Angel investors play a crucial role in the startup ecosystem. Angels fill the big gap in the pre-seed and seed funding stages usually referred to as the ‘Valley of Death” due to VCs becoming more risk-averse and shifting to later-stage funding.

Whether you are a professional or a self-made entrepreneur, an angel can open doors, and offer wisdom, and mentorship beyond capital. You can offer “smart capital”, and have the patience to wait for a company to mature successfully.

In this article, I hope to share several steps that you should consider before cutting that first cheque as an angel.

Understand the risks involved in startup investing

Startup investing is inherently risky. The truth is most startups fail to achieve their goals and go kaput. In my work as a startup lawyer, high net-worth people I met no doubt have the risk appetite to stomach the capital loss as an angel, but they underestimated the inherent risk of startup investing.

As an angel, there are common challenges that you need to address:

• Failure to understand startup investing as an asset class i.e. liquidity risk
• Limited access to quality deal flow thus lacking in diversification
• No experience to read on current trends and emerging markets
• What to do to invest such as what to look out for in a due diligence
• How to negotiate funding terms
• Failure to familiarise with the local startup ecosystem and regulations

Be sure to consult your advisers including legal counsel, accountant, and financial planner to assess all these challenges.

Find a company to invest

Finding a great startup to invest in is hard. You may need to compete with other prominent investors to get on the startup’s cap table unless you can show how you can add more value than the rest. VCs even hire scouts (eg, usually seasoned founders that they have venture-backed previously) to help them source for hidden or potential deals ahead of the competitor.

You may want to look into and tap on your own network. The common funding sources of seed funding will be ‘Friends and Family’. You may already be related to a founder through blood or friendship. You should leverage that unique connection.

Also Read: Understanding angel investors with Mysty Rusk

Put up your personal email for companies to send their pitch deck. Have an investor profile on e27.

You will need to screen through the pitch decks. Another great way is to join an angel network in your area and co-invest with other angels like AngelCentral to help you screen the deals.

VCs can also be your friend. If you are already invested in a VC fund, you may check if you can co-invest in deals. At times, VCs may pass on a deal as it does not fulfil their ‘investment thesis’.

Agreeing on the valuation

Dealing with valuation can be stressful. If the company is raising funds for the first time, it may get tricky as there is a chance that you need to decide how much the company is actually worth investing and how much stake you should get in exchange for the capital invested.

There is no hard and fast rule on startup valuation. Generally, a startup may be giving up 10 per cent to 20 per cent of the equity in the company for every round. So a pre-money valuation (i.e. the valuation of the company before the new fundraising) is usually based on how much money the founders think they need.

You will get to hear all sorts of valuation methods and tools. As an angel, you will need to decide if the valuation makes sense. To reduce headaches in dealing with valuation, it may be common for angels to co-invest with a lead investor (usually a VC) that may have done the groundwork in negotiating a price.

Another option is to agree for the round to be an unpriced round.  An unpriced round is when investors contribute capital in exchange for a discount on the company’s shares in the succeeding priced round. A priced round is a financing round based on mutually agreed upon company valuation.

Have the correct funding agreements in place

We won’t cover in detail the specifics of the funding documents needed as they will be based on whether you are investing in a priced round or an unpriced round.

Generally, a priced round will include a subscription agreement and a shareholders agreement together with the present shareholders (usually the Co-Founders). An angel usually subscribes to new ordinary shares as opposed to preference shares.

In an unpriced round, you may choose either to use a ‘Simple Agreement for Future Equity’ (SAFE) commonly used by Y Combinator, or a ‘Keep It Simple Security’ (KISS) created by 500 Startups. Like Y Combinator with their SAFE notes, KISS also aims to simplify and standardise seed funding.

Understand the terms “discount rate”, “valuation cap”, “pre-money” or “post-money”, “pro rata rights” and other terminologies and their effect on your investment.

Note that these documents have gone through multiple changes over the years since they were first made available to the public. Be sure to engage a startup lawyer to help you review the funding documents especially if you plan to use a template.

Also Read: Web3 startups: The next big thing investors are flocking to

All founders have signed a shareholders’ agreement

You do not want to inherit a startup’s legal problems and get stuck in a company with a shareholder dispute without any way to exit as a shareholder.

A shareholders agreement (also known as a founders agreement) should contain all the necessary provisions covering topics like shares vesting, assignment of intellectual property ownership, management of the company i.e. board of directors and voting, transfer of shares, non-disclosure clause, and exit and deadlock mechanism provisions.

If a cofounder fails to perform his assigned role, the remaining cofounders can trigger a ‘bad leaver’ scenario. The remaining cofounders will be entitled to re-purchase the shares from the defaulting cofounder (usually at a nominal value). The unvested shares may be offered to a new substitute cofounder in the future or even redistributed among the present shareholders.

