Do you find yourself buying options just to watch them expire worthless… even when the…
If you’re not investing in startups RIGHT NOW… you must not like the idea of big returns in the coming years.
Seriously, though.
You see, there’s been a major shift in the world of Angel Investing space and it’s created HUGE opportunities…
And given the upper hand back to the investor.
For years, it was ridiculously easy for startups to get funding from large venture capital firms.
That’s not the case anymore.
Things have been shaken up with COVID-19 concerns, startups may find it more difficult to raise cash.
YOU now have the upper hand.
With all that’s going on in the world right now, there’s a general feeling of uncertainty. Investors are reevaluating their portfolios and loads of equity have been placed on hold.
The angel investing space isn’t immune to the global lockdown. There has been a major shift here.
But, while many point to the challenges this brings, there is an equally substantial opportunity here. An opportunity that gives investors the upper hand.
To help you capitalize on new opportunities and avoid new pitfalls, we boiled matters down to 5 essential things angel investors need to know right now.
Short answer — no.
Investing in startups is alive and well, but the rules have changed. Your strategy and mindset as an investor must adapt to the crisis if you want to succeed.
The first thing to remind yourself is that the economy will get better.
Angel investing is betting on the future. The goal is to make investments that work with the current forecasts for recovery. Invest for medium- to long-term growth.
There is a shift in favor of deal terms to investors. Valuations are better. Startups aren’t able to negotiate for the best deals like they were a year ago. They’re adapting to the current economic climate.
This means that you have a chance to invest in stronger companies and own larger shares than you would normally.
Why? Cash is in high demand for startups. Venture capital firms are struggling. Founders are looking for anyways to raise funds and are making compromises to do it.
Startups are being negatively affected because many sources of funding have dried up. Also, some startups were more prepared for a rainy day than others. This scenario will act as a filtering mechanism for startups.
As the world goes into lock-down mode and social distancing becomes the new norm, buying behaviors will change dramatically. All industries will be affected, but a few will be hit harder than others. Startups that are making non-essential products/services will surely see a pullback.
The social implications of this crisis will also have an effect.
Restaurants, hospitality, tourism, and much of the sharing economy will be forced to retract, restructure, and rethink. It’s best to avoid anything in these verticals for a while.
The Silver Lining
Good news, there are still startups disrupting the status quo and pushing for efficiency.
As history shows us, disrupters that get adopted are well-positioned to prosper. A remarkable number of success stories always seem to come out of big financial crises.
For example, Apple and Microsoft were born from the 1970s recession and Airbnb and Uber from the global financial crisis of the late 2000s.
There were many winners of the last recession.
Groupon saw the opportunity to offer people their non-essential luxuries at a discount when money was tight. Netflix capitalized on the decline of video rental. Countless fintech startups offered an alternative to the traditional institutions that failed us.
Startups that capitalize on changes in markets and society always ride the major boom that follows the bust.
The essentials for assessing a deal remain. But, there are some new red flags to look out for and new benefits to be aware of. You need to do things a bit differently if you want long-term growth and a big ROI.
Know the Burn Rate
Knowing how much a startup is spending is more important than ever. This will show you how equipped the founders are to ride out the storm.
The business should have realistic ideas on growth. Maybe last year’s plans are put firmly on hold and adaptation comes before expansion. Hopefully, the founders already have a convincing plan for restructuring and reducing their burn rate.
However, a startup in fintech that needs to pump out innovative solutions ASAP can justify burning through some cash. It depends on the product/service and the sector.
Ask yourself, can the team adapt to deal with the crisis, using smart working and lean strategies to improve their long-term success?
Find the Right Sector
Your safest bet right now is on essential industries. Innovations of things we can’t live without are crisis-proof.
For now, be skeptical of flashy products that rely on heaps of disposable income. Most people are changing their spending habits and are prioritizing basics first.
Startups that alleviate or solve current problems are great. Startups that work with the changing culture are also great.
Extra points to anything that serves social distancing. Extra extra points to anything that enables social connection despite social distancing.
In certain cases, you can even find a startup that’s so revolutionary or so solid that it doesn’t matter what’s going on, you just know it will be a long-term success.
Expect anything in online education, delivery services, e-pharmacies, gaming, and streaming to stay strong and maintain pace through the current landscape.
