INTERVIEW: How to invest in startups during the COVID-19 era?
Grouport has invested in London's Beem, betting on mixed reality technology. An guess how? Full remotely. Read the Interview with Michal Ciffra, partner of the Grouport angel fund about how it went and some investors tips.
Where did you find the British startup Beem?
Michal: I am a member of DEPO Angels, a syndicate of angel investors and funds. At one of the events, where a selection of the best startups for the last month was presented, we came across Beem.
What attracted you to this startup?
Michal: Rarely do the founders provoke such a FOMO that investors immediately think about how to get into the project as soon as possible and finance it. That was the case with Beem. Janosch (CEO) presented a very ambitious vision in which Beem and its technology will change communication as we know it today, using augmented reality. Moonshot vision, a globally built company from day one, a great team, patented technology… They simply got us.
At the moment, only Czech projects are in your portfolio. Why did you choose a foreign one?
Michal: Our strategy is to perceive the CEE region as a whole. Even projects related to this region do not have to limit the borders of individual countries. The current composition of the portfolio is thus more of a coincidence since all the projects we liked are from the Czech Republic. But we are always looking for some common points with the region. At Beem, they set themselves the goal of expanding into CEE as part of their B2B sales. And we can help them thanks to a robust business network we have here.
The whole situation around COVID-19 has shattered our notions of a rigid territorial focus. Startups are usually set up in the UK or US. Besides, teams today are often global and operate remotely. Janosch is of Swiss origin, he grew up in Australia and much of their development is in Russia. So where does this company belong?
Most investors and VC funds state that personal contact and chemistry between the investor and the founder are one of the key parameters in the selection. You said that in one of the interviews as well. Can this be detected via a computer screen?
Michal: I still agree with that. On the other hand, I think that if the founder can attract you even though you do not have the opportunity to physically meet him or her, then a personal meeting would not change much. The computer screen is uncompromising. It doesn't give you much space for empty words. In my experience, we can get to the heart of the matter faster through video conferencing.
Otherwise, it's not just about the speech itself. It is also about how the team adheres to the deadlines, the readiness of all documents, style of communication, management of the entire investment process, including negotiations with other investors, and so on. In general, I would call it professionalism.
So how do you set it up together?
Michal: Standardly as with our other portfolio companies. We use Slack or Whatsapp for ad hoc communication in our Grouport Family. We have set up reporting monthly and we solve current challenges and problems on a weekly (sometimes daily) basis.
Angel investors usually do not invest outside their country because they do not have an overview and cannot meet the founder and the team in person. Aren't you afraid of that?
Michal: I know the classic advice, which says that angel investors do not invest more than an hour from their place of residence. I understand the concerns of angel investors, especially the less experienced. The funds have their own infrastructure and the necessary know-how for the implementation of due diligence, negotiations, proposal of basic investment conditions. This can very well replace the angel network or syndicate for angel investors.
Times are changing and thanks to technology, investing is becoming more and more internationalized even for angel investors. In Europe, cross-border investing and the syndication of angel investors are currently major issues. I am glad that DEPO Angels, which is a member of the European Business Angels Network EBAN, addresses these topics. This allows us great access to local and foreign projects and currently a better opportunity in the form of co-investment with angel investors and funds at home and abroad.
Thanks for the interview, and I wish you much success.
Michal: Thank you too, have a nice day.