He explained how to resolve differences between the startup and the angel and gave excellent examples to learn from. Finally, he shared with us some details of the Budapest startup ecosystem and the collaboration of angels and his unique perspective on it.
We asked Tivadar about his experience and thoughts regarding the angel. Enjoy our short interview.
Women Business Angels: What was the main reason when searching for an angel investor instead of applying for a bank loan?
Tivadar Limbacher: We were active in the startup scene in Budapest during the first few years. During that time I participated and presented at several conferences, competitions and events. We were not looking for funding yet, our plan was organic growth and bootstrapping. Applying for an “official” loan with all the red tape definitely never crossed our minds. At one of these events, the angel and his funding found us, and we decided that it will speed up our growth.
WBA: What were the expectations, and what was the reality when you started working with the angel investors? How would you summarize the evolution of your businesses’ and angel investors’ relationship?
TL: We had no idealistic expectations that the “big money” or funding will solve all our problems. A little more guidance or more connections would have been nice to get at the time. Of course, now we know that a successful angel investor’s time is more valuable than his/her money. We accepted soon enough that we were still on our own.
WBA: What are the most important values an angel investor can bring to a startup in the CEE region? (Based on your experience)
TL: That’s the beauty of it. Being an angel investor is much more flexible and can be tailored than being a VC or private equity or let alone a bank. Based on my experience the ideal angel investor in the CE region gives much more than funding. S/he is a board member, a mentor and a motivator even, but definitely a team member in some sense, not only the funding.
WBA: What would be your advice for startups when teaming up whit an angel investor? Are there any red flags/green flags you could share with us?
TL: There are a lot of red flags alright. The most important is when they’re offering only “mentoring”, “connections” and/or “goodwill”. Such help might be legit, but the value they’ll bring is far less than the overhead. It is risky to offer equity in such cases. I would advise discussing the exact expectations from both sides. Discussing the details helps transparency and mutual understanding.
WBA: Which role do you prefer: being a mentor or an angel investor?
TL: So far I’ve only tried the mentor role – mainly because of the above. When I take equity, I want to be certain that I’ll bring value to the table. It is also important for me that I can expedite the team’s success significantly. Being a mentor is less of a commitment from both sides.
For me, it’s a personal development: first mentor, then an angel investor.