Get Deals You Couldn’t Normally
A crisis is the only time investors will be able to pull unreasonably favorable deals.
Just like trading stocks, buy low, sell high.
Right now, incredible ideas with strong teams are desperate for cash and will give you the opportunity of a lifetime. You just need to know where the good deals are.
Find Solid Founders
In difficult times, sometimes the ideas don’t mean as much. What will shape the success of your investment is the team behind it.
Experienced founders are doubly important right now.
Most startups will need to play a slow, meticulous game to get out of the mess we’re in. One mistake can cost the whole operation.
Be very observant of founders. Look at their background, see what they say, talk to them if you can.
Pick the Right Location
There is more faith in advanced economies’ ability to cope and recover. But, developing economies are more desperate for capital.
The IMF’s Managing Director, Kristalina Georgieva, had this to say about emerging markets:
“They are badly affected by outward capital flows, and domestic activity will be severely impacted as countries respond to the epidemic. Investors have already removed US $83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded.”
This will inevitably hamstring startups across the globe. The weak ones will fail and the strong will be left without investors. This is where a savvy angel investor can swoop in.
Angels who look towards these markets while everyone else looks away will find spectacular companies with very favorable valuations.
Remind yourself, this is a long-term strategy.
If you have invested in strong startups, this crisis will just delay things. Real innovation pushed by good teams won’t crumble under this pressure.
In general, your return will depend on the strategy of the startup. What was their original plan for an exit? You can look to the history of similar exits in the same verticals.
With some good startups in deep water, we could see an increase in exits via acquisitions from large corporations.
Things played out like this throughout the recession of the 2000s.
JPMorgan acquired Bear Stearns and Washington Mutual for a fraction of their value from just a few months before. Today, we will likely see big tech companies taking the initiative and snatch up intellectual property bargains left and right.
Big players who know they can weather the storm won’t let this opportunity slip by, and neither should you.
ROI and Predictions About COVID-19
Coming back to IMF manager Kristalina Georgieva, we have some predictions about what to expect from the economy in general.
“First, the outlook for global growth: for 2020 it is negative—a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021 . . . The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be.”
With this in mind, you can make investments or adjustments to your portfolio accordingly. As news comes in about containment and recovery, you can gradually upgrade your confidence level.
Remember, in 2021 we will all be singing a different tune. Those who get in on great deals today will be sailing smoothly when they catch the first winds of recovery.
For angel investors trying to persevere and prosper with the current forecast, nothing is more important than deal flow.
The incentives are big. We have extreme valuation discounts. Startups are innovating to make the situation better. Disruptors that come out of this crisis can be huge.
But, if you don’t have access to exceptional deals or don’t know how to find them, your odds aren’t great. The game just became more difficult.
Luckily, there are resources that can give you an edge.
First, experienced investors are a wealth of information. If you can learn from one, don’t miss that opportunity. Next, joining a community of like-minded investors can give you inspiration, motivation, and education. Finally, deal recommendations of up-and-coming startups can place incredible opportunities right in your hands.
The one resource on the market that does all of these things is Angel Investing Insider. My team and I made this package extensive and affordable to expand the angel investing world.
Entry into this space has been difficult for many, but we aim to break down those barriers. This benefits startups and investors alike.
What do you think? Leave us feedback in the comments!
If I hadn’t just bought this brand new desktop computer, I’d throw it out the window.
Thousands of people are missing the opportunities at hand right here, right now, because of the coronavirus pandemic, and they have absolutely NOTHING to do with high-tech disinfecting robots or the next medical breakthrough.
Frankly, those “investment opportunities” are shallow.
They have a short shelf life, and once we turn the corner on this pandemic, they’ll take a backseat for good.
The coronavirus pandemic revealed holes in 4 sectors that are poised for improvement (Read: And Investment Opportunity!) in the coming years.
THESE are where you need to be paying close attention.
These sectors are not just responding to the pandemic itself – which has a shelf life, no matter how much it may seem like it doesn’t – they’re responding to the effects of the pandemic.
Businesses that connect people and improve the way we can interact globally are where the real investment opportunity of this pandemic lies.
We live in a connected world–it’s a constant phenomenon, not a trend.
The “connectivity” of the world will continue to grow for years to come… long after the dust of our current situation settles.
Gaps are being revealed by the pandemic and these are the industries where the real opportunities lie.
