longer accept unawareness, ignorance of facts, or even deliberate misallocation. Considering that in 2020, 83 female (co)-founded unicorns joined The Crunchbase Unicorn Board compared to 18 in 2019, the change is already happening, and it is merely a question of how fast VCs and angel investors will adapt.
Following are four strategies to adjust and perform better in the future:
- Diversify your deal sourcing
Deal sourcing is obviously directly related to your network. Depending how heterogenous or homogenous your network is, you will have access to more or less diverse startups. No matter how much you would like to invest into female-led startups, you will not be able to find them if you do not make a conscious effort to expand your network. The numerous fantastic initiatives, organizations, and accelerators focusing on female-led startups provide the fastest and most professional access.
- Be aware of your “pitching bias”
One of the major factors behind this inconsistency is unconscious bias. According to ILO, unconscious gender bias is defined as unintentional and automatic mental associations based on gender, stemming from traditions, norms, values, culture and/or experience. The unconscious, automatic associations feed into decision-making, enabling a quick assessment of an individual according to gender and gender stereotypes.
According to Harvard Business Review, one study (2014) using identical slides and scripts but voiced by men or women. The researchers concluded, “Investors prefer pitches presented by male entrepreneurs compared with pitches made by female entrepreneurs, even when the content of the pitch is the same.”
In addition, bias is present in how founders are questioned. Research from 2017 found that women are asked different questions than men when pitching to VCs. Across 180 entrepreneurs and 140 VCs at the TechCrunch competition, men were consistently asked more ‘promotion’ questions (highlighting upside and potential gains), while women were asked more ‘preventive’ questions (highlighting potential losses and risk mitigation). Entrepreneurs who addressed promotion questions raised at least six times more money than those asked the prevention questions.
There are different methods to diminish this bias, but already awareness creates change in the system. Just remember: you might be missing a fantastic investment opportunity.
- Expand across industries
The same lack of experience or even self-doubt which is assigned to many female investors entering highly technical fields, is also true for most male investors entering fields such as for example femtech. This maybe “unknown territory”, but considering there are 4 billion women, potential customers, the upside is evident.
- The “Business Angelina effect”
The quick fix yet most sustainable strategy is making sure your investment committee or business angel co-investor group reflects not only complementary expertise but also gender diversity. Keep in mind that women influence over 80% of buying decisions and potentially understand better the needs of female customers. The number of female angel investors and female focused VCs is growing. Last but certainly not least, women now control 32% of the world’s wealth (according to BCG) and this will rise at a compound annual growth rate of 5.7% to USD 97 trillion by 2024.
There are many fantastic networks you can either join as a female investor or to identify female co-investors. To start with, get inspired by the EU-Startups Top 100 Europe’s most influential women in the startup and venture capital space or join EBAN events.
The world is changing at exponential rate. Change will either happen to us or we can shape it.
Sources:
https://www.embroker.com/blog/female-founders/
https://www.ilo.org/wcmsp5/groups/public/—ed_dialogue/—act_emp/documents/publication/wcms_601276.pdf
https://kalkinemedia.com/news/world-news/50-cognitive-biases-for-the-young-elon-musk
https://www.bcg.com/de-at/publications/2020/managing-next-decade-women-wealth
https://www.ubs.com/global/en/wealth-management/our-approach/marketnews/article.1525100.html
https://www.theventure.city/invest-in-women-now
https://gap.hks.harvard.edu/investors-prefer-entrepreneurial-ventures-pitched-attractive-men
https://hbr.org/2020/01/how-the-vc-pitch-process-is-failing-female-entrepreneurs
The Lithuanian startup ecosystem mobilises support for Ukraine, strengthens focus on miltech investments – watch the recording on EBAN TV.
- Lithuanian business angels met with the Ukrainian ambassador, local NGOs to extend financial and logistical support for on-ground operations – over a million EUR already committed;
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LitBAN also incentivised investments into Lithuanian miltech startups to bolster national defence capabilities, including spacetech, unmanned buggy and UAV solutions.
