Head of Angel Investment Foundation says that with “critical resources” in hand, business starters can easily address capital and social network issues.
What are “critical resources”? Angel Investment Foundation co-founder Ivan Shum explained, “They can be technologies or data. Something that lacks the downstream support required for commercialization.” He points out that when business starters approach angel investors, the most important thing is to demonstrate what unique critical resources they possess. “For example, if you want to set up an online store that caters to everyday needs of the Tai Po community, you have to tell me is there really such a market demand? Are there problems in the brick and mortar market and consumers can’t get what they want unless there are online stores? Or is it very difficult to get around in the community? I don’t have the answers to these questions. That’s why you have to tell me.”
Understanding the market and answering investors’ questions
Shum further points out, “Business starters can acquire this information in their own time because they don’t need any investment at this stage. They can also build databases and social networks in the process. This information will become their critical resource in the future.” He says as long as there are critical resources, business starters can proceed even if they don’t have capital, technology or an experienced business management team. The Foundation can provide everything. “The Foundation can identify different types of investors. What’s important is whether there are critical resources.”
Shum says Angel Investment Foundation has invested in about 20 incubation projects of various sectors to date. “These starters have one thing in common. They all have critical resources but fail to materialize their business ideas. Our job is to commercialize their ideas and bring them into play. That’s what we want to do.” Most business starters approaching Shum belong to the creative technology sector. He says, “Admission threshold for technology projects is relatively low. The whole process can involve just a few people, which is a much lower threshold than that for setting up a large restaurant or factory.”
The unique angel investment foundation
A former venture capital fund manager, Shum is highly experienced in reviewing round A and round B seed fund investments. He set up his own business two years ago and co-founded Angel Investment Foundation with other investors. “We wish to invest in early-stage, pre-round A projects so we can help business starters plan and engineer their projects more successfully.” Since 2014, Hong Kong has seen a big startup wave. Indeed, new startup projects emerged in great numbers just before and after the establishment of the Innovation and Technology Bureau (ITB), and more and more resources are now available to support business starters. However, Shum noticed that very few investors in the market would make effort to restructure and plan every project and engage in reinvestment. “Traditional angel investors expect business starters to have a complete team, and the proposals must be carefully thought out and confirmed to be viable. Our foundation does it differently. We try to recreate the critical factors of different projects to help proponents with business planning so they can improve their projects.”
Angel Investment Foundation currently offers funding schemes and interest free startup loan schemes. Shum says, “What we want most is to let incubation projects stay focused on their own resources, advantages and professional work. We’ll handle all the rest. The Foundation can provide capital and other supports. This engagement in both investment and management is different from the ordinary angel investor approach. And that’s the reason why business starters like us.”
Shum feels that many startups fail because the entrepreneurs have to deal with other matters while trying to concentrate on the project itself. “They have little energy left for the project because handling all these matters are draining them. The company’s growth is sluggish as a result.”
Effective use of resources and a dynamic approach to development
In response to those unsuccessful cases, Shum suggests flexibility in all investment projects. “Incubation projects that we invest in can be shaped into other related projects, and the client bases and resources we introduced can also be transformed to create other products. For this reason, even if the Foundation’s investment projects fail or sustain some loss at the end, we can still readjust our strategies to promote the development of other products.”
