"Angels are the bravest investors entering in the earliest stage of the company’s life cycle" – Heidi Kakko's lead angel experiences from nordic angel program
Short Intro and background as an Angel Investor + industry interest
I have been investing into startups since 2009, first as a VC fund manager and later as an angel investor. My investment focus is on IT-enabled areas with highly scalable business models - innovation can be everywhere.
What got you excited about angel investing?
Angels are the bravest investors entering in the earliest stage of the company’s life cycle as professional support to the entrepreneurs. Everybody else is waiting to have more traction and less risk as they are investing with somebody else’s money.
What made you attend the “Nordic Angel Program by EstBAN”?
The NAP is my “baby” - I initiated and developed the program called Angel Investment Program by EstBAN a year before the NAP was built on the results and best practice of the AIP program.
How was your role as the lead investor?
Taking the Lead Investor’s role is the best position to be in - the most information, the most responsibility and the most of action, and probably also the more of reward in the future.
As the lead angel, could you shortly describe the angel syndicate that the NAP syndicate consisted of?
The first batch of NAP by EstBAN syndicate consisted of 35 angels who joined the round prior to selecting the winner to receive the investment. The group had both more and less experienced angels and everybody contributed the same amount of an investment. After the winner had been selected and announced, also some additional angels joined the round because of liking the company, but also seeing the syndicate as the best structure to co-invest with. Despite missing the training program and joint evaluations, they were even more eager to submit their application for the next batch of NAP by EstBAN.
Short introduction of the syndication process
We promoted the program to active business angels, which signed up on Startup Includer’s deal flow platform. The final approval to be able to join our batch was made by me as the lead investor. The approved investors signed an agreement with the investment syndicate.
The participating startups submitted their applications via the Startup Includer by the given date, followed by the first evaluation by the participating angels to select the TOP15 companies for the first-round pitches. Based on the pitches, the syndicate angels selected the TOP4 companies. Prior to the final pitch of the TOP4, the group of angels with the Lead Investor performed the Due Diligence and pre-agreed on the term sheet of the investment.
During the final pitch on the stage of Latitude 59 - the largest tech and startup conference in Estonia - the angels voted on the finalist to receive the investment. The final investment agreement and Share holder agreement (SHA) were established and signed with the winner.
Could you highlight the main legal aspects of the investment (syndication)
The angel investors syndicated via a “special-purpose vehicle” (SPV) by a success-based debt facility to invest into a target company in a form of an equity investment. The Lead Investor shall be responsible for the investment and reporting, and take good care of the invested company.
What tools were used in the process?
Startup Includer has been used to submit the investment interest, fill out the startup applications and evaluate the companies in process for selecting the best for the pitches. Also, the analysis and comments were uploaded into Startup Includer.
The syndicate agreement has been signed by using Docusign. The final agreements were closed at the notary as not all of the investors had the possibility to sign documents electronically.
What was the most valuable part of the Nordic Angel Program?
I believe that for the participating angels the most valuable part was the joint evaluation of the companies, to learn from each other, but also to see a wide range of participating startups and to sense the market and trends.
How was you experience evaluating the startups in a group?
The evaluation process was rather smooth, although there are always more and less active participants. If you want to have all the investors’ votes counting, a significant effort has to be taken to get those on deadlines, as the process was rather tough timewise.
How does the angel syndicate cooperate and communicate from now onwards?
The Lead Investor has the responsibility to report on quarterly basis. In reality, the participating angels are asked to contribute with their help also to the progress of the jointly invested startup. Some angels are very interested in contributing and sharing the ideas, and some prefer to be a bit more passive and on the passenger seat, whilst trusting the Lead Investor.
How important was NAP’s facilitation SUPPORT for the syndicate?
As a Lead Investor I am very happy with the facilitation support for the syndicate provided by EstBAN, as attracting the angels and startups and keeping the deadlines of the process may turn out to be rather complicated, as there a lot of participants. The help with the training program was very much needed and appreciated.
How do you see the future role of cross-border group investing?
Nordic Angel Program’s 2nd batch is starting soon. Will you be investing again?
I definitely recommend all angels to participate the NAP investment batches due to the good access to the deal-flow, a wider network of fellow investors and the advanced training program with the professionally managed evaluation process.
NORDIC ANGEL PROGRAM BY ESTBAN