Elected European Business Angel of the Year in 2015, Brigitte Baumann is a businesswoman of many talents. She is the founder of Go Beyond Investing, a democratized Angel Investing platform for investors at beginning and expert levels alike. The platform regroups more than 800 investors specialized in helping people who plan to invest in startups and build a solid portfolio—the platform was, among other recognitions, featured in an HBS case study. She also took one of the leading roles of the Rising Tide Europe program, in which 200 women from over 30 countries came together for a common goal: financially educating women, investing in European start-ups, and creating a network. She is President Emeritus of the European Business Angel trade association (EBAN). We met Madam Baumann during her visit in Luxembourg while she was delivering a workshop organized by ESIL (Early Stage Investment Launchpad).
(Featured Image: Brigitte Baumann, founder of Go Beyond Investing and European Business Angel of the Year in 2015 / Image Credit © Go Beyond Investing)
Why did you become a Business Angel?
Before anything else, I was an intrapreneur at American Express – helped create Expedia and Gemalto, two companies that, during the time I worked for them, entered into the stock market. That was my golden chance to see from the inside the success of two companies that are now highly respected. I then wanted to take hold of my personal values by using my savoir-faire and skills, which I had accumulated over 25 years. It was at that time that I discovered angel investments, and I started to invest in companies whose company values were in line with my own. Today, I invest between 2 and 10% of my net worth in projects that are close to my heart and in which my professional experience brings real added value to the entrepreneurs.
“I really do believe—and it’s proven—that the development of female entrepreneurship is happening between more and more diverse investing groups.”
What do you recommend to those hoping to become a Business Angel?
You need at least two good reasons. One alone won’t cut it because it’s quite a steep risk to take. Let’s take deep water diving as an example. If you practice it without knowing what you’re doing, it can be a double-edged sword. While It could feel great for you it is also dangerous because you’re not prepared or equipped to handle the situation. Investing is a little bit like deep water diving. It carries a risk. You feel enjoyment immediately with your first investment but you also enter a high-risk asset class.
The first reason is often: money. You really need to understand the fundamentals, even the success stories, of financial investments because we’re talking about a personal wealth—but also about the nuances such as interest rates, taxes, etc. The more you invest, the more you feel the urge to take risks. But when we see our interest rates climb, we see smaller returns on investment.
The second reason could be one of many. Investing is an excellent way to learn, to come face to face with new sectors and to give back to Society, with a capital S, that which it gave us, and of course to develop on a personal level.
When I meet people who want to invest for the first time as a Business Angel, I generally give them three pieces of advice. The first is to start with small amounts. The second is to diversify their portfolio from the very beginning into a min of ten investments and to have enough money to reinvest in the projects that succeed better than the others. The third is to join a community in order to meet other investors, build up good skills, and augment your chances of personal and financial success. Again, just like deep water diving, you don’t jump in without equipment!
You want to increase women’s participation in Angel Investments. Why is that?
For this I have again three reasons. The first is that women are now making more and more money, and thus have a heavier financial power in steering society. They are looking for financial literacy to best manage their money. The second reason is that angel investing is the perfect activity for women because, whether they are busy as a professional or a stay-at-home mom, investing can require as little as three or four hours per month. The third reason concerns those who wish to become entrepreneurs and want to acquire deep financial knowledge. Being a Business Angle is the best school out there.
I really do believe—and it’s proven—that the development of female entrepreneurship is happening between more and more diverse investing groups. If we want women to have similar chances of success as much as men, it is our role to help them financially and put them on our shoulders.
“Being a Business Angel is also a way to accept losing money. It’s for this reason that financial education is so important.”
You bring up the idea of investment groups. What is the tendency in the Business Angel field today? Investing alone or collectively?
As I was saying a little bit above, it is absolutely crucial to build up a portfolio of at least ten investments and have money to reinvest one or two times in companies that develop well, you will quite honestly have very small chances of making money.
In the same way, entrepreneurs want fewer investors on their side because management can become very difficult, especially when you’re raising money or trying to exit.
The first tendency is what I call, in English, syndicates. You need at the same time big investments and few investors, such that the average ticket remains low. The only way to respond to this need is for investors to pool their individual investment into one.
That is what I mean by syndicates. In this way, there is a group of investors that enter into the deal with someone who coordinates the relationship with the entrepreneur.It’s just easier for everyone that way.
The second tendency is what I call bundling: that is, carrying out several investments as a group of investors. It’s a strategy for creating a portfolio of investments in a fast way and with limited funds. Personally, I have had as many as 35 simultaneous investments. It was too much—I admit. Today, with Rising Tide Europe, I reinvest more in a portfolio that’s already very well managed.
Here’s the big question: can you really make money as a Business Angel?
If you invest in a project from the very beginning, you are married to the entrepreneurs for five to eight years! If you team up with other investors and invest a little bit later in a project—that is, once it’s already going a bit—you can scale down that period to three or five years. Nevertheless, the general average is 5 years. For financial benefit, we did a study on the 300 members of Go Beyond. On average, the annualized return of their investment portfolio is 15%. This is a great achievement despite the fact that a number of individual investments die or return little. External studies show that 40% die, 40% break even, and 20% make money. Being a Business Angel is also a way to accept losing money. It’s for this reason that financial education is so important.
This article has been published for the first time in SILICON Luxembourg Magazine