Today in class, we had a guest speaker by the name of Fran Waller. Fran Waller is an Angel investor at Lehigh Valley Angel Investors and he taught us general Angel terminology as well as criteria that Angel investors typically look at. Regarding terminology, the main thing I learned was the brackets for each angel tier. I never realized that there were super Angels and I didn\’t know that Angels had to fall within a specific bracket regarding how much money they have. I also learned about the significance of having an exit strategy. If the startup never goes public, then the Angels only way to make their money back is to either be bought out by another investor, have the business purchased by another company, or to have a royalty on the product.
To my excitement, I learned that software is currently the most popular sector to invest in taking up over a quarter of all investments. In the future, when I start my own company, it will most likely be a tech related venture. One thing that I knew but still found interesting was that 50% of all startups fail. What never clicked for me though is that Angel Investors therefore need at least a 6X return to cover their anticipated loss.
Fran Waller surprised me with one strong belief he had. He believed that a startup was only investable if the owner invested money into their own startup. His rational behind this is that if the owner hasn\’t invested then they\’re not passionate about the business. I wholeheartedly disagree. There are tons of entrepreneurs who only have enough money to live on and therefore need outside investments to follow their dreams. It\’s perfectly reasonable for them not to spend money on their business so that they can have a home and eat food daily.
As for Stickr\’d, I don\’t believe we\’d be pitching our business to investors. While a unique take on stickers, our product isn\’t unique or revolutionary enough to require an investor. Rather, I think we\’d go to the bank for a loan. Sticker manufacturing is relatively low capital intensive so it\’d be a lower risk venture for the bank to invest in.