Vilnius | Monday, 21 March 2022:
The Lithuanian startup ecosystem is actively mobilising further support to help Ukraine in the aftermath of the Russian invasion, and rallying investments for the Lithuanian national military technology (miltech) solutions, a sector that has demonstrated rapid national growth over the past years.
Justinas Pašys, Managing Director at Lithuanian Business Angel Network (LitBAN), which hosted a thematic event at the Vilnius TV tower last week, says the organisation has a mandate to facilitate member connectivity with Ukrainian relief efforts as well as promising miltech startups:
“The Lithuanian startup ecosystem stands in solidarity with Ukraine and has activated multiple support initiatives. As the war enters its fourth week, we must sustain the momentum, zero in on the most pressing needs and centralise our efforts to help. For this, we must maintain a direct dialogue between the business community and the Ukrainian partners and NGOs.”
The Ukrainian Ambassador in Lithuania, Petro Beshta, keynoted the event, noting the dire need for ongoing defensive equipment support and pressure on Western businesses to boycott Russia.
“LitBAN’s second mandate in these geopolitically challenging times is encouraging investments into most prominent national miltech startups. At the event, we decided to showcase five spacetech and unmanned aerial as well as ground vehicle solutions, in order to signal our growing defence innovation sector, and the resolute will of our ecosystem to respond to existential challenges,” adds Mr Pašys.
R&D solutions featured included:
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Astrolight (laser communication in outer space);
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AirLift by Adscensus (a cost-efficient warfield delivery drone with 400kg lifting capacity);
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Krampus by Ostaralab (a robot all-terrain buggy for special forces);
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DBox by DroneTeam (a maintenance solution for remotely controlled drone operations);
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BlackSwan Space (satellite control that helps avoid outer space clashes).
The event also welcomed NGOs, active on the ground in Ukraine, including:
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The International Committee of the Red Cross (ICRC) in Lithuania;
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A national “Stronger Together” initiative, which match-makes Ukrainian refugees with Lithuanians willing to host them at home, as well as initiates informational calls to random Russian numbers to bypass the Kremlin’s informational censorship;
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“Blue / Yellow” organisation, supporting the Ukrainian armed forces and volunteers.
Watch the full event recording on EBAN TV.
LitBAN’s Contribution
LitBAN members having already donated more than 1M euros to relief efforts for Ukraine are suggesting the bank account details of the embassy of Ukraine and the following charities where you can donate directly:
Beneficiary: Embassy of Ukraine in the Republic of Lithuania
IBAN: LT887044090102961248
AB SEB Bankas
SWIFT: CBVILT2X
Currency: EUR /USD
Also LitBAN is inviting you to keep supporting Strong together, Blue / Yellow, and Red cross.
About LitBAN
LitBAN is the national business angel association in Lithuania and one of the largest in the region. LitBAN has been growing at a significant pace, with the number of members increasing from 70 to 201 in 2021, now standing at 230 member angels. Also the early-stage startup investments by its members grew almost five times year on year – from 2.2 million EUR in 2020 up to 10.4 million Eur in 2021.
By Janne Jormalainen, EBAN President and FiBAN Chair Emeritus
“What made FiBAN so successful?” is a question often asked in different forums. Let’s explore the major reasons behind FiBAN’s success. The intention for writing this article is to share learnings among the business angel community and let other angel networks benefit from them.
Finnish Business Angel Network (FiBAN) was established in 2010 and it is home to more than 650 business angels. During 2010-2020 FiBAN members invested 335 M€ in more than 1500 start-ups. FiBAN has been able to gather and unite all Finnish business angels under the same roof. These achievements stand out in a country of 5.5 M people.
