Welcome to the Innovation Conversation, a podcast
about innovators, both in business and real life.
Hosted by myself, Ricardo Rescual and Harry McCona.
This podcast is also sponsored by ODEV Tech.
ODEV Tech is your premier software development
partner. Make sure you check them out at odev
.tech. The podcast is also sponsored by Notion
.so. Notion is offering six months for free for
new users. Make sure you check out our website,
thestoreofevents .co .uk to read in the software.
Hi and welcome to another episode of the Innovation
Conversation. Today we are joined by Pedro Bandera.
Thank you Ricardo. It is a pleasure to be here.
Thank you very much for having me. It's a pleasure.
Pedro, would you like to introduce yourself to
the audience please? Yeah, sure, sure. Of course.
I just started. I was a nurse before. And then
I started my own companies in the healthcare
sector, in online courses, also a company in
consultancy for innovation and agri -tech company.
And after those four companies, I started investing
as a business angel and I joined... Today is
my business partner, Ray Falcon, that we started
a group of angels in 2014. And then in 2009,
it called Red Angels. In 2019, we started at
Core Angels and we have now 12 angel funds around
the globe. And last year we started Y -Angel
to help angels to do exits and to learn a little
bit more about how to become better angels. So
that's me. I'm also the vice president for angels
at Investors Portugal, the national association
for early stage investors. VCs and angels mostly.
And so I'm the person in charge of angels there.
Wow. Okay. I have so many questions. It's actually
crazy right now. So this is the first time we
actually have someone in charge of the whole
angel network. So how did you get started with
that? I mean, how did you even came up with the
idea to launch your own angel network and how
did that happen? You know, I think the entire
thing about angel investing is that in a moment
in time, you are inspired by someone else. So
I think that's the way most angels start is because
somebody's also doing that and you just want
to follow those steps. So when I met Rui in 2013,
he was already an angel. I was not. I was, you
know, managing my companies, building new startups.
And when Rui said it to me and challenged me
to, you know, Did you think about becoming an
angel investor already? I said, I never thought
about it. So come with me. So that's how everything
started. So we started investing together in
the first startups and then we started inviting
more people to join us. And we ended up with
a group of 66 angels from 11 different countries.
How it all happened? I don't know, but it happened.
Do you think that having the background from
the startup world made a difference in your approach
as an angel? Yeah, for sure. I can see mostly
three profiles of angels that are investing with
us. So one is a serial entrepreneur that wants
to continue that entrepreneurial journey without
taking the lead, without the hassle of that.
not sleeping at night. So I think that, you know,
those entrepreneurs that want to be part of the
next big thing, but are supporting someone that
is leading and instead of leading themselves,
that's one of the angels profile. So I'm more
in that category. Then we have another profile
that is more like a C level of a multinational
company that is tired of that corporate world
but has some money in the pocket and wants to
get involved with innovation and learn about
new things and new ways of doing business and
then we have a third that is someone that made
money not by being an entrepreneur or vice you
know through salary but because They they come
from a wealthy family or because they earn money
with that cryptos or with poker or whatever So
so a lot of different things, but they are not
used to build companies. So those two profiles
profiles they come together and the beauty of
this is that when those different profiles are
Looking at the same starter. They see a different
thing And those different points of view are
very interesting to discuss between those different
profiles and, you know, learn from each other
because all of them bring different things and
that's interesting. So for me, in my reality,
just I was building my startups, my companies,
some of them startups, others were not that scalable,
if you want, but then when When somebody approached
me saying, Oh, do you want to invest in startups?
Why not? So why should I be focusing in my own
companies if I can, you know, help others also
to do those companies and being connected with
it. So that's the way it started. Interesting.
I know from previous conversations, you're very
hands on when it comes to the companies you actually
end up investing in. So it's not just. here's
the money, go and do something with it, go spend
it. It's actually, here's the money and here's
some advice as well with the money, right? So
that makes a big difference in these companies
I'm imagining. Yeah, you know, we usually say
that business angels are angel investors. You
know, in Europe, we usually call them business
angels. In the United States, it's called angel
investors. So I usually say business angel investors
are angels just to make it happen. You know,
usually the angels are are not investing only
money. Because if they are investing money only,
they are investing in startups, they can invest
in crowdfunding and it's only money, or they
can invest in a VC fund and they put the money
there and they delegate in a management team
all the world. So that management team will select
the startups to invest, will invest in the startups,
take care of the entire process, will mentor
the startups, make sure the startups grow. and
then we'll sell the startups and distribute the
results. And the only thing that those LPs, the
limited partners, the investors in a venture
capital fund, the only thing that they receive
is the end results financially and the reports,
quarterly reports, our annual reports, they receive
reports and that's it. So when you want to name
the investor, it is not about the money gate.
