Bauman offered these insights into angel investing at a forum to introduce LINK-Caribbean, an initiative of the World Bank and Caribbean Export Development Agency to increase access to capital for Caribbean entrepreneurs. The forum was part of a World Bank mission to Jamaica during Global Entrepreneurship Week in November, and it brought together the World Bank country office and stakeholders of the Entrepreneurship Program for Innovation in the Caribbean (EPIC), including staff from the Caribbean Investment Facilitation Project, Caribbean Mobile Innovation Project, Caribbean Climate Innovation Center, Start-Up Jamaica, and other local business enablers.
“Angels are motivated to give something back to local economies by investing in entrepreneurs and young companies, particularly those in emerging technologies,” Bauman said. “They are on the lookout for investments where they can add value by passing on their own business experience.”
Around the world, there is great diversity in the membership of angel groups and their preferences as investors, Bauman said. Some investors are focused on young entrepreneurs or the high-growth tech industry, while others specialize in more traditional industries. Similarly, some investors are highly visible to the public, while others prefer to keep a low profile.
“They also like to have fun and learn with like-minded professionals, while hoping to make some money in the process,” Bauman added. “So if you are doing something that is exceptionally interesting, they will keep coming back to the table.”
There are three angels groups – comprising more than 60 investors – currently operating in the Caribbean region: First Angels and Alpha Angels in Jamaica, and Trident Angels in Barbados. To date, the angel groups have received 35 formal pitches and made five investments totalling more than US$500,000. The individual investments have ranged from US$50,000 to US$180,000.
If you want to attract this kind of funding, you’ll need more than a good idea, Bauman said.
Angel investors “are keen on companies that have built products that are near commercialization,” Bauman said. “They especially want to see companies providing high-value, smart solutions capable of solving real-world business challenges.”
Companies that hope to attract investment should also have a solid management team with the ability to execute a high-growth plan, as well as a clear business and sales model with demonstrable traction with customers.
What does a strong management team look like? It’s not all about university training, Bauman said. “Although this is useful, angels are looking for teams that have rich work experience with special links to the business venture at hand.”
Financials are a crucial part of an angel group’s decision to invest. Does your company offer scalability and opportunity? Are your financial projections realistic? Is your strategy executable? Do you have a clear plan for how you will use angel funding?
“Angels are critically looking at your business model, how you will make money and evidence that your team can execute,” Bauman said. “Make sure that you check the box on these questions, understand and are conversant with investment terms, and have completed a full risk assessment. Additionally, remember that a credible exit strategy and some charisma also help to attract angels.”
Finally, Caribbean entrepreneurs should think about the opportunities for their company globally. “The challenge in the region is that the markets are relatively small,” Bauman said. “So companies in the angel market need to demonstrate that they have the ability to go international.”
LINK-Caribbean is an investment facilitation project under the Entrepreneurship Program for Innovation in the Caribbean (EPIC) designed to identify and create connections between promising entrepreneurs and private investors, primarily business angel investors. It is being implemented by a regional partner, the Caribbean Export Development Agency, and is the second phase of the EPIC access to finance initiative to unlock and develop private capital investment into high growth potential entrepreneurial ventures. The first phase saw the launch and development of three angel investor groups in the region and the first structured angel investments. LINK seeks to stimulate additional early-stage investment activity through deal sourcing activities, grant funding products (Investment Ready and Co-Investment Grants), and the formation of the Regional Angel Investors Network (RAIN), a platform for growing the investor community while connecting entrepreneurs and investors. At the end of the first cycle, 296 firms were registered on the RAIN platform and 134 companies had completed applications.
The Entrepreneurship Program for Innovation in the Caribbean (EPIC) is an initiative of the World Bank Group. Launched in 2011, it is a seven-year, CAN $20 million programme sponsored by the government of Canada and managed by the World Bank Group’s innovation and entrepreneurship program, infoDev. EPIC aims to contribute to the advancement of a more prosperous and more integrated Caribbean community, able to generate and sustain economic growth. It also provides a unique opportunity for Caribbean entrepreneurs to explore new methodologies to learn, scale, and market their business solutions locally, regionally, and internationally. The project's objective is to contribute to increased competitiveness, growth, and job creation in the Caribbean region through the development of a robust and vibrant innovation and entrepreneurship ecosystem.