Strong foundation
Before FiBAN was established governmental organizations Finnvera and Sitra had hosted angel investor activities already for a couple of years. Based on these activities there were already tens of identified angels. This base of angels kickstarted FiBAN’s member growth in the early days. Before FiBAN was even established there was a strong vision to create an organization to cover the whole Finland instead of having smaller geographically split angel groups and potentially federation on top of them. The grand vision was to create a network of 1000 angels. The large membership base has enabled FiBAN to have a strong hired office team of six persons and financial resources for developing its operations.
Giving back mindset, enthusiasm, and strong commitment
The 18 founders of FiBAN wanted to give back to the community by supporting startups and entrepreneurs. The strongest example of the giving back mindset was Juha Kurkinen’s cash contribution of 100 000 € to the newly established organization through his company. The core founding team spent endless hours of work on the big topics such as vision and strategy to small details of writing the communication letters. In the early days, all the work was based on enthusiasm, strong personal commitment and hard work.
Clear strategy and tangible member services
FiBAN was established to be private, independent, and non-profit; values which it has stayed true since its establishment. Its strategy was to focus on good quality deal flow, training, and networking among angels. Today FiBAN processes an annual deal-flow of over 1000 start-ups, approximately 4% of applicants receive funding. Training is offered from basic angel investing topics to special talks in the interest of most experienced angels. FiBAN’s Pitch Finland gathers typically over 100 members to listen to start-up pitches and network with other angels. Protecting angels’ personal credit records in case she or he is a member of the investee company board, has been a valuable member service. Without his protection, a company bankruptcy will be recorded to board members’ personal credit records in Finland.
Rotation of leadership
Even though there were strong angel characters such as Juha Kurkinen and Ari Korhonen among the founders, they soon made room for other members to take over the leadership positions. An unwritten rule was established that the chairperson would only be allowed to stay in power for two years and board members for a maximum of four years. This has led to an organization that is not anybody’s “baby” but has new leaders developing it based on a jointly agreed strategy.
International co-operation and benchmarking.
Networking with angel groups in Europe and globally and adapting the best practices from others was playing an important role in creating the founding principles of FiBAN but has also continued ever since. To make integration to international community easier, it was decided that FiBAN will use only English language in communication and events. FiBAN’s first director and co-founder Claes-Mikko Nilsen made his first business trip to attend the EBAN congress in Sophia Antipolis. Former FiBAN chairmen Ari Korhonen and Riku Asikainen were active in EBAN leadership roles as vice presidents. In addition to being active in EBAN, it has been a tradition for FiBAN leaders to attend the ACA meetings and maintain close ties with the US and Canadian angel groups.
Conclusion
Vision of uniting all Finnish angels under one roof and being an independent non-profit organization with clear member benefits has led FiBAN to have both resources and appeal for angels. It was built and continues to be built on the enthusiasm of individual angels and relentless pro-bono work. Hopefully some of these ideas can inspire other angel networks to find their own recipe for success.
Janne Jormalainen is an entrepreneur and angel investor as well as president of EBAN and former chairman of FiBAN. Ari Korhonen, FiBAN co-founder and Claes Mikko Nilsen, first FiBAN director and co-founder have been interviewed for the creation of this article. Without their invaluable contribution the creation of this article would not have been possible.
Insider, a platform enabling marketers to deliver digital experiences, recently became the first SaaS unicorn in Turkey and led the way to GBA’s very first unicorn!
Insider has raised $121 million in a Series D round led by Qatar Investment Authority, with Sequoia Capital, Riverwood Capital, 212, Wamda, Esas Private Equity, and Endeavor Catalyst participating. Insider is the first woman-founded SaaS startup to achieve unicorn status in Turkey and the Middle East region, with the round valued at $1.22 billion.
As with every success story, there are important lessons to be learned, here, in Insider’s success.
1. Trust the Vision of the Entrepreneur
Insider was founded in 2012, and GBA first met the team in 2013. When they first came to GBA, the team was only a few people (6 co-founders), and although the business model was not fully understood, the passion and backgrounds of the team was highly valued by the investors and the pre-seed round was oversubscribed. This initial investment was followed by follow-on rounds in 2016 and 2017.