Tax incentive

As an angel, you may qualify for tax incentives if you invest in startups depending on where you are domiciled.

To qualify, you usually need to hold your investment for a fixed number of years. Also, not all investee companies may be specified as “qualifying investments” by the tax authority. Consult your tax adviser to check if you can apply for any tax incentive as an angel.

Conclusion

In reality, no one really knows how a startup is going to perform. It is often a mix of luck, preparation, market, and fate. These steps can appear overwhelming if you are planning to go on solo as an angel. I suggest joining an angel network and co-investing with other angels in smaller ticket sizes may best the best way to get started.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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The post Unlocking angel investing: 6 key steps for making your first investment appeared first on e27.

Use our special promo code: GO for 75% off your Echelon tickets!

The 2023 Echelon Asia Summit is happening at the Singapore EXPO on 14-15 June 2023. Are you a startup founder, investor, corporate, or tech enthusiast? Don’t miss out on one of the most anticipated tech conferences in the region! For more information, visit the official Echelon page.

Registration for TOP100 is now open and we are looking forward to seeing your startup on the list!

TOP100 Program gives you the one golden chance to connect with hundreds of investors, showcase your startup at Echelon, pitch on the TOP100 stage, and access special programs. Find out what’s new in TOP100 and join here: https://bit.ly/TOP100_2023
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Securing adequate funding is an indispensable aspect for founders to turn their innovative ideas into profitable ventures. Nevertheless, there are persistent debates on whether fundraising should be a core competency of any startup founder. Unfortunately, despite being extremely important for many founders, many lack the expertise and connections to be efficient in their fundraising journey.

It is not just that fundraising is arduous, but it is also a veritable time sink that deflects founders from focusing on their core competencies such as product development or business growth. Founders spend months trying to establish connections with investors, or worse, resorting to prospecting potential investors on platforms like LinkedIn, Google, or Conference Agendas.

Let e27 help you in your fundraising journey

At e27, our mission is to empower founders with the necessary tools and resources to grow their companies. For the past several years, our TOP100 program has been our flagship program, and it has been immensely popular since its inception in 2014. The program is run annually at Echelon Asia Summit and aims to democratise fundraising for startup founders, giving them the opportunity to succeed based on their innovative products, exciting services, and kickass ideas.

We understand that fundraising is a continuous and long-term effort that cannot be condensed into just two days. As such, while our program does enable founders to condense months of investor outreach into 2 days, we have come to acknowledge that they need more than just a couple of days. This realisation led us on a six-month-long journey of customer development, where we aimed to discover the best way to connect startups with relevant investors and corporates year-round.

Also read: Go big or go home: Why young startups need to exhibit on a global platform like 2023 TOP100 APAC

Our efforts have resulted in the creation of e27 Pro, a membership program that provides people with access to an Echelon experience on a year-round basis. This program provides valuable insights, networking platforms, and necessary tools for business growth through one of our most prominent features, e27 Connect, which connects startups with relevant investors and corporates throughout the year.

With e27 Pro, you can rest assured that you’ll have access to the tools and resources you need to succeed in today’s competitive business landscape. Curious about e27 Pro? Find out more here.

Connecting the tech ecosystem

Echelon Asia Summit is coming back this year to help spark impactful conversations and create meaningful connections among startup founders, corporates, investors, and other members of the community. Guided by its theme, “Building towards a sustainable and impactful tech ecosystem”, Echelon Asia Summit 2023 is bringing back its top-notch features to enable a truly connected global startup ecosystem.

Also read: 6 different ways to explore growth at Echelon Asia Summit 2023

With network and connection being at the heart of fundraising, let e27 do the dirty work for you as we bring together active startup investors this 14-15 June 2023. At the Echelon Asia Summit, you can access information on each investor for you to examine, navigate through, and connect with based on relevance to your business.

We ensure that investors actively opt into each session of e27 Connect to guarantee that they are actively looking to source for startups to deploy capital. At Echelon Asia Summit, you have the chance not only to connect and engage with potential investors online; you have the unique opportunity of sharing to them the story of your startup journey — live!

Join us at Echelon Asia Summit 2023 in Singapore this June. Sign up here.

The post We know fundraising sucks, so e27 Connect is here to help you appeared first on e27.

Salary range transparency has become a hot topic in recent months, but it has always held a personal meaning for me.

My first encounter with salary range transparency was back in 2011 when I was looking for a software engineer job in Singapore. I found it odd that no software engineer role on the largest job platform then had a salary bracket. When I did my first HR interview, I asked for the salary range. The recruiter was taken aback by my question, and I too was surprised by her reaction.