If you want to travel on vacation or start a business abroad, you will likely need to exchange money.
This can seem trivial for some — just change some USD at the bank and you’re good to go.
In reality, currency can be a barrier that prevents people from gaining access to many things.
Imagine that you run a business with workers across the globe. Sure you can pay them in dollars, but banks and intermediaries like PayPal charge exorbitant fees to change those bucks.
Now, imagine you run an e-commerce business and want to sell internationally. If your merchant account doesn’t allow you to deal with other currencies, you may need to enlist the aid of a payment processor.
Even Amazon will charge you a fee for paying in certain currencies. On top of that, your bank may give extra charges for the exchange.
Long story short, difficulties in currency exchange limit many businesses and cost people time and money. In our world of frequent travel, remote workers, and international collaboration, it seems like a better solution is in order.
Luckily, some startups see this struggle and have stepped in to disrupt banking and make currency exchange simple.
TransferWise is a London-based startup that has raised over $772 million in funding with its simplified currency exchange platform. This startup lets expats, international students, and businesses move money globally without hidden charges.
WeSwap is the first person-to-person currency exchange tool for travelers. Instead of going through financial institutions, you get money from real people.
If I’m an American looking for Euros, the WeSwap app matches me with a European looking for USD and we make the trade. WeSwap takes one transparent fee, and we go happily on our way.
These solutions are melting borders and opening doors. Think post-pandemic here, when normal life resumes. The time to find opportunities like this is now… when it’s furthest from most investors’ mind.
The easier it is to travel, work, and buy internationally, the more accessible the world becomes.
As an angel, being able to spot startups making this kind of impact is one big key to success. The 6 Sectors ebook can be used as your roadmap for finding your next big win.
It has long been a dream of science fiction that technology can enable instant communication across languages. Today, we are getting pretty darn close.
Waverly Labs has one of the first systems for accurate, real-time translation in conversation. By wearing an earbud and microphone you can speak to almost anyone in the world. The company’s app, called Ambassador, has three modes, Listen, Lecture, and Converse.
In Listen mode, anyone speaking within 8 feet will be processed and played back in the language of your choice. With Lecture mode, anything you say will be translated and played through your recipient’s earbud. Finally, the Converse mode allows up to four users to link together to have a seamless conversation.
To date, Waverly Labs has earned over $6 million in funding.
One of the best ways to fix language barriers on the internet is through translation guided by machine learning.
Unbabel uses machine learning AI paired with human language experts. Once AI automatically translates the text, human translators double-check to ensure it’s high-quality.
The Unbabel app works with more than 70 languages. The program can be integrated into WordPress, Salesforce, Zendesk, and more.
Unbabel has garnered over $90 million in funding and is already serving the likes of Microsoft, Under Armour, Pinterest, and others to translate content.
Speaking of… we believe the next Uber, Microsoft or Under Armour-caliber startup will come from one of the sectors we outline in our ebook.
The global tourism market is larger than ever (until recently, of course).
Unfortunately, many people have reservations about traveling to certain areas. Fear of the unknown, ignorance or real danger can prevent travelers from even considering certain countries.
Instead of venturing off the beaten path, most tourists will choose one of a handful of destinations. Much of the world goes untouched and untapped. Beautiful cultures with so much to give are overlooked.
Luckily, there are a few startups making travel to even the most exotic locations reasonable and safe.
Travel can be a dangerous endeavor for women. Going to a foreign country alone, for example, isn’t recommendable in many places. Rather than letting this fact push women out of tourism, one startup decided to change it.
Girls LOVE Travel is a social network for empowering women and other marginalized travelers. In this community, members can request help, find up-to-date resources, connect to other travelers and more. By working together, sharing, networking, and helping others, travel can be safe and inclusive.
The next startup, SafetyWing, is the first-ever international travel insurance platform. SafetyWing was made specifically for entrepreneurs and remote workers who travel or live abroad.
With this, millions of people who do their business internationally can remain covered medically. Getting sick on a business trip won’t set you back. If something happens, stipulations and sub-clauses won’t prevent you from getting compensation.
Another exciting breakthrough in the tourism industry is the use of virtual reality (VR), augmented reality (AR), and immersive video to attract customers.
Companies can give you a full-on virtual experience of — let’s say — your hotel in Guam before you ever book it. You can then scroll through a travel company or travel influencer’s page and see 360-degree videos of local attractions.
