I got involved with angel investing somewhat by chance, and it became one of the nicest experiences in my life!
Luigi Amati is President of Business Angels Europe, he is one of the nine founders of Italian Angels for Growth, one of the fastest growing business angels groups in Europe, counting more than 200 members, and a Member of the Executive Committee of the Italian Business Angels Association. Luigi is also co-founder and board member of META - a European company delivering Investment, Academy and Advisory Services in the field of Research and Innovation in several countries, to clients such as the European Commission, the European Investment Bank and many other leading International and National Research and Innovation Organizations.
Luigi started as a researcher and software engineer in the field of Computational Mechanics, working with a spin-off of Imperial College (www.lusas.com) and Italian Research Institutions. He holds an Engineering Degree Summa cum Laude from the University of Rome a Master of Science and a Diploma from Imperial College London.
Keep reading for his take on why it’s important to start experiencing investing as part of a group, what good quality motivation is, what makes a good investment portfolio, what his 3 criteria for angel investing are, what his best advice for entrepreneurs and investors is, why knowledge-intensive companies are important, how the diversity in Europe is both a strength and an obstacle to start-up scaling, what a researcher's duty is, and so much more!
Taking the time to think is very important. We must make time for reflection!
In his autobiography, Born to Run, Bruce Springsteen writes that "Love will make you better and reflection will make you last". How has love made you better? How does reflection make us last – in terms of development, growth, innovation, sustainability?
Love has made me better in that it has taught me how important it is to take care of someone or something every day. When it comes to love, one very important thing is to never take it for granted. You must take care of it everyday, the same way you would look after a delicate flower or any other living thing. Learning to do this well is how love makes you better.
As for reflection, I believe taking the time to think is very important. Sometimes it may feel like we cannot afford to do it, or that we are not allowed, or maybe modern technology is not giving us some real time to think, but we must make time to think. The way I do it is by prioritizing the things that are really important to think about.
And then I think that ethics, having a guiding light about how to think, is essential. Applying a structure in which you always think of behaving, and giving yourself the time to reflect whether you’re constantly applying it - this is what makes you last. Long-term business ethics is what will make you successful in the end.
I got involved with angel investing somewhat by chance, and it became one of the nicest experiences in my life!
Can you think of a time when your work as a business angel brought you a lot of joy? Will you tell us about it?
Angel investment started rather informally for me, as I’m sure it has for many people. Both myself, as well as the people in my circle, we’ve always been into innovation, technology etc., and we started casually talking about investing. At the time, I did not realize what was giving me joy, but I think it’s about how refreshing and engaging it is to discuss with entrepreneurs, people who have ideas they really believe in, and who fight so hard to get through, there is so much energy. This always gives you joy!
Italian Angels for Growth, however, has given me one of the most joyful experiences in life. Let me tell you a little story. My sister, with whom I share part of my business life, read an article of the Il Sole 24 Ore, which is like the Financial Times of Italy, about this new American ambassador, of Italian origin, who apparently was very willing to grow venture capital in Italy, because this is what he was doing in the US. This was the early 2000’s, venture capital was not so well-known back then. So my sister suggested I call the American Embassy. I did exactly that, and I met with the Commercial Attaché, who told about this program they were setting up, Partnership for Growth, which was bringing together 30-40 leaders in various sectors. I was believed to be a front runner and was invited to join the program.
The plan was for the program to open the doors for Italian investors to what was happening in the US. So 40 of us went to the US. We started with the East Coast – which we thought was too far away and too far ahead. We took a trip to the West Coast - which was a little too conservative and still too far ahead. Then we went for the Midwest – this was a third trip, and only 20 investors took it.
And then, one Saturday afternoon, we went to Kansas City, where we were supposed to visit the Kauffman Foundation on Monday. We asked the hotel guy what we could do on a Sunday afternoon, in Kansas City. He recommended the GoKart race circuit, just a few miles outside Kansas City. So we decided to have some fun and go GoKart Racing. This race, followed by a nice meal, brought us together. Then we visited some places in Kansas City, which was not so far ahead of us like the East and West Coast were.