It is Of course that if you're investing in startups,
you want to sell your shares in the startup for
a value that is higher than the money invested
in. But this is not only about the end result.
It is about the journey. So it means that the
angels usually invest in the startups, the money,
but also the time, the expertise they bring from
previous experiences, but also the network. So
the angels can open doors, facilitate, you know,
a meeting with somebody that it is very hard
for the startup to, you know, get a call with
a specific person. And we can facilitate that
sometimes, you know, working with a lot of startups,
you end up facilitating the entire process because
you can share with the entrepreneur what happened
with other startups, you know, mostly more than
the things to do with the things Not to do like,
you know, don't go that path because I saw that
before. Um, so it is, it is not only advice,
but sometimes it's really hands on, like going
with the entrepreneurs to those calls, to those
meetings and facilitating the entire process.
So yes, it is to be an angel. To become an angel,
you need to put more than money. You need to
put the money, but you need to put the time.
your knowledge and your contacts to work. I'm
curious because, you know, all the SERPs I talked
to, they're always very confused on what criteria
do VCs have, what criteria do angels have. So
my question would be what criteria do you have
as a business angel and how do you select these
companies? You know, we can build a Congress
out of that, right? But, you know, it really
depends on your angel profile. So the first thing
I should say about angel investors is it is very
diverse. So you have angel investors that are
very motivated by the potential of that startup.
There are business angels that are excited with
the social impact the startups can produce. There
are angels that are They don't care about the
business itself, but they really they are really
looking for Incredible founders they want to
work with Because if you know if they are building
the wrong thing we together we can you know pivot
that and we can change the business to a Better
thing, but they are really looking for incredible
people that you know that different profiles
But I would say that It really depends on the
stage that you're investing in. If your profile
is to take less risk, usually the angels that
come from the corporate world, they don't like
the pre -seed startups because it is chaotic
and it is hard for a person that is used to work
with the no assumptions to work in the chaotic
world. You know, those angels, usually they prefer
to invest in seed and series A or pre -series
A. And in that case, you want to look to the
traction of that startup, to the proof in the
market, and you look more to the business side
of things. But for myself, I prefer to invest
in pre -seed. What I love is to create business,
not to manage businesses. So when a startup starts
going more into the managing side of things,
I usually get out because I don't like managing
companies. What I like is building new companies.
So because I prefer to invest in pre -seed, a
lot of times I invest in startups that are pre
-sales. So when the business model is not yet
proven, is not yet designed, I know we are still
figuring it out. So I love that stage. Because
of that, that's very, it is, but it is very funny.
You know, super exciting because you can really
influence. It can be part of it. If the business
is already running and you're putting money,
you can help on structuring the company and becoming
more organized. You can help with the governance.
You can help with sales, but all that is very
technical. You know, it's not strategic. So in
the very beginning, it is much more interesting.
You know, because it is more design thinking
if you want, it's more, you need to think about
what is needed in the world. You need to think
differently and that freedom of thought, that's
what excites me. So in the end, I end up involving
more other people than the business because I
have no business to assess. You know, there is
nothing to assess if there is no business yet.
And I guess you probably end up being a lot more
passionate about What are you investing in? Then
if you were to invest in later stage, because
later stage, you're concerned about your entry
point and your exit point. Whereas if you go
from the beginning, from the inception, from
the idea, then it's completely different. You
actually do believe in that idea strongly and
you believe that idea is going to make money.
So it's a lot of commitment from your end. Yeah.
I think, you know, if I want just to big bounty
out of money, there are much better options.
You know, to become an angel investor is not
the easiest way to make money. Because you need
to put a lot of work. You need to put a lot of
time. So you need to really commit with what
you're doing. So there are easier ways to multiply
your money. So if you want to engage in the angel
world, you should only do that. I usually say
to the entrepreneurs that don't start a startup.
If you can work for somebody, if you are okay
with working for somebody else, go there and
work for them. So if just only commit in with
building a startup, if you cannot sleep, but
not doing that, you know, only if you can, there
is a bigger force pushing you to do it. So that's
the same thing with angel investors only if you
really need that connection with startups and
entrepreneurs. If you need that to be happy,
that's the only reason for you to become an angel
investor. If you need that, if you like that
process, if you like to be involved in that process.
So it is a lot of work, but it is not only giving.
