Mike Flache
Angel investor Mike Flache was a survivor of the 2004 Indian Ocean tsunami.
When it happened, he was on the Indonesian island of Bintan. Like many other survivors of such a massive disaster, his survival encouraged him to give back to the society by co-founding Safe Water Gardens, a Singapore-based NGO that aims to use digitalisation to tackle global sanitation crises.
But at heart, Flache is an entrepreneur and investor.
“I have always been fascinated by the process of creating something. At the age of nine, I programmed my first computer, then I founded my first company at the age of 19 … Building businesses has always been my whole life, both as an entrepreneur and an investor,” he tells e27 in a phone interview.
Apart from being a partner at V/G Ventures Switzerland, Flache is also involved in at least 15 startups in the area of Artificial Intelligence, machine learning, SaaS, and fintech such as Fundment and Codetrails. He also advised Fortune 500 companies and spoke at various events and conferences.
Also Read: The angel investor’s cheat sheet to successful portfolio building
In this interview, Flache breaks down the four main points to consider before one begins the journey of angel investing:
1. Choose the right startup
What is the right startup? The angel investor explains that the right startup should have a “realistic” pre-money valuation. He points out how founders might get over-enthusiastic about their ideas, leading to a ballooning pre-money valuation.
“This is not a good base in an investor’s point of view because you need to develop this company first,” he says.
2. Keep an eye on the founders
An angel investor needs to keep watch of the company’s founding team, which Flache stresses as the most important factor that he considers when looking at a potential investment. It is a time-consuming process, but investors must see the founders’ mindset, ability, and track-record.
“It’s best to say I invest in people instead of tech,” he says.
Flache also elaborated that the most ideal number of people in a founding team should be between two to three people.
“If you have more than three … it can be hard to get all minds on the same page, especially if they have strong characters or vision,” he says.
Also Read: Angel Investor: The right catalyst for your startup
3. Prepare the safety net
Flache also advises for angel investors to ensure the strength and endurance of their portfolio company.
“As an investor, you might be building a portfolio of five to 10 companies. But every single startup must have the potential to recover the entire portfolio,” he explains.
He points out the importance of this idea by reminding that the tech industry is a high-risk business, with more than 70 per cent of startups failing within their first few years.
4. Find that timing
Last but not least, Flache finds that it is important for angel investors to always consider the timing.
Most innovative businesses have a time-frame of a few years. For example, building an e-commerce company is much harder today compared to 10 years ago.
“You cannot force anything, even if you’re willing to put more money into the company … The ‘magic’ that you will need to find is the ideal fit between the product, the market, and above all, the team itself,” he elaborates.
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Image Credit: Mike Flache
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