When we came back, 9 of us decided to do this: we signed a 1-page piece of paper, stating that each of us will commit a certain amount of money over a certain time period. We communicated to the press there was 1 million EUR available from our angel group, which we decided to call Italian Angels for Growth.
After that, we had a lot of fun – we organized a retreat, we visited angel communities across the world (from India to the UK, Israel, the US, China), and every time we went to these places we would go GoKart Racing together. This is how we came to define the 3 criteria for us to do angel investing: we wanted it to be professionally stimulating, financially rewarding, and a lot of fun! We’ve been doing it like this ever since, and this is what gives me joy!
I got involved with angel investing somewhat by chance, and it became one of the nicest experiences in my life.
Many good things come from creating the opportunity for people to come together, be themselves, connect - this is how we built the ESIL program and how we got in touch with Cip (CiprianMan, co-founder of Growceanu). This is why the ESIL program was built around organizing these visits for people who had not come into contact with these realities, so they can take a look and say ‘OK, this can really happen, why don’t I try it?’ This is not about a lot of money from a public agency, this is about a small group of people who come together and think: ‘We can do it!’ That’s the spark!
What difference was ESIL set to make? Has it achieved its purpose?
ESIL is an ongoing activity (although it has less resources now), which was initiated to grow, connect and improve angel investing in H2020 member countries, and it continues to do so. You can always do better, but a lot of good outcomes came out already, particularly in terms of reaching out to less developed geographies and addressing diversity.
My trick is that I assess the motivation of the person who is guiding the team! Motivation must be positive, not negative, it must be rooted in a positive attitude.
How do you evaluate opportunities?
Everybody says the team is the most important, but I will go a little beyond that. My trick is that I assess the motivation of the person who I believe is guiding the team. When I look back at my investments, the strength and the quality of the motivation of the person who was the driving force of the company has been the fundamental element in deciding whether to invest or not.
When I’m investing in syndicate, I need to trust that the lead angel is also taking into account this motivation factor carefully – in addition, of course, to having a thorough understanding of the technology, innovation, the business model, the market,the business environment etc.
Motivation comes from Latin, and it means to move – and you move because of something. So understanding what your inner motivation is, its quality and how you can tame it, make it positive instead of negative – this is really important, because motivation can also be very distracting. You have to be very careful that your motivation is not just about intensity and persistence, in which case it could be the totally wrong way of developing a business. Motivation is multifaceted. Motivation must be rooted in a very positive attitude.
How do you deal with failure, when it happens?
I stay calm, and spend time thinking and understanding.
A good investment portfolio is built on two axes: different sectors and different stages of investment.
What makes for a good investment portfolio?
I think a good investment portfolio is built on a couple of axes: one is diversification in terms of sectors, and the other is diversification in terms of stages of investment.
I believe it is good to have a broad area of investment – this is how we learn and diversify our expertise, this is how we build our network. My portfolio is MedTech, BioTech, IT etc.- fields I understand well, fields I know less about. I believe no one can really understand all the technology or the underlying intellectual property/capital as the company team does. I am an engineer, my background is computation mechanics and fluid dynamics - so I can go extremely deep in these field, which has given me the strong conviction that you will never understand the technology, the chemistry or the physics behind a knowledge-intensive start-up enough to be sure that is the good technology, as such understanding is usually the result of several PhDs and decades of studying. You can challenge it in your own domain, but you cannot be so presumptuous to think you understand exactly what that team is doing.
Investing in companies that are in different stages of investment (very early proof of concept to mature deals) is also key, because the stages of returns are also different, which makes your cash flow work a lot better, and you get money back, you can reinvest etc.
