This Angel Investor in Dubai Shares What She Looks For When Investing in Startups
- Hi, I am Lucy Chow, an entrepreneur and director of the Women’s Angel Investor Network (Wain) in the UAE. As well as being Senator, UAE for World Business Angels Investment Forum (WBAF).
- Born in Canada, I started my expatriate career in China before moving to Hong Kong to work as a senior vice president for HSBC, spending over a decade there.
- In 2008, I moved to Dubai and decided I would like to try my hand at starting my own thing!
- In 2013, I was approached to be a Director at WAIN and act as an Angel Investor!
- Are you are seeking angel investing/ fundraise and need guidance? Below I share a few tips.
Back Story: First-time entrepreneur in Dubai
I am a first-generation born in Canada...and I come from a really humble background because my parents were immigrants!
My great grandfather came from Guangzhou, China to Vancouver in the early 1900s and worked in a wood mill and then he brought my dad to Canada when he was 15 years old.
My dad held down multiple jobs to raise his family and my mum worked as a chambermaid for Hyatt for 20 years. So blue-collar!
We were brought up with really not much and so at the age of 14 (I said I was 15), I started working at McDonald’s...and I worked all through university, sometimes holding two, even three jobs!
Fast forward, I worked as a Trade Liaison for the British Columbia Trade Development Corporation in China, Senior Vice President - Market Development, Global Transaction Banking, HSBC.
And later Managing Director, Head of Corporate Development, Altamar Capital, New York.
So before moving to Dubai, I worked in several countries all over the world!
For the first few years in Dubai, I did business development for companies based in Hong Kong.
And then in 2010, I started my own company, The Elements Group, to put on bespoke events...here started my journey as an Entrepreneur in Dubai!
Becoming an Angel Investor. Investing in ventures with at least one woman!
I never thought I would be an 'Angel Investor', as I really didn’t know anyone in that space!
In 2013, Heather Henyon the Founder of WAIN approached Rebecca Hill and myself, and asked if we would join her in starting 'Women's Angel Investor Network (WAIN)'.
We said, ‘absolutely' and here started my journey as an 'Angel Investor'!
The mission was to encourage more women (like ourselves) to become angel investors and concurrently fund female founders.
Why Women? It’s very well documented that in teams with at least one woman, the return on investment is greater than an all-male team.
So why is it that, even with the facts right in front of them, they’re not investing in diverse teams? It’s because in a lot of the VCs , the GPs and the LPs are typically male, so there is an unconscious basis!
My day as an Angel Investor
There is no real typical day! As an Angel Investor, I am always looking for:
- A strong deal pipeline
- Good, viable companies to invest in.
- And then we need to be sure we are helping our portfolio companies grow and scale!
So Angels are always out there:
- Meeting with founders
- Speaking with other investors
- Making sure we are active in the startup/innovation ecosystem
- And naturally supporting our portfolio companies however possible
Who are angel investors, and why are they such a valuable demographic?
Basically, 'Angels' invest in companies at the very early stages!
In short, after you have done a family/friends round and are ready to grow so they are valuable because they are your 'first money’ in.’
Without that ‘growth money', it would be pretty hard for any entrepreneur to grow a business...but you need to be aware that money is money.
I always say lookout for ‘SMART MONEY' - Angels who can mentor and open doors!
Angels who can DO MORE than just give you funds.
If I want to approach an Angel Investor – what should startups be ready with?
Companies seek ‘angel’ funds when they have already tapped into their own pocket/personal network and are ready for the next stage of growth.
If you are looking for an Angel Investor, you have to be ready with :
- Your business plan and specifically your financials!
- Be very clear as to what your USP is?
- What is your specific business model? How are you going to make money?
- And then be sure you have looked at putting together clear financials to show potential investors 'how you plan to grow their investment'.
- How you plan to spend their money to grow your company.
As an Angel Investor 'What Do I look for in Companies?'
We look for companies that have a ‘minimum viable product.’ Something that shows there is a market demand!
If you have no paying customers yet, show testimonies and/or examples of other similar companies doing well in the same space.
So, we invest in the 'business model' but yes, the founders have a huge influence on our decision making.
I call this the ‘X' factor!
Every time we have a ‘round’, only a very small percentage of companies are funded!
For example with the WBAF, we had 100 companies pitch. (this number was already shortlisted from 500+ entrants globally) From the pitching, we narrowed down to 10 firms. From the 10 we will realistically fund 2-3.
Fair percentage startups should give an angel investor?
This is a difficult question to answer as every situation is different!
It all depending on how much the Angels are giving you!
In my opinion, you really should try 'not to give more than 10%' away at such an early juncture.
Since Angels invest very early in your business, if you give too much away initially, there is not much left for later rounds when 'the big money comes in'.
How should startups select the right angel investor for their startup?
Two words. SMART MONEY!
Anyone can give you money…but what more do you need from an investor?
It could be Geographic knowledge if you plan to export? Legal advice if you are a company that is IP heavy?
Don’t say yes to the first person/group who is willing to give you money. I know it is tempting…but always look for SMART MONEY, not just Money!
In short, Know what you need and, or missing other than Money!
Common mistakes you have seen entrepreneurs make?
Not having a Co-Founder - being an entrepreneur is a hard slog, harder if you go solo!
It is difficult to find someone that can do everything and hence, always better to have a co-Founder that complements your skillsets.
Where can you find Angel Investors?
You need to start with your 'Network'!
If you don’t know anyone in this space then ask founders of other startups, who they approached for funding.
People are usually very helpful if you just ask.
Also, familiarize yourself with the entrepreneurial ecosystem of your city/province/state etc.
Handling risks and challenges as an Angel Investor
Angels should not be an angel unless they are prepared to lose it all! This is the riskiest stage in business to invest…at the beginning.
Once you are fine with that, my mindset is 'to teach everything I know.’
If I don’t know it and there is much I do not know then find someone or introduce someone to the start-up that can help them along.
It doesn’t matter what background you have. Entrepreneurs come from all walks of life.
Finance professionals naturally have a big of a leg up re: valuation of a company and financial projections. Both are crucial skills to have when starting a company.
I say, if you have an idea, put it out there. You know you will have a role in financial services.
How will you feel if you never let your ‘business idea’ see the light of day?
Lucy Chow is focused on the innovation space, both in terms of supporting founders and as an investor. She is a Director of WAIN (Women’s Angel Investor Network) and the Investment Committee, World Business Angel Investment Forum (WBAF) Start-Up Fund.
She is Chairman of the Steering Committee with The Capital Club (a prestigious private business and social club located in the Dubai International Financial Centre), Member of the Advisory Board, Canadian Business Council, and founded the Dubai Chapter of Room to Read.
She was recently appointed on the Board of Trustees for The American School of Dubai.
Lucy is also an investor with NextWave Ventures, The Founder Institute and Mindshift Capital, the former two based out of the US.
Now It's Your Turn...
Have any questions for Lucy? Comment below.
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