We caught up with Stephan Peters, the President of the LBAN and Managing Director of SANZARU Group, to talk about his experience and best practices about angel investment.
Stephan, thank you for being with us on this occasion!
Which roles do you currently hold?
President of LBAN Board, Board Member on EBAN Impact Investing Committee, Managing Director of SANZARU Group, and a few more.
What’s your education background?
MBA from INSEAD, MSc in Aerospace Engineering from Delft University of Technology
Do you have any hobbies or extracurricular activities?
I love active, outdoor sports like hiking, running, skiing, sailing, scuba diving, etc. For the rest, I enjoy trying exotic food and drinks.
Why did you decide to join LBAN?
My main motivation was to find a community. I wanted to learn from other business angels, discuss and share best practices, and help each other succeed as angel investors. That’s exactly what I found in LBAN.
How did you get involved with angel investing?
I did my first angel investment back in 2010 to support a former colleague and friend whom I admired for his commercial drive and customer insights. Since then, I’ve invested in 15 companies as a business angel. I thoroughly enjoy helping entrepreneurs and business leaders succeed by sharing my experience and know-how.
How do you find the companies for investments as a business angel?
I found all my investments through my own network. Some deals come to me via colleagues and friends. Some come to me via co-investors whom I met on my previous deals. Some I found through the LBAN community.
How do you evaluate deals? What are your investment criteria and the qualities you are looking for?
Typically, I look at the standard elements such as the team, the problem / solution, the market, the competition, the business model, use of funds, etc. At early stages of the company, the team remains the most important criteria. I focus on the background and experience of each team member, whether there are skills gaps, whether the founders demonstrate critical thinking skills, whether they can make data-driven decisions while leveraging external advice, etc.
What was your first angel investment?
The company was called me360, before it pivoted and changed its name to FrontFlip. Originally, it intended to make social scheduling easier by allowing users to digitally plan, say, an evening together and easily figure out the best time and social venue for everyone. The concept didn’t get enough traction and they pivoted to offer a gamified loyalty and business intelligence solution to venues. I exited after three years to a VC that sought to increase its stake.
What was your most meaningful investment?
In 2016, together with a few other Luxembourgish angels, I invested in Datamaran. So far, the team has done an amazing job in developing their services, build a competent team and grow their revenues. More importantly, they are enabling companies to keep track of their ESG performance on material issues and manage the risks that are identified. In that way, they are pushing the envelope by offering valuable services while helping businesses to be more sustainable.
What are your most successful investments?
I guess I’ve been fairly lucky so far. Over ten years, I’ve slowly built up my portfolio. So far, I’ve had one successful exit with a decent return and four startups have failed so far. Given the average age of my portfolio is only about 4 years and more than half are “ramen profitable”, I think the portfolio is developing well. The verdict is still out though; anything can happen between now and the exit.
What should an entrepreneur look for in an angel investor?
Find angels that believe in the team and can bring value to the table beyond a financial contribution. It takes time to develop these types of relationships, so start meeting angels as soon as you can.
What were your lessons learned from previous investments?
Most of my regrets come from situations when I was not as pro-actively involved as I originally intended. Some were probably unavoidable, but many could have benefited from more frequent communication between founders and investors.
Any advice on pitches and what makes a good first impression?
Tell stories that people remember. If an angel walks away from a pitching event where they saw a handful entrepreneurs present, you want them to remember you.