Separating the facts from the myth

Since then, I’ve been asking recruiters the reasons they don’t share their salary ranges. The responses I got are the likes of “employees are going to ask for a pay raise and quit”, “competitors will poach our employees with a higher pay”, “candidates will reject the offer if it’s not at the top of the range”, and “candidates will join for the salary and quit as soon as they find a better-paying job”.

Also Read: Who is doing what: Understanding the different job titles in a VC firm

But every time they mention the risk of competitors increasing salaries to hire employees from a company that practises salary range transparency, I can’t get a single real-life example. It seems to be a fear-mongering myth passed down from recruiter to recruiter. 

At this point, I’m convinced the only valid explanation is when a public salary range could upset employees who would realise they were underpaid, similar to findings from a study last year. 

This, however, is not a good excuse to hide the salary range. All the more, because of existing pay discrepancies, companies have a stronger reason to scrutinise their salary review process before publishing salary ranges.

Embracing transparent salary conversations

When I was given the opportunity to build an engineering team at Wise in 2018, I knew this was the point where I could make a difference. 

One of the first things I did was to ask the recruiter to include salary ranges in the roles I was hiring for. She agreed and we never looked back. Today, all tech roles for Singapore and most positions worldwide at Wise have this information.

Publishing the salary ranges was not only a way to attract more candidates, but it was also to prove that, contrary to what most recruiters fear, nothing bad happens when you share the salary ranges if your employees are being paid fairly. 

I’m proud to say that out of the 15 engineers I’ve hired at the organisation in the past five years, no one left. There are companies that pay more than Wise, and it’s simply not true that salary range transparency increases flight risk. Studies like The Josh Bersin Company’s pay equity research show it helps in retention and I believe that’s because it enables honest and transparent conversations around salary.

Career maps were also another initiative we had in Wise to help with salary conversations. In 2019, we shared detailed career maps with our teams and published them externally a year later. Last year, I pushed to add salary ranges to the engineering career map for clarity into pay and career progression. I see these career maps as an example that every midsize and large company should follow to retain and grow their employees.

Also Read: How to combat burnout and boost your productivity

Pushing for salary range transparency in a bigger world

In 2018 when I started JobWiz as a fun job portal project because my wife was looking for a job, I made salary ranges and perks compulsory on our platform. 

The more I spoke with job seekers and employers, the more I realised there is a very serious problem to solve: a lack of salary range transparency.

I heard stories of people leaving their jobs when they learnt their pay was half of their teammates’ for the same role, just because they asked for a lower expected salary at the beginning. Something needs to be done.

In 2023, I decided to quit my job at Wise to focus full-time on JobWiz, with the mission of making salary ranges transparent and public. 

A lot of recruiters are telling me that it’s not going to happen. But I disagree. They might have dozens of years of experience but I have five years of experience in salary range transparency while they don’t have any. They just never tried.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image credit: Canva Pro

The post From job seeking to building a job portal: Turning my beliefs into reality appeared first on e27.

Singapore-based early-stage venture fintech investor Integra Partners has announced the final close of its second fund at US$90 million. This brings the total committed capital managed by the firm to over US$140 million.

Integra Partners Fund II is anchored by global institutional investors, including Germany’s development finance institution DEG, the US International Development Finance Corporation, the Norwegian Investment Fund for Developing Countries Norfund, European alternative asset management group Tikehau Capital, and includes participation from strategic corporates and family offices globally.

The new fund targets fintech, insurtech and digital health opportunities that leverage synergies across sectors to drive financial and healthcare inclusion in Southeast and South Asia. It invests in pre-Series A to Series B stages.

“We included digital health in the mandate for Fund II as we see it as a test case to prove our thesis that fintech is becoming a horizontal layer across all sectors and is embedded in all industries,” said Chris Kaptein, Managing Partner at Integra. “For example, in emerging markets across Southeast Asia, access to healthcare is often a financial problem as medical inflation becomes a pressing concern. Similarly, we see applications of fintech in almost every sector – e-commerce, AI, climate, logistics, education and beyond.”

Also Read: We know fundraising sucks, so e27 Connect is here to help you

Across Integra’s two funds, the firm has invested in 27 companies, comprising mostly B2B and B2B2C businesses. Integra’s portfolio companies include regional e-commerce aggregator, graas (Southeast Asia and India), earned wage access providers wagely (Indonesia and Bangladesh) and GIMO (Vietnam), open finance provider Brankas (Southeast Asia regional), institutional FX platform, Spark Systems (Asia regional), cybersecurity reinsurer, Envelop Risk (Global), and cybersecurity platform ReaQta (Global), which fully exited to IBM in 2021.

