After months of deliberation and planning, Portugal saw the creation of a new association representing angel investing. Importantly, Investors Portugal represents the whole early stage investing ecosystem, at a crucial juncture in the Portuguese economy. We spoke with its founder and co-president, and Board member for Business Angels Europe, Joao Trigo de Roza. Read on to understand his perspective on the angel-VC relationship, and why incentivizing angel investing is so crucial.
Towards angel investing
“Around year 2000 I was CEO at Portugal Telecom.com and had the opportunity to manage a dotcom holding in the telco industry with operations in Portugal, Brazil, China, Africa and the America’s. This was the first time I got in touch with internet entrepreneurship community. During that period, as a corporate investor, I learned a lot with these startups. After quitting the corporate world, during a trip to US, I was introduced through a friend to the Angel Capital Association, and participated on their Congress in NY. It was an epiphany moment. I discovered that there is a role for individual investors, to help entrepreneurs and startups. I thought, why not bring to Portugal the idea and concept of angel investing. Back to Portugal I invited some friends, to found the Business Angel Association, APBA, that today is Investors Portugal.”
Bringing angel investing and VC together
“Historically there were two institutions that represented the Business Angels in Portugal, FNABA and APBA. Investors Portugal is a new institution that brings together the two. In the last two years we build a constructive dialogue between the two organizations, starting with small steps, like putting together policy papers. Very quickly we realized that we shared the same values and purpose. The Covid19 pandemic accelerated this process of collaboration and we finally decided to join forces creating a new organization, Investors Portugal.
Investors Portugal is larger than sum of previous organizations. The name signifies our goal to include VC and corporate VC’s. We aim to represent to whole early-stage investor ecosystem in Portugal. We are aware of the importance that this community should be well represented.
It makes sense to forge stronger bonds between VC and angel investors. For a VC it’s important to know where the deal flow is. At the same time, when an angel invests, they need to know what the requets are from the VC who is aiming to make a follow-on investment. Things like writing a term sheet that is compatible with future investors is something we can strongly improve. That is done through making connections and fostering dialogue.
Investors Portugal will invest in capacity building and training to build a common understanding of the evolution of the early stage investing business.
This is key, seen as especially nowadays this space is like a ‘spaghetti’: angels are going late stage, VC going early, and they find themselves in the same round.”
“As we have now put the phase of creating the Association behind us, and ready to deliver our value proposition to our members. The absolute priority is to start meeting each other in person again, after more than one year of lockdown.
We are planning several initiatives, like capacity building, advocacy of the Business Angels, promote investment syndication, collect and organize market information. At same time we intend to be involved in international activities, like the Business Angels Europe Club for example, to focus on aspects like cross the border investments in Europe.
Signaling right ways of allocating capital
“Policy wise, our priority is tax. Why tax? Tax is a paramount signaller to the economy by the government. There are lot of barriers for us to enter this risky activity of investing. Buying and refurbishing apartments in Lisbon still remains a great investment and is very fashionable. But we believe this is not the only way of allocating capital. Government should signal fiscally that there is an important asset class, start-ups and scale-ups, where money should be allocated to guarantee the future growth of our economy.
We strongly believe in the British model ((S)EIS), which remains the best benchmark we have in Europe.
Although we have the ear of the policy makers, we need to keep engaging with them, especially on the complexity of the details design and implementation. It is not only important to have a law on tax incentives. It is more important to have a law that is practically viable.”
The future of angel investing
“Portuguese ecosystem is a thriving ecosystem, with already 5 unicorns. That is due to very strong entrepreneurial and investment activity, together with excellent accelerators and great universities who educate our students in management and entrepreneurship.
I believe that in the next 5 years, many things will happen. Maybe more scale-ups will achieve the status of unicorns, These unicorns provide visibility to the ecosystem , but also there are many others ventures that are contributing for development of a high value added economy.
In general, the angel market will be much more critical at European level and may develop very fast. Commercial banks will continue to be under pressure due to the macro-economic environment and are not prepared to take the risk to invest on the early stage.
Angel investors and early-stage VC’s will thus have an ever more important and critical role in our economy to support startups and the sustainable and successful growth of these companies.”