We sat down with Romain Hoffmann, Board Director and Head of Investment at the Luxembourg Business Angel Network (LBAN), to understand his role in Luxembourg’s startup scene and what he looks for when scouting new investment opportunities.
Image Credits: Mich Jacoby / Silicon Luxembourg
Romain, how did you get started with angel investing?
In 2017, I attended a startup ecosystem conference at Spuerkeess with some of the players like LBAN and nyuko. I saw Salonkee, a startup, pitch that night and I was so impressed with the founder and business model of this startup that I decided to become a member of LBAN the next day. I invested a year later in this company when they were looking for funding.
Why did you decide to join LBAN?
At this conference, I discovered the existence of LBAN and they made a great pitch as well. They awakened a part of my DNA which was entrepreneurship, being a founder myself of a software company at the age of 17. So, I rediscovered my passion for startups in 2017. Moreover, the time was right because stock markets were not showing interesting investment opportunities anymore. Therefore, it was convenient to allocate alternative assets into the portfolio.
Tell us about your role with LBAN.
To answer this question, I have to go back in time. In 2019 and before, LBAN was organized differently. We didn’t have our onboarding platform and the only way to engage as a business angel with the founders was to be present at our pitch events. Hence, some of our members have missed out on opportunities and it was also difficult to access a more international deal flow. At the end of 2019, LBAN has decided to switch the deal flow to a platform to which startups can apply and to which each of our members has access. My role was created in early 2020 (just before COVID-19) by joining the LBAN Board and becoming the head of the newly created Investment Committee. Today, we have three very active committee members. Our role in a nutshell is to scout new funding opportunities, bring together our angel community on deal opportunities, lead the due diligence processes, provide legal & expert support, build our standards and ensure that LBAN appears to third parties as acting as a group, despite not being organized into a fund structure. But more on that next year.
“Our business angels are generally experienced business owners, serial entrepreneurs and professional investors, typically aged between 40 and 65.”
What type of projects is LBAN looking for?
We are sector agnostic and look for innovation and disruption from great founding teams. The bigger the problem they solve, the better. We focus primarily on seed and pre-series A funding with some exceptions, and primarily in B2B (70%) and B2C (20%). Typical platform models (B2B2C) are underweighted as they are more difficult to scale, with founders needing to focus on both sides of the equation to maintain balance.
What are some of LBAN’s recent investments?
We have had our most active year so far, thanks to a high-quality deal flow. In 2021, we have completed 11 new investments to date. In addition, there have been two follow-on rounds. More than 50% of the funded companies are incorporated or have chosen to be incorporated in Luxembourg. Our investment activity can be followed via the LBAN page on LinkedIn.
How does LBAN support startups to accelerate further?
Our business angels are generally experienced business owners, serial entrepreneurs and professional investors, typically aged between 40 and 65. We don’t just fill the equity gap, but actively advise and support our portfolio companies by mentoring and coaching them through the various aspects of running and growing a successful business. The mission of angel investing is to help seed stage companies be attractive for the next phase of Series A funding, to reach the required product-market fit and to have predictable, repeatable and scalable sales & go-to-market processes.
Many diversity gaps exist in tech startups. What does LBAN do to support minority entrepreneurs?
Luxembourg is an example of a country that brings together people from many different cultures, languages and viewpoints. We at LBAN have more than 100 members of 17 different nationalities. We support quality teams, and team diversity is one of the main keys to success.
“Be clear and as short as possible in your taglines, messaging, pitch decks, about what you are doing, how great you are doing it and ultimately – why you.”
What is your impression of the current startup ecosystem here in Luxembourg? Are you seeing any trends?
We have an ongoing relationship with the various players in this ecosystem through our Network Committee. We see a growing willingness and a greater convergence of actions taken to attract quality startups to Luxembourg. For example, Startup Luxembourg is a recent initiative initiated and supported by the Ministry of Economy, to promote Luxembourg to startups and investors. The Luxinnovation programs, such as Fit 4 Start or R&D, are essential elements as well. Not to mention a specialized local press (including Silicon Luxembourg) helps make the ecosystem more visible through articles and events. As a consequence, we acquire new members and see our deal flow gaining in number and quality.
Do you have any advice for new angel investors?
Join LBAN and get involved in our various initiatives. In our community, new angels have the opportunity to learn from more experienced ones. We recently implemented a buddy program where we share learnings with new angels. We also offer special training programs and have regular lunch & learns and networking events.
In terms of general advice, investing in startups via a well-diversified fund instrument should be one of the building blocks of any solid investment portfolio. Higher returns always come with higher risks – so only allocate budgets that you can afford to lose.
Do you have any advice for startups who are looking to raise funds?
First impressions count. We are listening into our network, assisting partner pitch events, and following activity on social media. Be clear and as short as possible in your taglines, messaging, pitch decks, about what you are doing, how great you are doing it and ultimately – why you.
And finally, I recommend joining our LBAN platform to get visible to our 100 business angel members.