When VCs evaluate startups there are multiple factors to take into consideration. The market has to be large enough for the startup to generate lots of revenue. It also has to have an obvious competitive advantage. It could be the underlying technology, it could be staying in one niche or a geographic location, brand image recognition, being the first one to enter the market, etc.
Well, but at the end of the day, actually, all it matters is the team and their vision. Especially in early-stage startups, trends come and go, economy changes, things could go horribly wrong, and during that time, the team has to be resilient enough to create new strategies or pivot at some point. So we are basically pouring money on the team, not the product or anything else.
That’s what happened in the Insider’s case, as well. GBA’s first round of investment to Insider was a very early stage, not much of a traction or revenue, there wasn’t a very solid business model, but solely 6 guys with a burning passion.
2. Provide Smart Money, not just Capital
In the next round, GBA investors introduced Insider to a few VCs both in Turkey and globally. While VC’s attended in the next rounds, there were investors within GBA who made follow-up investments in the same rounds.
Providing capital to startups can be life-changing. We all agree that proper financing is highly crucial, but one thing we sometimes tend to forget is the importance of what comes with the money.
Startups, especially in early stages, not only need the money but also the network that comes with it. This is where the “smartness” of money comes into play. The right investors should be willing to share their network with the entrepreneurs, finding other potential investors and customers, providing them with business know-hows, and even sometimes helping them in opening up globally.
In our case, some of GBA angels mentored the Insider team through VC negotiations and as a result the valuation of Insider has increased by 20% as compared to VC’s term sheet.
When Sequoia Capital invested in Insider (Series B) in 2018, GBA investors partially exited while some investors continued to hold their stake in the company.
Today, Insider has grown to more than 700 employees, across 28 countries and 41 nationalities, aiming this Series D round will contribute to expanding globally, the enhancing of key technologies, and the growth of sales and marketing teams.
The African European Digital Innovation Bridge (AEDIB) has selected twelve consortia which qualified to become Digital Innovation Hubs (DIHs) on the African continent.
Dealroom.co presents:
The Ukrainian women founders to follow in 2022
This International Women’s Day season we’re shining a light on Ukrainian women startup founders, their innovative startups, and how they’re bringing their unique skills and entrepreneurialism to the fight for freedom and sovereignty in Ukraine.
The European Innovation Council (EIC) launched today the ninth edition of the EU Prize for Women Innovators. The Prize celebrates the women entrepreneurs behind Europe’s game-changing innovations, to inspire more women to follow their footsteps.
Scenes have come to European soils that the majority of us never could have expected to experience in our lifetime. As Ukraine has experienced invasion from Russian forces, the continent has been left shaken, shocked, and overwhelmed by what has happened.
During this time, across Europe, we have seen heartbreaking footage emerge from Ukraine of civilians sheltering in underground stations, fleeing their country in desperation, and people across the nation taking up arms in an effort to defend their homes. We have all been inspired by different stories of people bravely stepping up to confront this invasion – one such example that captured our readers’ attention being Kira Rudik.
The original article was written by EU-Startups
Since the beginning of the Russian invasion of Ukraine, Tech To The Rescue has matched 24 NGOs with tech companies to develop digital solutions needed to overcome the increasing humanitarian crisis. Now Tech To The Rescue is calling on the tech community and investors for financial support to carry on #TechForUkraine efforts, estimated to positively impact the lives of two million people.
