Angel Investors

Date: October 15, 2014

Name: Startup Grind – The view of Mike Volker, the Angel Investor

Presenter: Mike Volker

Startup Grind is a startup community that hosts many startup events to support startup entrepreneurs in Vancouver. The event is hosted by Cheryl Mack and Cheryl Draper, Directors of Vancouver Chapter. Startup Grind invites Mike Volker, the Angel Investor of new high technology ventures, and the Director of Simon Fraser University Innovation office, to discuss his view of Angel Investor. Startup entrepreneurs will understand the perspective of Angel Investor so they will know how to approach future angel investor with their innovative ideas.

After graduating from engineering major, Mike Volker founded his company, Volker-Craig Ltd, in 1973. With engineering background, he successfully builds a black box system that can connect screen, keyboard and typewriter to a television. After 8 years of success, IBM announced the innovation of laptop, which destroyed the core value of his business. In addition, he dissolves the corporation and team up with 6 other entrepreneurs and become Angel Investors to help out startup companies.

The first investment encounter experience

After selling his business, he works with the startup company that later becomes Research in Motion ltd (RIM). With 15% of rate of return for 30 thousand, he rejects the offer and suggests them to give shares for technical specialists instead payments. In addition, his suggestion helps RIM overcome the current crises

Volker mentions his first successful investment is a local voice call communication corporation that is sold to Ontario for 90 million for return. Now Volker is focusing his investment on biotech ideas, energy technology innovation and food industry

Volker’s important investment judgment experience

Volker believes integrity is an important factor. There is a time when he got approach from a good idea, but he forgot to check on the people behind the idea. This results of dishonest investment usage from investee by paying back to bank instead of investing in capital. Moreover, due diligent is extremely important for Angel Investors.

“The key to success is to ask many questions at the beginning before investing”

Tips for startup

There are 3 questions Volker will ask to any startup entrepreneurs.

• Who am I investing in?
• Are you totally in?
• What makes it different than everyone else?

In average, 90% of startup companies fail. It is important to treat those failures as learning experience. However, Volker believes entrepreneurs who are stubborn or not coachable or too strong head are the main reason behind those failures.

Volker is impressed with entrepreneurs who have strong commitment and nonstop approach mindset. To request for funding, the key aspect from Volker is to lead the conversation with a strong Return of Investment figure. If entrepreneurs cannot explain their ideas within 10 words, Volker indicates it is a lack of preparation and commitment.

“If someone is not willing to listen, it is a red flag”

In average, Angel Investors team will invest a total of $600,000 at the startup round and 2 million in total during the second round. Entrepreneurs need to go deep to convince the Angel Investors to invest.

Strategy for finding entrepreneurs

Volker invites potential startup entrepreneurs for dinner. He will introduce them to his wife. If his wife thinks they are jerks, Volker will not invest. Volker believes women’s instinct can determine emotional, which helps him with his decision making.

Volker suggests every startup entrepreneurs should have their personal roadmap. Moreover, they need to develop tools, publish website, and attend as much startup meeting as possible.

New trends

Comparing with the traditional startup entrepreneurs, the new innovative startup entrepreneurs will receive feedback quicker to determine the popularity of their business ideas. They are able to exit quickly. The qualities of ideas they present are better due to strong planning and preparation.

Advice for finding funding

Volker suggests all startup entrepreneurs to get involved with BC Innovation Council. Moreover, all startup entrepreneurs should participate with many competitions. People who have successfully built their companies are willing to help others. Therefore, seek them for their advices.

Every startup companies should implement a board. This proves they are going towards the right direction. Many Angel Investors are now looking for board in startup companies to determine their success structure.

Angel Investors are now meeting regularly every week. They expect startup entrepreneurs to provide previews for their presentations. Dragon’s Den is a perfect example of Angel Investors meeting. A majority of Angel Investors will diversify their investments with balance. In average, the investments come across the meeting are usually 27% ROI. However, 40% of Angel Investors will lose everything. Therefore, Angel Investors will at least invest 20 different companies with their money.

Angel Investors will factor startup entrepreneurs experience when they got approach with ideas. They will ask startup entrepreneurs to forecast their 5 years vision. Sometime Angel Investors will ask psychologist for their advice.

Lesson from RIM

Volker believes the main reason why RIM is not successful in the market is because they got sidetrack with other activities. They did not focus on their primary core values and they did not shift when opportunities come.

Future in Angel Investing

Volker forecasts crowdfunding will be the future funding source for many startup entrepreneurs. Canadian Government stats investors need to have million dollar net worth to consider as Angel Investor. In average, only 4% of investors qualify for this requirement. The purpose of this regulation is to protect scam. In the old days, bankers are the gate keeper, but now, it is more flexible and more liquidity. It is essential for all Angel Investors to ask themselves the question “Who should you sell your share to?” before making any investment.