Investors are one of the fastest-growing professional groups using LAMA app to create video content. In this article, we share insightful tips on how to make investments from some of the top business experts using our platform.
Why constructive collaboration is necessary to real influence and value creation as an investor
Hendrik Brandis, Co-Founder & Partner @ Earlybird Venture Capital
“I understand our role as a non-executive co-entrepreneur,” says Earlybird Venture Capital co-founder, Hendrik Brandis. “We want to be non-executive team members helping our entrepreneurs based on a trust-based relationship to create the best possible companies.”
Brandis’ view that a strong partnership makes a smart investment reflects an industry-wide trend towards ‘smart money’ investment, where investors bring their effort and experience, as well as capital.
According to Brandis, close relationships between investors and startups require constructive collaboration and respectful methods.
“I can only really help to build something great if the entrepreneur calls me up at night and says, “These are the concerns I have – I don’t really know whether to go left or right”. Then I can contribute with my perception, with my experience, with my judgment to help,” he says.
“If the relationship between investor [and startup] can be shaped in that way it is really constructive and can be material to create the best outcome. It’s like within a marriage, and it really needs to have this trust-based constructive collaboration dimension.”
Earlybird Venture Capital’s collaborative approach has contributed to successful growth for brands including Tipp24, Peak Games, and the peer-to-peer loan giant smava.
To identify a good investment, look for committed founders
Mario Ianniciello, Certified Corporate Director, Executive Advisor & Angel Investor
Renowned investor Mario Ianniciello says a company’s founders are the most important factor he looks at when deciding whether to make an investment.
“I think you will hear this time and time again,” says Ianniciello, “but the first thing I look into is: are these founders and entrepreneurs all-in?”
HubSpot CTO Dharmesh Shah has great insight into what defines the committed type of startup founder Mario Ianniciello is looking for:
“What I consider “real” co-founders are those that are financially and emotionally committed to the startup. For the founders to be committed, if the startup dies tomorrow, it will forever change their life. They can’t just wake up the next day and have it be life as usual (yes, they’ll recover – but the failure will have a lasting impact).
“In the startups that I’ve kicked off […] I’m always committed. And I’m particularly emotionally committed. Sure, I make substantial investments in the startup, but I really get emotionally committed. My identity becomes tied to the company.”
Like Hendrik Brandis, who is quoted in the previous section, Ianiciello stresses the importance of identifying founders who want ‘smart money’ – meaning it comes with the investor’s time, knowledge and input – rather than pure capital investment.
“My interest is offering spark money whereby I can help them leverage my experience, specifically in the sales and marketing area,” he says.
“So, are these founders open, and will they adapt to suggestions and advice that I may have to offer?”
Smart acquisitions can double the size and streamline the costs of a business
Fabio Cannavale, Co-founder of eDreams Italy, Volagratis.com and Lastminute.com group
For highly successful investors who already own a successful brand, major acquisitions in the same sector often prove to be the smartest investments.
The career of Fabio Cannavale, co-founder of eDreams Italy and volgagratis.com, has encompassed several prime examples of this tactic in-action – peaking with the acquisition of the well-known travel booking brand Lastminute.com.
Cannavel told LAMA: “When we acquired Rumbo [another travel booking brand], we discovered that when you do an acquisition, it’s the same if you do a small acquisition or a large acquisition. It’s more effort, but the large acquisition brings much better results.”
“So after Rumbo, we focused on doing other acquisitions of a big size. That’s when we did the largest one, Lastminute.com.”
According to Cannavale, growth through acquisition has helped his brands operate more efficiently.
“It makes a lot of sense to make acquisitions when you can see in general costs, if you double the size you decrease the cost,” he says.
The need – and opportunity – to invest in female entrepreneurs
In a LAMA article published March 2019, ‘The Rise and Need of Female Investment’, we wrote on how gender inequality favouring men is limiting the funding available to female entrepreneurs.
The overwhelming majority of fund managers are male, and “men tend to invest in men, despite ample evidence showing that women tend to deliver higher returns on investments than their male counterparts.”
Not only does this mean there’s a moral imperative for investors to give female founders more backing; it also shows there must be a wealth of high-potential businesses, led by women, that are on the lookout for investment.
So, investors who make the effort to correct the imbalance against female entrepreneurs stand both to make the world a fairer place, and also make a better return on their investment.
We hope you’ve found the advice featured in this article useful. All the investors featured are active on LAMA app – so if you’re still wondering how to make smart investments, ask them a question!
Main image by Sharon McCutcheon on Unsplash.