Tourism companies are embracing this technology, but startups are creating it. They use special cameras to capture the high-resolution, 360-degree footage and editors turn it into an experience that can sell tickets.
This takes some of the doubts and reservations away for tourists. You can know exactly what you’re getting before you buy it.
There’s no doubt that technology is improving education. Heck, the tech space makes up a big portion of the startups we believe will win in 2020.
Connecting schools and families to the internet creates incredible learning potential. Online lesson plans or simple educational videos are invaluable resources to schools in the developing world.
For higher education and professional training, online classes, simulations, and video mentoring have allowed many fields to flourish under even the most limited circumstances.
The more innovation that brings modern practices and tools to educational programs everywhere, the more connected and humane our world becomes.
One startup, PenPal Schools, has won many awards for its platform that brings children together.
This is a modern take on the classic pen-pal relationship. PenPal Schools allows students from over 170 countries to talk, collaborate, and learn together. A virtual classroom acts as the meeting ground between students and teachers. Messages are monitored and data encrypted, while children learn about reading, writing, digital citizenship, and social and emotional subjects.
With PenPal Schools, the unique skills and experiences of students are shared. Through this sharing, children on the platform get a global education.
We are more comfortable than ever traveling, working from home, or speaking to strangers on the other side of the world — and this is an amazing thing.
Innovation is leading us towards a connected and open world. New methods of communication, transportation, and education will continue to bring us closer together.
Angel investors should keep an eye on anything that breaks down barriers between us. Anything that connects the developing world to new technology is bound to bring in big bucks. There are huge, untapped markets everywhere just waiting for the right invention or idea to come along and make life better.
While angels fund these startups and reap profits, they shrink oceans and mountains, making the world smarter, stronger, and more inclusive.
Best Angel Investments of 2020 ebook: Be the first to learn which verticals are ripe for massive breakouts in 2020—and the easiest way to get your cut of the action.
It’s not all doom and gloom, ladies and gentlemen. Not by a longshot.
The startup world is alive and well! Sure, there are some sectors getting crushed… likely ones in the hospitality and travel industries. And others.
Then you have some that are just chugging along; business as usual.
Some are negatively affected by the market, while others just aren’t.
Privately-held startups are often more insulated from market fluctuation. Their fates are tied to new technologies and behaviors, rather than market weakness.
Coronavirus has caught the world by surprise. It’s disrupting work, education, and business everywhere. Schools are shutting down. Restaurants remain empty. Airports strike fear into the hearts of all. And yet — many startups are doing very well.
Some of them are moving forward unchanged due to their modern structure. Others are straight-up capitalizing on the trends caused by this crisis.
China is now a testing ground for emerging technologies. The country is struggling to keep up with the extreme demand for medical care, and technology is the answer. Meanwhile, businesses and governments everywhere are pioneering new ways to provide care, keep clean, and maintain economic stability.
I know for a fact that many divergent and novel ideas used out of desperate creativity will become essential fixtures in the future. This is why, as angel investors, we need to watch carefully to see what unfolds over the coming months and years.
So, what is the current forecast for business in the foreseeable future? Which startups and sectors are thriving? Can you find your next angel opportunity in this madness? Let’s find out.
Experts predict the novel coronavirus pandemic will have a lasting impact on the global economy.
Top venture capital firm, Sequoia Capital, wrote extensively on this subject. A fixture in Silicon Valley through generations of businesses, Sequoia is an expert on economic fluctuation. In the latest statement by the company, they compare the pandemic and its economic effects to the downturns of the early and late 2000s.
One of the most important sentiments offered was that “nobody ever regrets making fast and decisive adjustments to changing circumstances.” Those who avoid false optimism and take definitive steps to work through this situation will have the highest chance of survival.
This applies to angel investors too. In 2020 and 2021, you will likely have to change your investment strategies. Knowing where to look to find resilient startups — or better yet — ones that will thrive, is essential.
That’s why we’re here, to guide you through this and show you how to turn an unfortunate situation into a positive and profitable one.
One of the best things to be right now is a company that uses remote work and smart working practices. Even better — be a business that sells tools for remote work and smart working.
Everyone is canceling meetings, telling employees to stay home, and urging them not to travel. Children are forced to miss school. And yet, the world continues to turn. Business and education must continue as much as possible.