Tech To The Rescue wrote the original article that you can read here
€10BN Angel Funding Targeted as Cork Hosts European Business Angel Reunion
- CorkBIC will host up to 350 business angels, investors and start-ups from 35 countries at the European Business Angels Network (EBAN) Congress in Páirc Uí Chaoimh
- This is the first EBAN Congress in more than two years
- Event offers major international networking opportunity for investors and start-ups
- Amongst the speakers and attendees will be some of Europe’s most successful serial angel investors, who will share secrets to their success
- The Congress will help EBAN to grow annual business angel funding in Europe from €8BN to €10BN by 2025
- EBAN Congress is a major win for Cork and will bring €250K to the local economy
Cork, Monday 14th March, 2022 – CorkBIC today announces that it will host an all-Europe angel reunion at Páirc Uí Chaoimh, Cork, on 18th and 19th May in the presence of Michael McGrath TD, Minister for Public Expenditure and Reform. Business angels and super angels from across Europe will attend the European Business Angels Network (EBAN) Congress with the aim of increasing annual angel investment in Europe from €8BN to €10BN by 2025.
With a theme of ‘reconnect, reimagine, reinvest’, the congress – organised by CorkBIC, EBAN and the European Commission’s InvestEU Portal – will be a major networking event for Europe’s angel investors to share ideas, make connections and meet promising start-ups. Up to 350 business angels, investors and start-ups from 35 countries will attend the Congress, which marks the first time Europe’s business angels have gathered in-person in more than two years.
The two-day event – sponsored by Cork City Council, Cork County Council, EY Private and AIB Group – will host a series of speakers, including some of Europe’s most eminent investors and super angels. They include Dr. Hermann Hauser, founder of Acorn, and an investor and inventor with an Honorary CBE and KBE for his contributions to the UK’s enterprise, engineering and technology sectors. The venture capital firm he co-founded, Amadeus Capital, has invested in 180 companies. Peter Cowley, another super angel meanwhile, is the former president of EBAN and has invested in more than 76 companies.
Speakers at the Congress will provide insights on major angel investing trends, including impact investing and how to become angels of change; environmental, social and governance (ESG) funding routes; the power of accelerators for raising global finance; building for exits; and building a more diverse community.
The congress will mark a return of EBAN’s in-person annual awards ceremony, which was moved online in 2021 and 2020. The ceremony will be held at a gala dinner in Vertigo, Cork County Hall, on the evening of Wednesday 18th May and will recognise the start-ups, angel investors and networks that have made a significant impact on the angel investment community over the last year. Previous Irish winners of EBAN Awards include salon software company, Phorest; chipmaker DecaWave; the Halo Business Angel Network (HBAN); and CorkBIC as a Best Performing New EBAN Member.
Representing a major win for Ireland and Cork, CorkBIC won the competitive bid to host the Congress. The conference is expected to bring €250K to local businesses and hospitality providers over the two-day period.
The win also reflects the Southwest region’s contribution to angel funding in Ireland. Last year, of the €18.2M angel investment recorded by the Halo Business Angel Network (HBAN) on the island of Ireland, the southwest contributed €7.5M. HBAN’s Boole Investment Syndicate, located in Cork and focusing on investments in start-ups in the region, grew by 20% last year and has now invested more than €10M in 42 companies.
Michael McGrath TD, Minister for Expenditure and Public Reform, said: “Cork is continuing to raise the bar as a hub for entrepreneurialism, scaling and investment. Some of Ireland’s most promising start-ups and scale-ups are located here, along with some of the world’s largest enterprises. Helped by the tremendous work of CorkBIC, our region is now on the world map as a centre for innovation, making it well-placed to host an international event of this calibre and being a launching pad for the future of angel investment across Europe.”
Janne Jormalainen, President, European Business Angels Network, said: “This year’s congress is hugely significant for our members and Europe’s start-up ecosystem. A vital element of investing and fundraising is networking and as Europe’s largest angel network – consisting of more than 100 member angel networks and over 20,000 investors – we are very excited to be able to facilitate that on a large, international scale again.
“Last year, angels in our member organisations invested close to €8BN in start-ups. By reconnecting angel investors with Europe’s start-ups, this congress represents a new era of angel investment on our continent as we work towards reaching the €10BN milestone by 2025.”
