Connect with us

Angel Investors

This Entrepreneur Got Vinny Lingham To Invest In Him By Crashing His Party

Vinny Lingham is South Africa’s tech success story, which is why Sheraan Amod knew he was the best man to help him get his idea off the ground. But how could he convince Lingham that Sheraan was the best man to invest in?

Entrepreneur

Published

on

Vinny Lingham

The Investee

SHERAAN AMOD, PERSONERA

For Sheraan Amod, Vinny Lingham was a South African tech success story. “I wasn’t actually looking for an investor. I was looking for advice and contacts, and Vinny was an excellent place to start,” he explains. “His knowledge and networks would have been invaluable.”

Sheraan knew the ball was in his court. He made contact with Vinny on LinkedIn and Facebook, and managed to source his email address. He then sent Vinny three emails outlining who he was and his business idea… and had no response. “So I went to plan B. I learnt that Vinny was in South Africa and that his company Yola was having a party. So I crashed the party.

“I managed to introduce myself to him – and he recognised my name. He had read my email and was actually intrigued by my idea. He gave me one minute to pitch my company and idea. The reasoning for this is simple – you can only distill your business down into an elevator pitch if you really know your value proposition.  Always be prepared – investors will see straight through you if you aren’t.”

Vinny liked Sheraan’s idea. He was invited to the office the next day, where a half hour meeting soon stretched to an hour.

“He even asked me if I was looking for capital – which of course I was. A day later he and two other like-minded investors were sold. I had investors, a mentor and a business that I was ready to build. Personera, a unique personalised merchandise platform on Facebook, has grown dramatically in the international market over the last year.”

Approaching investors

Based on his experiences, Sheraan has these points to offer fellow entrepreneurs:

  • Potential investors are busy. They like to see perseverance, so you need to be the pursuer. It shows how serious you are, but it also keeps you on their radar. If there is no match and they ask you to stop, respect their wishes.
  • Money is important, but a bad investor can kill your business. Do your research and make sure the fit is right before you approach anyone.
  • Be flexible. My original business idea makes up about 20% of what the business actually developed into. Respect your investor’s opinions and ideas.
  • Once you have a well-connected investor on board, things can happen quickly. Personera has venture capital funds Hasso Plattner Ventures Africa as well as 4Di Capital on board — and both firms were first introduced to me by Vinny. Be ready for things to change quickly. Be flexible and adaptable.
  • Leverage networks. Ask for advice, opinions and introductions. The more contacts you have, the bigger your pool of influence.

The investor

VINNY LINGHAM

Yola.com founder Vinny Lingham is a South African entrepreneur who now lives and operates in Silicon Valley. He is also an angel investor. Why? Because he wants to support young entrepreneurs who are like he was: young, bright, willing to learn, and willing to make mistakes.

“I believe that most entrepreneurs are interested in supporting other young entrepreneurs break through,” he says. “This could be as an advisor or mentor, through contacts or even financially. The trick for aspiring entrepreneurs is to find and reach out to the right entrepreneurs who want to give back.”

In the case of Sheraan Amod, Vinny took this pitch to a few of his like-minded friends, and within days he had raised R1 million for Sheraan’s start-up.

Ticking the Right Boxes

Why? Because Sheraan ticked all the boxes that Vinny was looking for. Here’s what they were:

  • I am interested in the tech space, specifically disruptive businesses that will change the market. If you want to approach an angel investor, make sure their goals align with yours and what you are offering. If you keep knocking on the wrong doors, you won’t be taken seriously.
  • Read magazines, blogs and websites that relate to your field and the business world as a whole. Know who the entrepreneurial players are and where their interests lie. Do your research and attend events. Make connections.
  • You need to have a good idea. Be practical, know your industry, and be able to demonstrate this knowledge. You won’t be expected to be a master, but you need to demonstrate that you have really thought your business plan through.
  • Understand the angel landscape. In South Africa angel investors are not often bought out by VCs. Instead they need to be patient while the business grows. Understand what the angel investor is looking for. This will be a partnership, and it’s important you are all on the same page.
  • Be willing to learn from your mistakes and pick yourself up again when you make them. Your angel investor will support you, but you must be honest and upfront about what is happening in the business.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

Angel Investors

A Comprehensive List Of Angel Investors That Fund South African Start-Ups

To get your start-up off the ground you’ll need money. An alternative is to ask an angel investor for that initial capital injection to give your start-up a better chance at success.

Nicole Crampton

Published

on

Prev1 of 45

a-comprehensive-list-of-angel-investors-in-south-africa

An angel investor is usually a high net-worth individual or group that provides capital to start-ups. They are referred to as angels because they are willing to invest their personal funds into a struggling higher risk business, when no one else will. Just like funds and incubators, some angel investors will focus on a specific industries.

What is an angel investor?

“Angel investors got their name 100 years ago in New York City when struggling playwrights – with limited financial means – had theatrical productions funded by a wealthy and visionary individual usually at the last minute,” explains David Newton, professor of entrepreneurial finance and head of the entrepreneurship programme, Westmont College, California.