It is taking a lot, you know, because you learn
a lot from the founders. You learn a lot about,
you know, about new business models, new technologies,
you know, new ways of doing things. That's For
me, that's outcome also. The outcome is not only
financial outcome. That is also outcome. And
how, you know, when you're growing core angels,
because now it's in different countries, you
guys have tons of members. How was that journey
like? I mean, was it hard? Was it easy? How do
you even get started? Just thinking about the
end result, how do you even like came about the
product you have now? Not the product, but the
network you have now? You know, it is hard. But
not in a bad way. You know, I built companies
before didn't work though. Um, so, so, you know,
sometimes you build something that you really
believe that is the next thing and it really
doesn't work. It happens, but that's part of
the process. So, so when I started red angels,
I was not, you know, certain that it wouldn't
work. When I started core angels, I was not certain
that that would work. So now. last year I saw
that my angel I didn't know if uh it was uh to
uh to become a success or not so you know in
the end we don't know and that's why this is
so exciting because you don't know and you need
to really make it happen right you need to put
the effort to make them and that's the exciting
part of building new businesses so why don't
I start you know but in the end in the end I
think that all entrepreneurs in whatever business
if you are only focused on the financial success
you will not succeed you know it looks like a
common sentence but saying if you're really if
you're focused on the financial outcome it will
not happen because you will not have you will
not put enough effort to it so the only way for
you to do it is to have success is to is to with
a problem you're solving if you have the commitment
to solve that problem And if that is bigger than
you. So I'm not that passionate. I only work
with angels. But I'm not that passionate about
the change the angels can bring to the world.
I don't believe that the angels are the ones
that change the world for the better. What I
believe is that the entrepreneurs are the ones
that change the world for the better. Those are
the ones that build a better world. And I found
that One of the main problems of those entrepreneurs
is that the angels around them are not experienced,
are very amateur and they do a lot of mistakes.
So the best way I found to help those entrepreneurs
was to help the angels to become more professional,
to do it right. So the reason why I started Red
Angels, why I started Core Angels and why I started
Wine Angels is all because I want the angels
to to become better angels because the entrepreneurs
deserve it. So when you have that purpose behind,
everything is easier because even when the things
are not going in the direction that you dreamed,
you're still passionate about the problem and
you will find a way because you need to solve
it. I'm curious on one thing. What would you
divide? What do we sell to a startup when they're
looking out for angels to be on the lookout for?
What do you tell them? Hey, actually, you know
what? They're going to ask you questions, but
you also need to ask A, B and C questions. So
what will those questions be? You're referring
to the questions that the founders should ask
to the angels? Yes. How would they qualify them
as being the type of angels they would want to
work with? I think it doesn't work with the simple
questions. I usually talk about the probation
period. It is the same thing as asking, you know,
if you're selecting a female to marry, which
questions you will... It's not about, you know,
the specific criteria, right? It's the criteria.
What are the traits you look for? What are the
key elements you look for? In the end, it is
much more complex. So in the end, you don't want
to ask specific questions and analyze it, you
know, completely rationally, because that's not
the way it works. It is more dating that negotiation.
It is dating. So because it is dating, the founders
should first try to work with that angel. ask
for help if the angel is not interested in helping
doesn't have the time to help you if the inputs
are not good you cannot find a way to work together
forget forget that angel and go after another
one try it out first it is dating it is dating
for both sides right? so the angel should date
the startup and the startup should date the angel
and in the end only works if both are in love.
That's it. That's a really nice way of looking
at things. Okay, that's quite interesting. So,
you know, as a former business owner and obviously
as a business angel now, would you advise someone
to always go over for angels instead of VC funds
or actually depends on the start, depends on
too many things? It really depends. You know,
I should say that if you can do everything yourself
if you can build the next unicorn without angels
or bcs why should you look for them? you don't
need them, right? so if you can do that by yourself
with your team you know go move forward and do
it so you only need angels or bcs if something
is lacking is missing in your journey. So if
you go to VCs, usually the VCs, you know, there
are VCs and VCs, there are bad VCs and good VCs,
but for sure when you go to VCs, you need, it's
because you need a lot of money to be invested
to grow because you cannot grow without that
money. So to accelerate your growth and you know,
beyond money, Usually the VCs can help you with
the next funding rounds. They can help you on
structuring more like in the management side
of things like structuring more your company,
the processes, the hiring process, the sales
process, the governance, all that stuff, the
administrative side of the company. So the VCs
can usually help you a lot with that. When you're
looking for an angel, usually you're looking
for an angel in the early stages. That's because
the angels are better on helping you to discover
the business. They are better on that chaotic
moment. The VCs, they don't like that chaotic
moment because usually the people in the VC working
with you, they are not entrepreneurs themselves.