Michael O’Connor, CEO, CorkBIC, said: “Angel investment has been steadily growing in the Southwest region, bringing opportunities to investors and start-ups alike. We are honoured to be putting Cork on the European stage as we reconnect the angel community and work together to increase angel investment across Europe. We look forward to welcoming business angels, investors and start-ups to the Congress and exchanging ideas on how angel investment can further economic growth.”
Keynote speakers at the conference will include:
- Michael McGrath TD, Minister for Public Expenditure and Reform
- Dr. Hermann Hauser, Physicist, tech entrepreneur and venture capitalist, co-founder of Amadeus Capital Partners, which has invested in 180 companies
- Janne Jormalainen, president of the European Business Angels Network, and a super angel who has invested in more than 30 high-tech and education companies
- Edna Conway, Vice President, Chief Security and Risk Officer for Microsoft’s Azure
- Kieran McLoughlin, managing partner of VentureWave Capital, one of Ireland’s first impact investing funds former CEO of the Ireland Funds
- Jamy Goewie, serial social entrepreneur and CSR consultant,
- Julian Costley, a serial investor and co-founder of E*TRADE, an all-internet stockbroking firm that was acquired by Morgan Stanley in 2020
- Faye Walsh Drouillard, former social entrepreneur, founder & general partner of WakeUp Capital, an impact venture fund investing in sustainable and inclusive early-stage companies
- Peter Cowley, former president of the European Business Angels Network, and a super angel who has invested in more than 76 companies
- Pete Smyth, founder and CEO of Irish venture capital firm, Broadlake
- Ian Sosso, founder of Monte Carlo Capital, a group of business angel investors, UHNWIs and family offices investing in early-stage deep tech and highly disruptive businesses in Europe and the US
- Shemas Eivers, chairman of the Halo Business Angel Network’s Boole Syndicate and founder of the National Software Centre in Cork
– Ends –
Photo:
Katrina Mackey, 5 time All Ireland Medal Winner for Cork; Michael O’Connor, CEO, CorkBIC; Michael McGrath TD, Minister for Public Expenditure and Reform
Do We Need EU Social Taxonomy? By EVPA
EU standards for sustainable finance can encourage investments that will enable a green and just transition, but only if they act as an accurate barometer and truly prevent green and social washing.
Social taxonomy ABC. The European Commission’s Platform on Sustainable Finance published its final report on social taxonomy on 28 February. This comes in the framework of the EU’s legislative package on sustainable finance and EU taxonomy, which aims to create a common language for how companies and investors disclose green and social investments.
Social taxonomy is about defining standards for social investments and for what activities contribute to achieving social objectives. This is important because the net zero transition will not happen without also taking social aspects into account: we need a green and just transition. Companies and investors cannot go ‘green’ whilst ignoring basic rights and decent working conditions. The transition needs to take place in “an economy that works for people” too.
The report proposes a similar social taxonomy structure as the current green taxonomy: developing social objectives, defining types of substantial contributions, ‘do no significantly harm’ criteria; and minimum safeguards. It outlines 3 main objectives: decent work, adequate living standards and wellbeing, and inclusive and sustainable communities and societies.
From “Seeders MBA” to “Seeders Accelerate”
IM Capital is a 20 Million USD program funded under USAID, to provide Matching Capital, Equity Guarantee, and Support Programs to a broad range of qualified early-stage businesses and investors in Lebanon. The program works to provide needed support to early-stage businesses in order to create and sustain jobs, advance and develop the investment eco-system and encourage increased equity investment in early stage businesses, contributing to the goal of increasing the availability of equity capital for new, innovative, early business start-ups and existing small and medium businesses.
With its investment components, IM Capital contributed to the development of the Lebanese startup eco-system by launching several new initiatives, like the first seed startup accelerator “Speed@BDD” which graduated 35 startups, a mentorship platform based on MIT Venture Mentoring Service model (Confideo) with more than 60 mentors trained, and a coaching program for SMEs based on Stanford Seed methodology. It also created and managed the first structured business angel groups, SEEDERS and the Lebanese Women Angel Fund (LWAF), the latter being the first such network of businesswomen that invests in women-owned businesses in Lebanon.