The best way to do this is through remote work technology.
One of the biggest winners of COVID-19 is video conferencing software Zoom. This startup has gained an unprecedented number of downloads in the past few weeks. To get more people on board amidst competition from other platforms, Zoom has removed video call time-limits for all users.
Meanwhile, companies that have used smart-working practices for years are coasting through the panic, unaltered.
BOOM, an Italian photography startup says they’ve been mostly unaffected by the situation. Even with the terrible situation in Italy, the BOOM team manages to communicate and work from home as if nothing happened.
At Viacash, a financial startup, and Europe’s largest bank-independent payment infrastructure, it’s business as usual. Being a young, modern startup means working from home was already an option for employees — and a popular one at that. Despite canceled meetings and empty streets, the startup continues to thrive.
Businesses that offer cleaning products are in a great position right now. Just imagine the sales Purell and Lysol are pulling.
High-tech cleaning guns are apparently a thing now. Using charged-particles, these weapons in the war against germs offer an alternative to sanitation.
The guns draw from canisters of special disinfectants. When the user presses the trigger, the device emits a delicate mist that covers and disinfects objects. Everything from electronics, to chairs, or workout equipment is game. It offers a hands-free, modern approach to cleaning well-touched surfaces.
Previously used only in offices, schools, or by transit authorities, these spray guns now have domestic appeal. Calls are coming in from everywhere to startups like Emist, EFS Clean, and EarthSafe.
Jeremiah Gray, COO of EarthSafe, says the demand for his disinfectant gun is now 100-times greater than in peak flu season.
Household cleaners of all kinds are doing well now. And in the face of viral fears, cleaning startup Dazz is managing to help the environment. Dazz sells cleaning tablets that offer an alternative to liquid cleaners. Spray bottles of cleaners are mostly water, which is inefficient. We have water at home, why pay for it to be sent halfway around the world? Cleaning tablets have all the same ingredients and properties as liquid cleaners, you just drop them into some water and mix.
Dazz sends you a reusable plastic spray bottle with your tablets, eliminating plastic waste caused by traditional bottles.
Robots are a perfect solution for overcrowded hospitals and hazardous environments. Anywhere you don’t want a human to go — send a robot.
This is by far the field with the most activity, especially in China. There has been an incredible demand for robots and a great turnout by tech companies.
A hospital is a bad place to be right now if you want to stay healthy. Unfortunately, healthcare workers must thrust themselves into danger to help the sick, putting themselves at risk for infection. Luckily, startups are lending a hand to make hospitals a safer place.
Danish company UVD Robots has special disinfecting robots perfect for use in hospitals. Using powerful, short-wavelength ultraviolet-C lights, these robots can disinfect entire rooms in a short time. The light destroys the DNA of microorganisms, killing them, rendering spaces and surfaces safe for human use.
For almost a month these robots have been used in Chinese hospitals. UVD Robotics is rushing to produce their models as fast as possible to send more. The current goal is to supply at least 2,000 hospitals and medical facilities in China alone.
Finally, in China, drones are being used to remind citizens to wear masks, spray disinfectant, and manage traffic. Antwork Ltd. is using drones to deliver medical supplies and transport samples to labs. XAG is converting agricultural drone models into vehicle-disinfecting ones.
With robotic help, it seems optimistic that we can manage this crisis and keep everyone safe.
The world is struggling to cope with the COVID-19 outbreak. Fortunately, ingenious startups are mitigating economic loss and protecting people from infection.
While the economy may be on course for a slow-down, many areas remain unaltered. Remote work software and smart-working practices will become more popular. Companies will begin to make this an integral part of their structure.
Med-tech, like new sanitation methods and medical robots, will not only thrive for the life of the novel coronavirus crisis. These advancements will become a fixture in medical care globally.
Lastly, automation through robotics and artificial intelligence will become more desirable following this pandemic. Businesses always want to mitigate risk, and with COVID-19 as a big fat reminder of how susceptible the workforce is to drastic change, automation will be a juicy alternative.
For now, all we can do is try to stay healthy and live as normally and happily as possible. But as angel investors, we can also look to the breakthroughs in China and across the world.
An emergency is an incubator for innovation.
The response to this outbreak can create many amazing innovations. At the end of it all, people will be safer, businesses more stable, and angel investors wealthier.