Sometimes they have GPs that are entrepreneurs,
but the person that will work with you is not
an entrepreneur So because of that is more technical
person. So when you when you're looking for angels,
you're looking for somebody to discuss strategy
with but Usually is not a person that will help
you So much in the technical things but more
in the strategic things So I would say that that's
normal that in the very beginning when you're
defining the strategy When you're searching for
a business model, the business angel makes more
sense. And when you already found like the product
market feed and you know what you're doing, but
you need to structure better things and you need
more money going to VCE makes more sense. But
of course I'm generalizing things because then
you have a lot of gray areas, right? And you
know, the question that I got asked a lot on
all the events I do and everything is, which
is, is there a better region to be asking? money
from or to be working from, because a lot of
people in Europe say, let's move to the U S and
I at least you just had a conversation with the
American founder actually moved to Lisbon. So
what do you think about this different ecosystems
and is there a better one or actually it's all
the same? Yeah, there is a better, there is one
that is better than all the others, which is
the community you're in. You know, the thing
is that Mainly if you are in the very early stages.
If you're raising a Series A, it is more about
your metrics. But in the very early stages, people
that invest in early stages, they tend to invest
in proximity. So sometimes I already invested
in startups that are different countries, in
other countries that I know of. But I end up
feeling that I cannot build a... I'm not able
to build the same type of relationship. You know,
that's why most angels invest in two hours distance
from them. Because, you know, you want that agility
of being with a person. So, if you're in the
band at the very beginning, I would say that
if I'm building a new startup now, I will raise
the first round in proximity, angels around me.
and the second round I'll try to have a mix of
local and international VC so then in series
A I'm raising internationally and I don't care
anymore about the local evasives so but that's
a process you know in the very beginning in the
first round I would say that the best place to
raise is in your local community It's a refreshing
approach because everyone always thinks that
the grass is greener on the other side. But in
reality, just start where you're based and then
kind of go from there. Yeah. And you know, talent
is really everywhere, everywhere, everywhere.
You can find talent in, I don't want to name
countries to put in different, you know, polls,
but you can find great entrepreneurs everywhere,
everywhere. there is no reason to focus in a
specific because when you go to crowded ecosystems
you not only find you know more you find startups
that are investment ready because they have a
better ecosystem to help them to become prepared
right but then you also find more investors to
invest in those startups so You're looking for
a startup that is approaching a blue ocean. Why
should you approach a red ocean? You mentioned
something peculiar. At least here in the UK,
you have these investment vehicles where it's
called the SEIS and EIS, as I'm sure you probably
know about them. And for the audience listening,
it literally means that as an investor, you do
recoup some of your losses if they do occur and
you also get some tax deductions. You primarily
invest in Portugal, but I know you also invest
elsewhere. Are you able to easily find these
mechanisms for investing in these countries or
actually did not exist at all? No. So the short
answer is not at all. So, you know, we now, because
I'm the vice president for angels and investors
in Portugal, I'm used to be in meetings discussing
with the government, fiscal incentives for angels
and so on. and we are right now doing that with
the current Portuguese government and we use
for example the UK example as a benchmark because
that's one of the reasons why investment in startups
exploded so much in countries like like UK or
Israel is because of the fiscal incentives so
yeah if you have a fiscal incentive to invest
in innovative companies instead of investing
in real estate everybody will put the money in
innovative starts but if the fiscal incentive
is there to invest in real estate everybody will
invest in real estate that's the way it works
so right now in Portugal we don't have a scheme
like the LITK has to really promote angel investing
we are working on that I think next year we will
have good news on that but It is always a fight
because we need to prove that this is strategic
for the country. Individually, you can move to
another country fiscally to have access to those
incentives. But I think it makes no sense because
I'm really committed to help the Portuguese startup
ecosystem to improve and to grow. So I really
want to contribute locally. It's funny we're
talking about the Portuguese ecosystem because
a couple of years ago, they actually changed
how hard it is or how it became quite easy to
create a company. It's still not as easy as it
is in the UK where you could just do it all online
and it costs 14 pounds and you have a limited
company. How big of a role does that play in
your day to day? The complexities of the legal
system when it comes out to investing, especially
angel investing. pretty easy. So, if you go to
Spain that is right there, it is much more bureaucratic
and complicated. So Portugal is not, uh, Estonia,
yet, in that sense. Estonia should, you know,
maybe is the easiest place, you know, to set
up a company and to avoid bureaucracy, but we
are not there, but it is pretty good, so I can,
I can't complain. So, Of course, sometimes you
have bureaucracy in different things, but it
is not anymore like we used it to like 10 or
15 years ago. It is much more straightforward.
