Meet our Angels: Romain Hoffmann

1. About yourself

Current Roles: Corporate banking and finance at Spuerkeess

Hails from: Luxembourg (so a pure local play)

Education: Business Administration & Management, Algorithmic & Programming

First Job: self-employed at the start-up I founded in IT Software at age of 17

Work Attire: from smart casual to casual business (got rid of my tie some years ago)

Hobbies: Cycling, Photography, Garden design, Art, Travelling

Most admired entrepreneur or investor, and why:

Richard Branson. He is a symbol for good corporate management and outstanding leadership. With all the success he had he still keeps both feet on the ground. I had the chance to speak to him. A really inspiring person.

2. How did you begin angel investing?

How did you get involved with angel investing?

In 2017 at a start-up conference at Spuerkeess, with some players of this eco-system like LBAN, Nyuko and SALONKEE, which pitched that evening and impressed me so much that I decided (a) to become LBAN member next day and (b) to invest one year later in that company.

What was your first angel investment?

ADAPTI.ME in September 2018. They pitched at LBAN some months before and were introduced by Nicolas Valaize. Nicolas also introduced me later to SALONKEE.

What was your most meaningful investment?

ADAPTI.ME. I learned much out of this first investment.

What is your almost unmentionable secret as an investor?

I’m really committed to what I’m doing and actively involved with the founding team for the benefit of all the stakeholders, but I’m also Darwinist (“Survival of the fittest”). I could dump a company without any regret and whatever the amount I invested in if I lose trust in the team or the business model. “Better an end with pain than a pain without end”.

3. You & LBAN

Why did you decide to join LBAN?

I rediscovered my passion for start-ups in 2017 as my screeners didn’t show any investment opportunities on stock markets. The start-up conference mentioned before was the kick-off moment.

What benefits did you find in LBAN?

I’m feeling myself really comfortable being among like-minded. It’s inspiring for me and I like to share. Clearly a win-win for everybody. LBAN supports well this community with regular training opportunities, pitching and networking events.

4. Investing

How do you find the companies for investments as a business angel? Which ways works best for you?

Over time as Business Angel and expanding my network I’m getting now investment opportunities in a growing number of deals and over many channels: from LBAN members, spontaneous LinkedIn contacts, fundraising advisors and of course pitching events (mostly in LBAN). Recently LBAN has done right by adopting a platform like www.gust.com, so that I can share now the link for Gust on-boarding to promising start-ups for the benefit of the whole LBAN community.

How do you evaluate deals? What are your investment criteria and the qualities you are looking for?

Are they solving a real problem? Do they have the potential to disrupt a market? They should not only be digitalizing current market practices but should solve the “pains”. I’m a firm believer in Platform business models, especially in the B2B2C. Of course, everybody knows that end-consumers are not expected to pay for services, but they like to be rewarded. If there is kind of virality already present, you can use it for referrals to get access to the paying businesses.

As an example, for the business cases I’m currently on, with 3 commitments out, all present the kind of virality you need to have for early success without engaging huge marketing budgets. Especially when a technology is already widely spread, they should have some unfair advantages over competition.

I put also particular attention to the team. Are they organised, pro-active, dynamic, with a clear vision of where to go and how to get there? Are they aware of their weaknesses, how to fill the gaps and that the way to success could be really bumpy? Are they listening to the customer, the market needs, keeping an eye on competition, looking for win-win partnerships, ...? I’m challenging them to get a feeling about team and, the closer you work with them over months in the DD process, the more you get that feeling if they are up for it. As an example, some weeks ago I saw a press article about a company which could be a thread to one of the companies I was committed to. I sent the link immediately to the founder with the message “competitor or partner?”. He replied me about 5 minutes later that he saw this same article 2 hours before, took already contact to that founder over LinkedIn, analysed their business model with strengths & weaknesses, had already an offer how to partner and under which conditions. Woah. Simply said, these are qualities of an entrepreneur I’m looking for!

5. Your Investments

Can you explain the motivation behind your investments?

I’m highly motivated by the idea that as a Business Angel I can help a founder to realize his or her dream to solve a problem somewhere in the world. Of course, as there is money at stake, I also want to have a return and an exit somewhere in the future, but with the purpose to help even more start-ups.

As a business angel, how do you support your portfolio companies? In which ways do you help start-up further accelerate their growth?

At seed stage you have the opportunity for intense collaboration with founding team. You can build a climate of trust. I can guide them, put the attention on the weaknesses and push them into the right direction. My focus lies on processes and scalability, automation, go-to-market approach, UX, product and financials. I’m active, not only during the due diligence process, but also highly involved after the funding round has been realized. Especially in the first year I’m really present in my core investments.

6. Tips & Advice

What were your lessons learned from previous investments?

I learned that team and product are most critical for success. A start-up can solve the greatest problem, have the most innovative product, even the lowest churn rate, but if the value proposition is not immediately understood, if you leave too much room for customization you will end up with too long selling processes. In that particular case, potential customers wanted to optimize the product in extremis for their needs and often decision making was done at another higher level which again lengthens the selling process. You, as a start-up, need the customer however the customer doesn’t need you (if the value proposition is not clearly obvious). The team was also too much focused on big leads in one highly competitive country they come from and was not ready to grow on a much larger scale. They lost the opportunity for much deeper automation in order to deploy earlier their mass market solution. At the end trust was gone.

Do you have any advice for new angel investors?

Especially in a community like LBAN new angels have the opportunity to learn from more experienced investors. Business Angels love to share what they have learned. Don’t fear to tell them that you are new, that you are interested to learn and that you want to invest.

Which are the most important qualities of a good business angel?

A Business Angel should take the time and be committed to help a start-up with all his expertise. Unfortunately, I still see many Business Angels acting passively, even with bigger stakes. They just put the money.

In your opinion, is it better to become a business angel investor and not just invest in a VC fund?

This is clearly how you want to position yourself. I’m clearly a seed investor. I’m feeling myself most comfortable investing at a stage before a VC would like to do so. If you are not comfortable in investing or if your budget is small, instead of investing in a VC fund, you could join a group of more experienced investors. They often have room for some smaller tickets.

Do you have any other pieces of advice?

Hmmm yes, maybe one: Investing in start-ups is at high risk. You have to be aware that the money you invest in one company could be gone and probably will never return back to you. Invest only the amount you can afford to lose. Diversify in several companies.

Thank you very much for such insights! It was a pleasure speaking with you. I hope our members will also enjoy this interview. Sonia FRANCK for LBAN