EstBAN has grown ten times, from 25 to 250 members in nine years. According to Ivar Siimar, one of the founding member of EstBAN, there are probably three times as many business angels in Estonia.
You were one of the founders of EstBAN 9 years ago. There were 25 founders and EstBAN currently has almost 250 members. Has the growth been fast or slow?
In this field, it is not important how many people you’ve got but how active the people are and whether you can make them work together.
Our main goal when establishing the network was to unite people active in the start-up world who we trusted in order to start making wiser decisions.
What do you think; how many angel investors are there on the market?
I believe that after the last exits and large acquisitions, there may be three times more than ESTBAN’s members.
What advice would you give to a starting angel investor? How can they get involved in the start-up world?
If a starting angel investor does not have a lot of experience and wants to establish a network, the most important thing is joining an angel investor network of a country they wish to invest in. They have to get the feel of the start-up world, go to events and read materials – it is not just enough to ”move closer” and start investing in enterprises others are investing in. Think two steps ahead, look at every investment object separately, and ask for advice to find enterprises that have the most potential, and get to know the strengths and weaknesses of your fellow investors.
How many years did it take for you to feel at home in the start-up world and feel confident in what you were doing?
I have gathered a lot of information through different transactions but I think if you start feeling too comfortable, this is the end of innovation as the start-up world is changing very quickly! I started making bolder decisions after four or five years of being on the market.
Have angel investors changed much during the past 9 years?
The investment median has changed – when we started investing in 2007-2008, the sums were much bigger. Now the sums have dropped and the average ticket (the entering investment sum) is about 20 000 euros. Having talked to external investors, we know it is the same everywhere. We also have more super-angels who invest bigger sums and make quicker decisions; the number of interested people has clearly grown.
What are the most beneficial transactions – with super-angels, through joint investments, or any others?
Everyone is trying to aim higher; when looking at EstBAN’s founding members, all of them have become VC founders who are now involved in bigger transactions. It is important to invest with a person whom you click with – it doesn’t matter if they are a super-angel, a VC or a regular angel.
Right now, the start-up sector has the most money; many people have joined with start-up investments. Nine years ago, we had one or two active venture capital funds headquartered or active in Estonia. Now, there are approximately eight. The scene has changed completely. The money reached from exits is also looking for a place.
What has not changed is the fact that good ideas engage money and it does so fast – without great ideas, you will not attract money.
Would you say that there is a lot of action in the market and that competition is high between start-ups?
Yes, for sure. The competition is much more exciting than, for example, five years ago.
How can one access exciting ideas?
Everyone has their own mini-networks. We are open with our partners and happily make joint transactions. The better the network, the higher the likelihood of finding a good deal.
There is no special trick. If you are active, move around, see things openly and talk about yourself, the more likely people are to invest in cooperation with you.
Investors have got a large-scale presence in their existing investments and portfolios. Start-up companies can be your biggest ambassadors if you help them and succeed in doing so.
The borders have become more open. A few years ago, investments were more local in origin and there were not too many investments made in Estonia.
Now, Estonian start-ups present their ideas in Finland and other parts of the world. In our TrindVC portfolio, there are 40 percent external investments with enterprises from Finland, Germany and Norway. We mainly cooperate with Scandinavian countries. It took a lot of work to get Estonia on the New Nordic map.
To name a couple of your first projects – Click and Grow and Cleveron – some thought they were pretty odd at the time. What do you think is today’s odd project that may succeed?
A successful project is one that has had an exit. Another milestone for success is reaching the level of a unicorn. I remember the beginnings of Taxify/Bolt when they just started gathering investments. The idea was not too engaging at the time but now they have become competitors to Uber and are very successful.
Today we have a lot of successful hardware projects. This segment wasn’t that popular either.
Every sector has great examples that fly high. The attention should rather be paid to good founders. Good founders can make any enterprise a success.
Estonia has many people with a good background who have been involved in great success stories. They have an understanding and feeling of how a rapidly growing enterprise is developing and what it means.
Is there a golden rule about the age of a founder?
A good founder has experience. Those with great enthusiasm and charisma quickly find people with experience to join their team. I like it when people have something to show and are not inventing the wheel for the first time. An ideal founder has already started a few start-ups and knows what needs to be done and how to do it.
We do not have a lot of founders like this in Estonia as we haven’t had many exits here.
Age is not important at all. If a person can grow a team, they will gather knowledge around them. Nobody is perfect or knows everything.