As we found out from speaking with Igor Mascarenhas and Andre Barrence about the Brazilian startup ecosystem, a number of active Brazilian angel investors is rising. To find out more about angel investing, we have caught up with Cassio Spina, who is an angel investors and a founder of Anjos do Brasil, the largest association of angel investors in Brazil.
Good morning Cassio, thank you very much for finding time in your busy schedule to talk to us. More and more people seem to be excited about opportunities to invest in startups. You are an experienced angel investor. What personally attracts you the most about it?
I am really happy to see that more and more people want to invest in startups. This is very good for the Brazilian startup ecosystem. As far as my motives go, there are two sides to this. The most important is the fact that I simply like being involved in creating new companies. There is just so much pleasure seeing a startup grow and knowing that I contributed to it with money and advice. The second aspect is financial. Startups are types of small businesses that can grow very big in fairly short time, so there is a huge opportunity for good returns on investment.
What return do you aim for when investing in a startup?
There are some projects with a great return (50x the initial investment), but there are not many of those. That’s why in the US they are referred to as unicorns. On the other hand, let’s not forget that not all startups are successful and you end up making a loss on many investments. What I can realistically expect is a return of 5-10 times on my initial investment, which should cover the losses and still make me good money.
How does a typical day of a professional angel investor like yourself look like?
There are many activities I need to do pretty much every day and they can be divided into two types: sourcing new deals and taking care of my portfolio startups. Almost every day I evaluate new startup investment opportunities that are presented to me, often listening to pitches from entrepreneurs. I also speak a lot with entrepreneurs from startups, in which I have already invested, helping them whenever they have questions or need advice. I tend to be in touch with each of these startups every few weeks, to see how they are doing. My focus is always on helping them grow their business.
These are the things I really like doing, but there are many other I am not a fan of. That includes dealing with Brazilian bureaucracy, reviewing contracts, or resolving conflicts between startup founders. All of this is a part of my role too.
Could you give some advice to someone who is interested to start investing in startups? What are the most important features of angel investor?
In simple terms, the role of a business angel is to add value to the startup. Obviously, one way of doing this is through their financial investment, but the role of advisor and mentor can be even more important. The combination of both is called “smart money” and angel investor who can provide that needs to have relevant professional experience, knowledge and contacts in the area in which the startup operates. Good set of soft skills is also very important. I would emphasize an open approach and collaborative attitude. Also, an angel investor must be ready to accept risk and the fact it’s the founders who need to deliver. You just can’t be overly controlling and tell the founders what they need to do.
Can anyone become an angel investor?
I think everybody should have a chance to invest in startups, but it takes time to become ready to lead your own investment. First of all, you need to learn well how the process of angel investing works. The devil is as always in the details. Only with that you can start to recognize which of the opportunities presented to you may turn into valuable deals. It all comes with time and experience, as there are many things that need to be considered and looked at. A good way to start is to connect with experienced angels and gain experience while investing with them. Also, in this way you can reduce your risk and build foundation to become more successful later.
What kinds of startups do you like investing in? Is it possible to find startups with great investment potential in Brazil?
Oh yes, there are many great startups in Brazil and I am always on a lookout for opportunities. Since I have lots of experience in technology I usually invest in startups with this kind of products.
How do you perform due diligence to find a great startup? What do you look for in particular?
At this stage you invest primarily in people, so the most important for me is the entrepreneur’s profile. I work only with people who I believe can take the project to the next level and who have the capacity to transform their companies into successful businesses.
Then I look at the opportunity. There needs to be a big problem that they solve and the solution proposed has to be both innovative and difficult to copy. I am looking for startups that can build a competitive advantage to raise entry barriers for competitors that will want to enter later. Finally, I look at how big the market is and if it can be monetized.
Do you think investment in startups can be as accessible to individuals as investing on the stock exchange?
Angel investing is not yet popular in Brazil, but I think it should be exactly like you say. However, for it to happen, we need first to inform these new potential investors about opportunities in startup investing and teach them about the process. It takes time and the investment has to be easy enough to execute for novices. I would also welcome changes in law. We need better regulations protecting investors and create a friendlier environment to invest, something like they have in the UK or the US.
What is your most successful investment?”
I am proud of ZOEMOB. They offer individuals and families the means to help protect, monitor and remotely manage personal information and details that may have a significant impact on their personal and professional lives and on their relationships. It’s a great team and I feel there was a clear need for their product.