4NGELS Finland Batch Highlights: “Angel investing is an exit business,” says EBAN president Janne Jormalainen
November 02, 2023
Angel investing is highly risky, but how can one avoid the biggest pitfalls? Find out the 8 key insights from angel investor and EBAN President Janne Jormalainen.
This Autumn, our angels, and 20 selected startups have learned from the success stories of our partners and the expertise of our network.
But nothing beats learning from seasoned angel investors, such as FiBAN Chairman Emeritus and EBAN President Janne Jormalainen, who shared his extensive experience of what it takes to succeed as an angel investor. If you missed the session, this article is for you as it summarises some of the key points.
1. Angel investing is not for quick wins.
“Keep a long-term view in your investments and build a balanced and large enough portfolio. The real work of an angel starts after the investment.”
2. Most startups fail – the risk of bankruptcy is very high.
“Investing in startups is not easy – otherwise, everyone would do it and succeed all the time. The majority of your investments will fail. Make sure you have a large enough portfolio where you actually can have a good exit as well.”
3. Angels on company boards make a difference.
Angels are often on the boards of the companies they invest in, and for a reason: “If the angel is in the company board, the likelihood for return multiples is much higher. If there are good investors in the board or in the advisory board of a company, they can make a huge difference,” he says.
4. Diversity often equals better returns.
“What does the diversity of the team mean for returns? If there’s even one female founding team member, data shows you get 63% better returns. If you want to have good returns or succeed, you need to start taking diversity matters seriously,” he underlines. Learn about the “Manifesto For a Gender-Balanced Angel Investing Ecosystem” by EBAN. FiBAN is a member organization of EBAN.
5. “Traction is usually either money or users. It’s that simple.”
To verify traction, Janne Jormalainen encourages angels to talk to the startup’s clients before sealing the deal: “I call the startup’s customers, and I ask for 3-5 customer references. One of the things you learn from there is that if the traction is actually true and if something is coming up in the next 12 months – that is if they really want to buy and are committed.”
6. Reputation and networks of the angel matter – and you need to build them early.
“Only with the right reputation and networks can you get the best deals. To do angel investing professionally, you need to be networked internationally. You need to know who can buy the startup next when it’s time for you to exit.”
7. Angels can make an impact.
“The biggest thing for me is impact investing. I want to change the world as an angel investor for the better, and impact investing can do it.”
8. Angel investing is an exit business.
“Almost every good exit I have done myself, the buyer has been known for a number of years. It’s just a matter of time before they buy the company. In the case of Loupedeck getting acquired by Logitech, I knew the buyer of my latest exit for five years.”
Janne Jormalainen is an experienced angel investor, FiBAN Chairman Emeritus, and EBAN president.
Want your news, insights, or exit story here?
Contact FiBAN Communications Manager
Milja Mäkelä firstname.lastname@example.org
What is 4NGELS?
4NGELS is an EU-funded project that brings together four business angel networks: Estonian Business Angels Network EstBAN, Finnish Business Angels Network FiBAN, Business Angels of Slovenia, and COBIN Angels. The programme is coordinated by CIVITTA. Find out more on our International Projects page.
Are you a part of the 4NGELS program already? Sign up for the 4NGELS study trip in Helsinki on November 29th during Slush!