With a team of 17, Integra Partners has a footprint in the Philippines, India, and Pakistan. It recently announced the launch of the Win With Women Venture Partner Program, which will add boots on the ground in Vietnam and Indonesia.

Integra intends to continue expanding regionally, building out its venture partner network and in-country teams.

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Echelon Asia Summit 2023 is bringing together APAC’s leading startups, corporates, policymakers, industry leaders, and investors to Singapore this June 14-15. Learn more and get tickets here. Echelon also features the TOP100 stage, where startups get the chance to pitch to 5000+ delegates, among other benefits like a chance to connect with investors, visibility through e27 platform, and other prizes. Join TOP100 here.

The post Integra Partners closes US$90M Fund II to invest in fintech, insurtech, digital health in Asia appeared first on e27.

Recently, Hong Kong Science and Technology Parks Corporation (HKSTP) announced proptech startup Skyland Innovation as the overall champion of the 7th Elevator Pitch Competition (EPiC), beating over 610 startups from 55 economies around the world.

This competition is just one of the initiatives that HKSTP is doing to support the local–and global–startup ecosystem, in a way. For over 20 years, the organisation is committed to building up Hong Kong as a global innovation and technology hub to propel success for local and global startups through facilities such as Hong Kong Science Park in Shatin, InnoCentre in Kowloon Tong and three modern INNOPARKs in Tai Po, Tseung Kwan O and Yuen Long.

It has established a thriving I&T ecosystem that is home to two unicorns and Hong Kong’s leading R&D hub with over 13,000 research professionals and over 1,300 technology companies focused on healthtech, AI and robotics, fintech and smart city technologies.

In the midst of EPiC 2023, e27 speaks to HKSTP Head of Partnerships Eric Or about the challenges faced by local and global startups in growing in the region–and what opportunities are available to seize.

Beyond innovation, there is commercialisation

Hong Kong is a hub for startups in Asia, with a thriving ecosystem that is constantly evolving. However, like any startup ecosystem, there are a number of challenges that entrepreneurs face when trying to build and grow their businesses in Hong Kong.

Also Read: Opportunities abound for Hong Kong’s largest I&T Career Expo

According to Or, one of the biggest challenges that startups face in Hong Kong is commercialisation.

“Many startups have great ideas and innovative solutions but struggle to find customers who are willing to buy their products or services. This is partly due to the fact that Hong Kong is a very competitive market, with many established companies and startups vying for the same customers,” he says.

Like many other regions, the startup ecosystem in Hong Kong is also struggling to find the right talent. While there are many talented individuals in Hong Kong, there is also a lot of competition for the best talent. Many startups struggle to attract and retain top talent, which can make it difficult to build a strong team that can help the company grow and succeed.

There is also another challenge of COVID-19 pandemic recovery. Despite opening itself up to international and regional visitors, the pandemic has made it more difficult to network and build relationships with potential customers and partners.

This is why HKSTP offers a range of programs and services to help startups grow and succeed, including incubation and acceleration programmes, funding opportunities, and access to a network of mentors and advisors.

There are also a number of events in Hong Kong that bring together startups, investors, and corporate partners. For example, the StartmeupHK Festival is an annual event that showcases the latest trends and innovations in the startup ecosystem. The event features keynote speakers, panel discussions, and networking opportunities, and is an excellent way for startups to connect with potential partners and investors.

Also Read: Hong Kong introduces regulatory measures for crypto trading platforms to enhance security

What it takes to build a global tech hub

One of the key strengths of Hong Kong’s startup ecosystem is its global outlook and rock-solid regulations. Hong Kong is a gateway to China and the wider Asia Pacific region, and startups in Hong Kong are well-positioned to expand into these markets. In addition, Hong Kong has a strong legal and regulatory framework, which provides startups with a stable and predictable environment in which to operate.

“Many startups in Hong Kong are also looking to take advantage of the opportunities presented by China’s rapidly growing economy,” Or explains.

“While China can be a challenging market to navigate, Hong Kong provides a safer approach for startups looking to expand into China. Hong Kong’s proximity to China, its cultural and linguistic similarities, and its well-established business networks make it an attractive option for startups looking to tap into the Chinese market.”

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Echelon Asia Summit 2023 is bringing together APAC’s leading startups, corporates, policymakers, industry leaders, and investors to Singapore this June 14-15. Learn more and get tickets here.

Echelon also features the TOP100 stage, where startups get the chance to pitch to 5000+ delegates, among other benefits like a chance to connect with investors, visibility through e27 platform, and other prizes. Join TOP100 here.

The post How HKSTP can help international startups in the next stage of their expansion journey appeared first on e27.