He says that this generosity was associated to angels floating down from heaven with money so the show could go on. However, these angels were astute investors with keen eyes for investments that would achieve high profits. Angels fund a business to get in on the ground floor of an opportunity for financial gain.

The difference between an angel investor and a venture capitalist

Venture capital funding usually comes from a firm with people selected to help your business develop. Venture capital firms are comprised of professional investors. The capital is generated from a variety of sources such as corporations and individuals, private and public pension funds, and foundations.

A venture capital firm is looking for businesses with high growth potential. They will then buy shares and have a say in the future of a business, in exchange they expect a high return on investment.

The pros and cons of choosing an angel investor

The funding an angel investor can bring to the table could make all the difference in getting your start-up off the ground, but there are a few trade-offs you need to be aware off:

The pros

  • Angel investors are usually entrepreneurs themselves, who understand the level of risk involved in investing with you, and so they won’t require you to jump through as many hoops as with a typical business loan.
  • An angel investor will offer you capital in exchange for an ownership stake, which means you won’t have to repay their investment.
  • Angel investors bring years of expertise and already understand the challenges your business will need to overcome before reaching success.

The cons

  • The cons of an angel investor taking on high risk start-ups is they usually have high expectations. It isn’t unusual for an angel investor to expect a rate of return 10 times their original investment within the first 5-7 years.
  • Offering up a portion of ownership to the angel investor can limit your start-up’s capability of realising a profit, if you don’t carefully assess the terms.
  • The angel will want to take an active part in making decisions, or they’ll want you to explain the reasons behind some of your decisions.

Here is our comprehensive list of 43 angel investors interested in South African start-ups:

  1. Ernst Hertzog
  2. Brett Mason
  3. Avi Eyal
  4. Joel Gascoigne
  5. Brett Dawson
  6. Michael Leeman
  7. Lawrence T Levine
  8. Saul Klein
  9. Mohamed Nanabhay
  10. Sean Emery
  11. Vinny Lingham
  12. Bukola Jejeloye
  13. Kresten Buch
  14. Abu Cassim
  15. Pardon Makumbe
  16. Charles Lorenceau
  17. Justin Stanford
  18. Zachariah George
  19. Daniel Guasco
  20. Craig Raw
  21. Rob Stokes
  22. Mark Levitt
  23. Alvin Singh
  24. Dean Cannell
  25. Llew Claasen
  26. Ari Lustbader
  27. Tommy Chia
  28. Mark Pretorius
  29. Henk Kleynhans
  30. Michael Jordaan
  31. Dotun Olowoporoku
  32. Abrar Ahmad
  33. Michael Greve
  34. Wayne Gosling
  35. Jordan Wainer
  36. Paul Brown
  37. Dan Stephenson
  38. Malcolm Gray
  39. Richard Rose
  40. Mark Forrester
  41. Shlomi Podgaetz
  42. Jesse Hemson-Struthers
  43. Cassian Coquelle and Hendrik du Preez and Andre Bottger
  44. Angel Investor Networks
Prev1 of 45

Continue Reading

Angel Investors

When Attracting Investors Go Ugly Early

When it comes to attracting an investor, use the same strategies in the boardroom as you would in the barroom.

Alan Knott-Craig

Published

on

alanknottcraig

If you want to make money from your idea, you must be unique in your ability to execute it. Sometimes you have a great idea – a game-changing idea; an idea that’s worth a billion dollars – so you start thinking about how to make it a reality and you quickly realise that you don’t have sufficient capital, technical expertise and/or time.

At this point you’re faced with two choices: 

Option 1: Be paranoid

Start worrying someone will steal your genius idea. Insist on NDAs before sharing. Start fantasising about selling your idea to a giant corporation that is so lethargic it would never be able to come up with your idea.

Related: 9 Tips for Winning Investors in the 5 Minutes You Have Their Attention

Option 2: Share

Start telling everyone about your idea. Share it on Twitter or Facebook. Tell the world!

Option 1 is a dead-end filled with losers. Option 2 carries the small chance that you get ten people who validate your idea and you can take the next step.

Option 1 deprives the world of your idea and leads to you muttering: “I thought of Facebook long before Zuckerberg,” whilst sipping a late-harvest semi-sweet wine with ice. Option 2 gives you a small shot at being part of a bigger story, and at the very least, gives the world a chance to benefit from your idea, even if you enjoy no financial upside (or credit).

Investor-meeting

Get screwed early

If someone steals your idea and makes a success of it, tough luck. If your contribution is not critical to the realisation of the idea, then the idea is worthless. At the very least, you can identify crooks early on. The world is full of crooks. Giving people an opportunity to screw you early is a great way to filter bad people from your life.

Build a track record

Okay, so you’ve got the idea. Now you need funding — you need a shareholder. First, you need a network. Cold calls rarely work. Investors work on personal references. With luck, your parents or your friends or your colleagues can plug you into a capital network.

If you weren’t born lucky, you have to make your own luck. The shortcut is to marry rich, although that usually results in long-term unhappiness.

The long route is: Go work at a reputable company, build a track record and strong relationships that you can leverage when you are ready to start your own business.