IM Capital created SEEDERS in 2016, the first structured and syndicated Business Angels program in Lebanon, in an effort democratize and crowd-source angel investing by building small communities of business angels. The program builds capacity for novice individual investors through an MBA (Masterclass for Business Angels) that spans from September to July every year, and follows a “Learn & Earn” methodology, mixing investment sessions and capacity-building workshops over a 9-months “academic” period. The angels get to meet every 6 weeks to attend pitches and workshops and invest their personal moneys in startups; participating tickets are $15k per investor per MBA, with 50% capital guaranteed by IM Capital. A co-equity fund by the World Bank in Lebanon has also topped the angels’ SPVs by 1 and 1.5 times, the groups reaching collectively a $2.8M of capital raised for Lebanese startups.
Till July 2019, 4 angel groups were created and 105 graduated Angel Investors through the MBA programs, 18 Deal Leaders and 4 Group coaches certified. More than 25 Investment sessions with 120 startups pitched in front of the angel investors, and more than 10 ventures were funded by the angels, covering sectors such as SaaS, Platforms & Marketplaces, Education, Hardware, IOT, Arts & Design, and Entertainment, creating a diverse portfolio and filling a funding gap, with investment tickets ranging between $100K and $200K per startup.
The seeders/LWAF program was such a success that it got interest from business angels in the region such as Jordan and Egypt to be replicated in their eco-systems.
The 5th SEEDERS/LWAF group started in September 2019, with a batch of 24 angel investors and an investment vehicle of $900K, and then an economic crisis hit Lebanon in October 2019, following the uprising of the population against the corrupted governing system. Devaluation of the local currency, capital controls and lack of liquidity in banks plunged the country into financial chaos and uncertainty. As a result, all the Lebanese entrepreneurial eco-system collapsed, the existing VCs disappeared, so did the support programs and accelerators.
Amidst such situation, valuation of startups became an impossible exercise, and hence the SEEDERS MBA program was unable to make a single investment during the “academic year”. The group had to pivot to another model, to keep searching for opportunities not to keep their monies stuck in banks in such risky situations. The program shifted to an “Accelerator” model, to inject capital into a cohort of startups to develop their MVP between 3 to 6 months, with a fixed financing scheme: Inject a small investment ticket of up to $50K into each startup (+ equivalent of $50K in-kind) for 5% of the company, with follow-on funding from the SEEDERS SPV depending on milestones and KPIs. The deal flow would come from:
(1) startups that pitched to Seeders LWAF previously, but not qualified due to their seed stage
(2) & call out to new startups
The program objectives is to (1) identify promising startups, (2) provide capacity building to the entrepreneurs, (3) provide venture building sessions focused on helping the founding team in planning and launching their MVP into market, (4) provide the Initial seed funding and opportunity for follow-on funding. The startups would also benefit from access to a network of mentors and access to workspace within the premises of IM Capital.
The selection process was done with a small number of business angels from the current group, and each selected startup would have one angel as a coach for follow-up. The program selected 10 startups as a first cohort, and started implementing the accelerator program.
As a preliminary direct result of this program, one startup, Digital Prestige, who was hosted in the accelerator, already “graduated” into its own space and is now a team of 10.
The program is being approached by family offices that want to partner to offer investments in startups as an alternative asset class for their clients (individual investors) and to diversify their investments from real estate and traditional asset classes.
For more information:
https://www.youtube.com/watch?v=47wNWKhhYj8 (Seeders 2016)
https://www.facebook.com/IMKapital/videos/444317295978601/ (Seeders LWAF 2017)
http://bit.ly/2y9q0kb & http://bit.ly/2GCSXcS (Seeders LWAF 2018)
