Amidst the challenges of a tough funding climate, e27 is launching an exciting new article series called Angel’s Advocate to provide fresh perspectives on angel funding. In this exclusive series, we sit down with prominent angels to hear their stories and strategies and gain unique insights about the early-stage financing space.
Tina Di Cicco co-founded two travel tech companies, led the founding team of two airlines, and led businesses at Lufthansa and IHG. She has diverse experience growing B2B and B2C early and mid-stage companies, driving market expansion in Southeast Asia, Hong Kong, and Macau.
Currently, she leads Avaya Ventures, an advisory firm on travel technology, aviation and scaling up businesses in Southeast Asia.
Di Cicco is on the board of the Manila Angel Investors Network and chairs its Gender Lens Investing Committee, an initiative devoted to generating investments in women-led startups.
She is also in boards and mentorship programmes, including German Accelerator, StartUp SG Network (Enterprise SG), Plug and Play Tech, New York University (NYU) Singapore, and Murdoch University.
Additionally, she co-founded the Philippine Chamber of Commerce in Singapore.
In this edition, Di Cicco shares her take on angel funding.
Edited excerpts:
How do you typically approach investing during a funding winter?
Due diligence is a constant practice, regardless of funding season or industry or investment amount or geography. We ensure we have conversations with the consumer, the supplier and the team before we write a check.
In a low season, we’d revisit our assets and check where it makes sense to increase our exposure or wait out the situation. We try to be rational, and we remind ourselves not to succumb to fear and anxiety. Keep calm and stay the course.
In reality, anxiety wins; cash conservation rules the day. And, yes, we still invest but selectively, in startups that are revenue-generating and those that we have really studied well and double-checked.
What are your typical investment criteria, such as industry, stage, and geographic location?
First, I ask myself these questions:
- Is it a business model with high potential? Will it work? Will it survive?
- Is the leadership driven and with technical competency and lots of humility? Do the founders know what they are doing? Are their ears to the ground, their minds open?
- What is the company they keep? Who supports them? Who are their investors or stakeholders?
- Do I understand the industry and geography?
- And quite importantly, is there an attitude of paying it forward and doing the right thing versus just making money? In short, will the product or service help people heal the world?
Then, I look at our strategies.
Number one is we stick to the knitting. We tend to invest where we understand the business or co-invest with domain experts who we trust. The speed of innovation in the industries I know is already supersonic, and to take that a notch higher by understanding another industry can diffuse our focus.
In the same breadth, we invest in geographies we know. At the airlines, when I was launching destinations, I would have all the data and information about a city, but until I landed there and touched the ground, I really don’t know the place.
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Second, we ask ourselves, what is the problem, and is this the solution? We dig deep into this question, scan the market players and see how scalable the business is. The startup can be the first mover or a challenger or an innovator, or even a late entrant. As long as there is a growth trajectory, we think there is a place in the market with the right product and sound strategies.
Third, we look at the founding team. Having founded and co-founded companies, I know the joys and rewards of cohesive teams, as well as the challenges when they are not in sync. We look for driven leadership, diversity in teams and, most importantly, coachable Founders.
Can you describe your investment process from initial contact to closing a deal?
We are LPs in some Asia and US funds, and those are pretty straightforward processes where the fund experts craft the investment portfolio. I also join investor groups such as the Manila Angel Investors’ Network, Keiretsu Forum, Launch.co, and a number of others, and that’s the fun and exciting part!
I get to tap the collective knowledge and wisdom of the group, which helps me decide whether to invest or not. Sometimes I lead the syndicate, especially when I see a high-potential startup and when I resonate with the Founder and the business.
How do you evaluate a startup’s potential for growth and success?
There’s quite a list, but two things are our compass: product-market fit and scalability. Does the value proposition solve the problem, and would customers be willing to pay for it? Is there a path for the startup to get a dominant market share?
How important is the founder’s experience and background when making investment decisions?
When flying a plane, you need a pilot with technical competency who has the determination to fulfil the mission of reaching the destination and the mental readiness to course-correct when the situation changes. That’s about the same with a founder. You need the competency, passion and vision to steer the company and deliver value to investors.
In addition, it’s important for us to have a founder who is coachable and who recognises the value of experts in the field.
Also, in 2022, only three per cent of VC capital globally went to women-led startups, and that’s a huge gap in gender equity in capital deployment. We believe in diversity and equality, so we are paying more attention to female founders and finding ways to support gender equality in investment.
Can you share your successful investment and what made that investment successful?
After wrapping up our hospitality tech company, my husband and I started an edutech company long before it was sexy. We partnered with a CEO to run the business, who did well, but there was friction and disagreement around vision and operating styles.
We were fighting, and the company was in peril. My husband made the painful decision of divesting our majority shareholding to keep the peace and save the company. It was painful.
But a few years later, the company was acquired, and we exited quite nicely. What made that investment successful? We took the emotion out of the picture and focused solely on aligning interests and supporting growth.
What are some common mistakes that startups make when pitching to angel investors? What are some myths about angel investment?
When we were building our first startup two decades ago, the imagery in my mind was like the wild west. You meet someone in a bar, deliver your elevator pitch, and the guy in front of you dispenses money to get you started. Was that a myth? I think the principles are still the same.
Startups need to articulate the value proposition in short and crisp language, understandable to a layman. Some investors review 10+ pitch decks a day, and for a startup to get a piece of that mental real estate, the pitch has to be memorable and clear. We once met with a brilliant pedigreed founder, but she regurgitated extravagant words that we got lost in the conversation.
So short, crisp and clear. And do spell-check your pitch deck and fact-check your data.
How important is the alignment of values between the investor and the startup Founder?
As investors select their startups carefully, so should founders with their investors. Perhaps, easier said than done, especially when the founder needs the money to develop the product or go to market. But an alignment of the vision at the onset, while it may be time-consuming and tedious, will help ensure the investors’ support of the startup over the long term.
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We find that alignment comes organically, especially when the investor understands the industry, its challenges and idiosyncrasies and are able to appreciate the startup’s journey.
With us, alignment in diversity and inclusion is important. As ex-founders, we realise that these values are critical in a successful workplace. Groupthink is the nemesis of innovation, while diversity creates new perspectives.
How do you manage risk when investing in startups? Are there any specific metrics or indicators you look for?
We manage risks by investing in startups that are already revenue-generating. This gives us the proof of concept and a certain level of confidence. We also use a signalling approach, essentially who is writing checks, who are behind the startup, who are advising them.
Can you share any advice for startups looking to raise funds from angel investors?
Founders nowadays have a wealth of resources on what to do and not to do when raising funds. From founder’s institutes to accelerators and incubators, the nuggets of wisdom are a-plenty. But I think it all boils down to three things: feet on the ground, due diligence all the time, and love your investors!
We saw founders who believed their own press, forgot to check reality and had to, sadly, sunset their startups. People will get excited about the product and say wonderful things to you and about you, but the real measure is when that check gets in the bank.
On due diligence. In the frenzy and excitement of startup life, founders will miss one or two details in the books or lab or data security. My advice is not. In the early stages of a company, the little items we miss can lead to big mistakes or losses. Get someone you super trust for this, or do this yourself, but do due diligence all the time.
Lastly, your investors are your number one fan. Their mission is to make you succeed in your venture so you can deliver value to them. Talk to your investors, engage them, ask for their support, whether it’s a ‘like’ in your post or an email intro to a big client, and send them updates even when their questions can sometimes be annoying to you.
Quite importantly, don’t bad mouth them. We’ve seen some who do this. Investors talk to each other. Word gets around.
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