Member Blog: Continuous Learning As A FiBAN Angel
October 18, 2023
In this FiBAN Member blog, angel investor Jorma Heinonen reflects on his experience as an angel and board member, what are his investment criteria, and what he has learned as an angel investor through the network's training and peer learning opportunities.
It is time to share my experiences just being close to five years in the Finnish Business Angel Network.
I have been an investor and board member for the last 20 years, as well as served many years in operational positions in global sales management. So, I have been able to experience the journey as a business angel in good and bad, even before joining FiBAN.
Business angel experience builds up with startup investing, peer networks, and angel investor training
Since I had my first IPO and several exits, I have also met the other side of the coin with several “fire sales” of companies and a few bankruptcies.
I have started my FiBAN journey with many FiBAN Angel trainings, as well as actively participating in the Pitch Finland events and visits to our FiBAN networks around the EMEA. I have been active in joining many EstBAN (Estonia Business Angels Network) events during this time, too.
For me, these FiBAN trainings have been very valuable even though I have had some personal knowledge and experience of these topics. It has been the right time to stop a bit and listen to the professionals’ and experts’ experiences and use these in my portfolio companies.
I have also been happy with using our FiBAN Dealum database many times to check the correct wording of agreements as well as to prevent mistakes in Due Diligence. This has also been valuable for my portfolio companies.
Part of this learning has also been participating in the FiBAN screening process, in which we go through a group of Startups before they are presented in the flag-ship pitching event Pitch Finland. As a new angel, this screening can be very valuable for You to get an overview of the startup scene and learn from your peers.
The most important for me has been to get an amicable network of other Angels as well as FiBAN partners. Some of those I have got also as my personal friends out of FiBAN. This has been a great value for me in case I need additional opinions or help before making an investment decision. Just one call to some of my FiBAN friends – it can be as simple as that.
Crunching Angel Investment Criteria – What are my Investment Criteria as A Business Angel?
I have been following my own modified FiBAN VC partner Gorilla Capital’s investment criteria. Thanks for Risto and Petri opening that for us in FiBAN. These are my criteria as an angel investor, when I look at startup cases.
- Understand the customer’s problem. 🡪 You must have product market fit now, not later.
- You are capital-efficient.
- You are in the market, and the market size is big enough.
- Your team has the competence needed to execute. 🡪 The team is number one for me.
- The valuation of the company is in line with Your business.
There are also some industries I have just dropped out of due to my own low understanding and knowledge of such businesses, for example, the game industry or health tech.
I have been a bit lucky with some exits and especially very interesting opportunities to help my portfolio companies “hands-on” in their journey.
Currently, I am participating in the 4NGELS program as well, personally trying to learn more from AI use cases daily.
I think FiBAN Angels can really execute the startup company growth much more than pure investment only. It will be very important for startup companies to find angels who will provide real industry or market experience as well as prevent the company from making traditional Startup mistakes. Having such a syndicate team from FiBAN Angels can be a great starting point.
My key learnings as an angel investor
- Patience is key. As an investor, you must be patient enough. Things will always take much more time than you expected.
- Small tickets on the way mean less risk but can still give you reasonable IRR.
- Typically, you underestimate the challenges of entering the global market, and even your product may be the best in the market.
- The excellent founder team is so important. If they have done a successful exit before, this will help a lot throughout the journey.
- If your global market potential is not big enough, you better stay local.
- Be sure that you have enough money when you enter the global market. For sure it will cost more than you expected.
- Try to get advisors and investors who have enough knowledge of the industry and international business as well as enough money to enter that market.
- Be due diligence ready from day one. You’ll be ready whenever needed.
- In the end, make sure that the company keeps the focus on their daily business, happy customers, and real customer revenues all the time. The exit may come if you are lucky and the timing is right.
- Be aware of your portfolio company and your cash position on the way to prevent them from being in the out-of-cash corner.
Continuous learning will make your daily work much more exciting. Also, finding new friends in the FiBAN network has been of great value to me. It is now time to find younger active angels to join our FiBAN network. I would be happy to see more female angels joining FiBAN, too. We, all FiBAN angels, can create a positive journey together with the great FiBAN team.
About the Author
Jorma Heinonen is an experienced angel investor member at FiBAN and a board professional.