Related: When Angel Investors Reject Your Plan

Go ugly early

Once you have access to a network, you need to attract investors’ attention. Getting the attention of an investor is a bit like finding love at a bar. If you’re like me and you always struggled to attract good-looking members of the opposite sex, employ the ‘go ugly early’ strategy.

The same strategy works when it comes to chasing funding. Instead of chasing the most attractive person in the room, head straight for the hunchback. This will save you time. Also, it will gain the attention of the most attractive person in the room. “That’s weird, why is that guy not talking to me? Everyone always talks to me!”

Here’s the thing: The key to the ‘go ugly early’ strategy is to be noticed. It’s no good chatting up the hunchback if Leonardo Dicaprio can’t see you doing it.

Close the deal

Okay, assuming you can attract interest, you need to close the deal. Get the basics right. Dress smart, have your forecasts on hand, be clear that you’re in it for the money (not to save the world). Most importantly, show your passion. People don’t invest in excel spreadsheets — people invest in dreams. Sell the dream.

If you don’t close the deal, don’t sweat it. Move to the next girl (or guy) at the bar. Remember, the best investors are hard to get. If someone seems too eager to give you cash, think twice. Easy cash is like easy sex. It normally comes with STDs…

Raising money is all about people. Be yourself and the right person will choose you. If you try to be someone that you’re not, you may find yourself in bed with the wrong person. And shareholding relationships are like the mafia: It’s hard getting in, but it’s much harder getting out.


Read ‘Be A Hero’ today

be-a-hero

Continue Reading

Angel Investors

How To Fund Your Business By Taking On New Shareholders

Here are four practical things to consider and implement to do just that.

Adrian Dommisse

Published

on

company-shareholders

There comes a time when your business needs an injection of capital to get over that hump. The hump might be the viability test for your product; the road to earning revenue; or the boost to take your business to that next milestone. Whatever it is for your specific company, finding the best way to raise the needed cash is an important and often challenging task.

A conventional way to do this is to bring on a new shareholder. Here are four practical things to consider and implement to do just that:

1The practicalities

First up, how do you practically raise funds by bringing a new shareholder on board? It’s important to understand that your company is raising funding. This is done by offering ownership to the funders in the form of shares. The ownership and value of the company is split into fractions (shares) – a new owner puts money into the company, and gets shares in the ownership of the company in return.

Related: How Giraffe Played The VC Game (And Won Funding)

2Measuring your company’s value

The natural next question is: how much ownership does the new shareholder get in return for their contribution? Does a R 1 million investment get the new shareholder 50% or 5% of the ownership of the company? As you can expect, this depends on the value of the company before the investment.

How do you measure the value? Luckily, there are whole industries dedicated to doing this – with the essence being: Your company’s value depends on its ability to earn profits for its shareholders.

There are many ways to measure that, but you will essentially need to show a compelling argument of why the company can earn profits for its shareholders.

3The start-up challenge

This is where the early stage start-up company faces a real challenge. The start-up will often have little or no actual revenue – making it hard or even impossible to show a track record of earning profits for its shareholders. The challenge here is to show its potential to earn revenue.

Typically, this comes down to showing a great product, a great management team, reliable research into the size of the market or potential market, and how the start-up’s value offering can crack that market wide open.

Related: Arbor Capital Tell You Which Funding Is Smart – And Which Is Not

4The investor’s risk

Once you’ve convinced an investor to buy 5% of your company for let’s say R1million rand, and you’ve given them a 5% shareholding in your company, what’s the next step? What risk does your investor take?

The starting point is that your investor is now a shareholder, so they take all the risks that you do. If the company fails despite your best efforts, the investor takes that risk and has no claim against you or the other shareholders.

It is common for sophisticated investors (think Venture Capital, Private Equity or Angel Investment Funds) to try and limit that risk. Common tools here include liquidity preference – which is a fancy way of saying that they get their investment back before you do, should the company become insolvent (that is if there is any cash back).

But what do you personally owe that investor in return? This is important – you as a director of the company will owe a duty to that investor to spend their money wisely, in the interests of all the shareholders. You owe them a duty to manage the affairs of the company prudently. You are now the custodian of someone else’s money and your goal is to build the value of the company so that you give all the shareholders a return on their assets. If you breach this duty, you can be held personally responsible for the shareholder’s loss.

Again, sophisticated investors can also require more from you – especially if you and your start up management team are essential to the growth and viability of the business. They can “lock up” your shares in such a way that you can’t sell for a specified period of time. They can also require your shares to “vest” over time so that if you leave before then, the company can take back your shares.

These and other tools are specifically intended to minimise the investor’s risk by motivating you as the founder and director of the company to stay and grow the company’s value.

Planning ‘life after the investment’

It seems obvious that you should prepare carefully for fund raising. It can be a time consuming exercise – but one you’ll never regret. It’s important to know what your potential investors want to see in order to agree to the value of your company.

Also, it’s vital to be very clear on what your obligations will be to the new shareholders once they come on board. Discuss both their expectations of you, as well as your expectations of them. Build the “life after investment” picture very clearly so that you know what your position will be afterwards.

In a nutshell – lay strong foundations with investors for a long term relationship in advance, and your company’s long term prospects will be much healthier.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending