Business angels play a key role in helping entrepreneurs in the early stages of their projects, providing support to allow a greater number of business projects to move forward. 

ESADE’s Business Angels Network (BAN) recently hosted a session to promote its activities, its entrepreneur-investor forums, and its Business Angels School, as well as to showcase the experiences of some investors and entrepreneurs.

Luisa Alemany, Director of the ESADE Entrepreneurship Institute and Assistant Professor in the Department of Financial Management and Control, introduced the audience members to the "business angel" concept, which refers to an individual who provides money and knowledge to entrepreneurs. Sixty percent of business angels worldwide are men, whereas in Spain this figure is close to 90%. The average investment per project ranges from 18,000 to 45,000 euros. 

Professor Alemany then explained the difference between venture capital and business angels, noting that the latter "invest their own money, and they do so for both profit and enjoyment". They also tend to be more hands-on, have a longer investment horizon, make decisions more quickly, and get involved at the very beginning of a business project. She added, however: "Not all business angels are alike; some are active and others are passive, depending on the level of activity". 

Towards the end of her remarks, Professor Alemany discussed the various red flags that may cause a business angel to back out of a project: lack of key information about the project, unfamiliarity with the sector or product, and, in cases where no guarantees are offered, risk aversion. 

The next speaker was Fernando Zallo, coordinator of the ESADE BAN. Mr. Zallo discussed the objective set by the network in this new phase: "To assume a position of leadership among Spanish networks of private investors and become a vehicle to assist the growing number of entrepreneurial initiatives by our alumni to secure financing". He added that the network organises various activities to encourage networking among the members of the ESADE BAN, forms alliances with other networks and entities to facilitate co-investment, offers training sessions and collaborates on some activities with other institutions. 

Two experiences

During the next part of the session, business angel Manuel Martos (EMBA 09) and iContainer founder and general manager Carlos Hernández shared some personal experiences. Mr. Martos explained how the training he received last year at the Business Angels School helped him to change how he looked at investments. "At the beginning, it was individual investment in an as-yet-undefined target market", he said. "I was lacking in critical mass, networking and financial analysis, and I needed a business plan suitable for a large company". Following this shift in his thinking, he created a higher-potential investment group focused on the industrial and nautical sectors. "The result", said Mr. Martos, "was a beacon effect that ended up bringing together numerous different disciplines and markets and creating a network of specialists that allows us to provide entrepreneurs with support and follow-up". 

Mr. Hernández then took the floor to discuss his experience as the entrepreneur behind a company called iContainer, which has grown to become the leading online sea freight forwarder. His company also exports goods, mostly to small and medium-sized companies, by means of full container load, less-than-container load, or air freight.  "For an entrepreneur, looking for capital is a complex process that requires time", he said. "You always have to know what kind of investor might be interested in joining the company". He added: "The most important thing is to find out whether an investor can provide more than just money: for example, industrial knowledge or contacts that are of interest to the company. Still, we have to remember that business angels are ultimately looking for profitable investments". 

Mr. Hernández finished his talk with the following observation: "Once an investment has materialised, it is the entrepreneur who must guide the relationship with the business angel. For me, it is important to find an investor who wants to provide support without totally changing the business model". After the speakers had finished, they took questions from the investors and entrepreneurs in the audience, some of whom shared their own experiences, as well. 


 

For further information:
esadealumni@esade.edu