You are always tempted to invest in early stage companies, because this is where angels can help the most, but I think that even if what I can do to help is introducing the Italian market to a more developed company form another country – that’s also angel investment, I’m still helping entrepreneurs develop the market, I am helping them with my business contacts.
I think it was 2-3 years after starting Italian Angels for Growth that we realized we were trapping ourselves into too early stage investments, and we stated moving our portfolio to include more mature companies.
There are many ways to make an angel group work well. Find your own recipe – this is also part of the fun of it!
Why is expertise diversity important in an angel group?
Let me start by saying that angel groups can be different and work very well, different as they are. Some are made of specialists excelling in a particular field, others are generalists, some angel groups are fully private,others are supported through public funding.
One of my business partners is part of a group called Angels for Women, and they only invest when there is a very strong contribution from a woman or from a group of women in the company, and that’s also OK. I have a group of friends who are angel investors specialize in software only, and they also add a lot of value.
Philippe Gluntz is part of Paris Business Angels, a generalist group, but also a member of Seed4Soft, which is formed of former CEOs or people in C level position in France,who are dealing with software companies. Both groups are perfectly fine.
The ways to make an angel group work very well are many – it’s down to the people, the processes, the procedure, the business model. Find your own recipe – which is part of the fun of it.
Where Italian Angels for Growth is concerned - a group that is randomly assembled, made of people who knew one another – our approach was similar to what social clubs do: if you want to penetrate society in a positive way, then you want to network, relate, and co-opt people from very diverse life experiences. We made it a point to have a very diverse group of people, because we were of the mindset that each of us could advise more in certain type of companies, depending on our background. This built us as a community. There was 9 of us, and now we are 280. We have an annual retreat, where we spend time together and we connect without talking about business. Part of the fun of it is to not always talk about one single sector! This recipe works for us – we liked exploring different fields and cover many investment possibilities.
There many other recipes that can be just as successful as ours.
How do you keep your thinking fresh?
I believe my best years are ahead, I envision them and I fill myself with good thoughts!
I like to live in a world made of knowledge-intensive companies!
You speak with great conviction about knowledge-intensive company. Tell us what drives a company like that, what makes it work?
Our vision, at META, is Knowledge intensive companies for knowledge-intensive regions, and our mission is Knowledge to market.
Knowledge intensity is at the heart of our vision, which shows what I want the world I like to live in to look like. I like to live in a world and in a region which is made of knowledge-intensive companies, because knowledge-intensive companies are the main driver for a knowledge-intensive region - which is very pleasant to live in because it is dynamic, stimulating, people and businesses are always re-inventing themselves.
Knowledge intensity is about how much the founder knows about the field of the business they want to start. If it’s tourism, I need the founders to know everything there is to know about tourism. This is why our mission is Knowledge to market, not Technology to market, and not Intellectual property to market.
Intellectual capital is very much related to knowledge intensity. There is a strong link between this and the founder’s motivation.
Building a conducive framework for entrepreneurship is very important and is a good way to spend your life!
How is the entrepreneurial culture evolving in Europe? What difference has it made?
Entrepreneurship has become a part of our culture, which has evolved enormously in the last 35 years! The process is in motion, and a lot of people are willing to make entrepreneurship a fundamental element of their life – which takes a lot of energy!
People are beginning to understand the difference between entrepreneurship for needs, family business, ambitious entrepreneurship, knowledge-intensive companies, angel investing – and I think this is permeating the so-called ‘ivory tower’ sources of knowledge – such as universities, research centers.
In my business life, I do a lot of investment and angel investing. But in META, the company I started, there is a part called Academy: Cultivating Entrepreneurialism – which is focused on achieving impact from research activity, and is about coaching researchers to commercialize what they do and bring it closer to what can be a useful application of their knowledge and research.
And people get it. Everybody gets that, as a researcher, you don’t have to be an entrepreneur – as that means behaviors that are not in a researcher’s DNA – but you do have a duty, to a certain extent, to make sure that your research, your work will have an impact. So, we have spent countless hours explaining why impact is so important, why you have to connect with people who might be more entrepreneurial – from angel investors to MBA graduates – and make sure that more impact will be produced in terms of research and innovation.
Of course, there is always room for improvement! Continental Europe is still lagging behind, Eastern Europe has, of course, a longer way to go, but the world is very different to what is was 25-30 years ago. I don’t want to say that we were preaching in the dessert, and today we are preaching in a nice green valley, but it’s getting closer to that. The EU programs are a lot better, the national programs are a lot better, the regional policies are a lot better, there’s no comparison!
Promoting entrepreneurship and innovation, making sure that more and more people understand how important it is, how important knowledge-intensive companies are, is crucial. Building a conducive framework for entrepreneurship is very important and it is a good way to spend your life.
Programs such as WEgate and WA4E have clearly shown that more women investors means more women entrepreneurs!
What do women bring to angel investing, entrepreneurship, business, leadership?
It is always difficult and dangerous to generalize, but, overall, women bring diversity which has always led to creativity, which is a fundamental ingredient for every start up, and they bring a realistic and pragmatic approach. Programs such as WEgate and WA4E have clearly shown that more women investors means more women entrepreneurs.
Building a conducive framework for entrepreneurship is very important and is a good way to spend your life!
You spoke about diversity, as a marked characteristic for Europe. How does it impact the start-up ecosystem? How is diversity a challenge, how is it an opportunity, in terms of scaling?
In Europe, we have more diversity than in the US - because of the borders and our different countries. This is an advantage, because it’s an element of creativity. However, this potential is a bit untapped. What we have to do, and very quickly, is to lower, and probably abolish, the fragmentation in terms of the legal and bureaucratic aspects.
Otherwise, when you are a start-up scaling up, as soon as you have some traction in your own country, you feel you’d better go to the US and scale up there. For instance, as an entrepreneur, if I want to hire someone in Belgium, I must learn everything about the legislation in Belgium – which it’s a total waste of time.
We should create a scale-up… sandbox/free space, call it as you like, because people will choose to scale in the US - where the market is enormous, rather than scale in Europe – where the market is also enormous, but scaling is fragmented to a step by step process – first Romania, then Italy, then Germany, then Spain etc.
So, I believe European diversity is great in terms of culture and creativity, but it’s a great disadvantage when it breaks down into this bureaucratic fragmentation. At scale-up level, the impact of the taxes is not that big on the fiscal system, so the start-ups should be able to grown at scale-up level, after which they can comply to the normal legislation for medium-sized companies. At least some harmonization of start-up related legislation would be helpful. We should leverage on the diversity we have, while also making it easier for the entrepreneurs to not have these obstacles.
Be transparent with your angel investors about your goals and how you intend to reach them!
What is your top piece of advice for investors, entrepreneurs and for angel platforms?
My advice for investors is to join an angel group, a platform, a club and start investing together, rather than on their own. They can become lone wolves later on, but it’s important to start experiencing investing as part of a group.
I advise entrepreneurs to do their homework well. I like entrepreneurs that come well-prepared. Don’t spam people, know why you are approaching one investor, rather than another.
As for angel platforms, my advice is to be transparent with your angel investors about your goals and how you intend to reach them – for instance if you are a for-profit organization or not, whether you are working for everyone's best interest, or for the shareholders’ interest. Also, be transparent and clear about how you intend to reach a critical mass – whether by organic growth or by acquiring another platform, eventually. Have these conversations early on!
In entrepreneurship, creativity is everything!
You love creativity in an entrepreneur! Tell us why that's important.
In entrepreneurship, creativity is everything. When you’ve got the right, positive motivation, which is shaped by your own life, then you need to be creative, because the entrepreneurial path is never straight.
There will be many times when you have to find original solutions, so your mind must be open and creative, in the sense that you must love to investigate and explore, you must love to get in touch with people - this is what will make you a successful entrepreneur!