I think Portugal improved a lot on that. So it
is much easier to do business in Portugal now
than it was 10 years ago. I think it is a good
place to set up a company. That's why, you know,
one thing I'm seeing is that a lot of foreign
entrepreneurs coming to Portugal to set up their
startups. Not only because of the startup ecosystem,
because, you know, Portugal became like a hub.
When you come to Portugal with your startup,
you will end up in an event that most people
are not Portuguese. So most partners are not
Portuguese, most investors are not Portuguese.
So it is like an international hub now. So I
think. It is not about Portuguese people anymore.
It is about the entire ecosystem that the Portuguese
people of course contribute to, but a lot of
other people contribute to. And now it is pretty
easy to do business in Portugal. Do you think,
you know, overall it became this very fluid ecosystem
where things move quickly and people are creating
a lot of stuff from your experience and from
the startups who you meet? Yeah, for sure. I
think, you know, it is always a Of course, if
you are in a crisis, the context is important.
If you are in a financial crisis, everybody starts
building businesses. When things are comfortable,
people get comfortable. Portuguese are very adaptable.
It means that we can adapt. If things are good,
we are good. If things are not good, we just
get our hands dirty. So that's how it works.
We want to do something. We we get it done. So
it's more it's more like I would say that it
is very fluid like a lot of people is doing Completely
different things. It was not like that, you know
the cultural environment in Portugal was like,
you know Go to a big corporate and find a good
job for the entire life. It is not like that
anymore You know people want to to build great
things and want to work for interesting companies
and not anymore that those still be courts I
guess they're more willing to take risks, right?
Which is a big, big difference. It's funny because
when I talk with, for example, people from Spain,
they always say the same thing, which is like,
they still don't have the mentality where it's
actually worth moving away from a big company
and a very nice salary and all the comforts it
brings to launch your own business. They still
say, why would you do that? You're so comfortable
here. Why would you go and risk it all to launch
a startup? But then that's because maybe there's
no culture of rewarding, I guess, risk. as a
whole, as a country. So that probably plays a
big role in it, doesn't it? Yeah, I agree. But
I think that, of course, the culture of each
country plays a role there. But I think also,
you know, the international context of the cycles
play a role. So in the same country, you can
see that culture is changing in five years because
the context changed. So You know, I think it
is not... We cannot say that this country is
like that and that country is like this. Because
things are evolving a lot. For example, in Spain,
that we mentioned before, in Spain things are
evolving pretty well. So, not only on the political
side, they have a new startup law that is favorable
for startups. Also, Portugal launched the new
startup law that is interesting for startups.
So, you know, in Spain, they are now, you know,
I think, getting back to it because they were
dipping on the entrepreneurial plan during a
lot of time, but they are now, wait, they wake
up and they are doing the right thing. So I'm
pretty confident on the Spanish ecosystem now
also. Do you think overall, is it still, a lot
of people complain that it's very hard to raise
money nowadays. Do you think it's hard or quite
on the contrary, it's moving around? The money
is around, right? And you see, you know, you
see in the reports, you don't see that the amount,
the total amount of money invested by angels
is not fluctuating a lot. So this economic cycles,
they affect more the VC investment. So you can
say that nowadays it is harder to raise series
B or series C rounds and you had a lot of down
rounds because 2018 -2019 the valuations were
crazy and then Covid came and all the uncertainty
and you know... The valuation came down because
the money was not so available, maybe in 2021.
It was a very bad year for that. But you know,
the angels were more stable because angels don't
fundraise. You know, the VCs are fundraising
from Elvis. The angels don't, the angels, you
know, not... It's not because the economic cycle
is changing that the Angels have less money or
more money, you know, the money is already there.
So, it is not changing that much on the Angel
side, so it is still, I should say, easy or difficult,
but not different from what it was before to
raise the first two rounds. I think after Series
A got more difficult to raise bigger rounds,
and I see one... One interesting trend is startups
raising two or three rounds and then doing the
edit instead of raising a lot of rounds because
you can, you know, when your startup valuation
is around 20 million, 50 million, you have much
more potential buyers, quires for your company.
When you are in unicorn, You know, the possible
acquirers are much less because all the others,
they cannot pay that amount. I see a lot of startups
exiting in the 20 million to 50 million interval.
And that's interesting because you can raise
two, three rounds and exit instead of fighting
for the long run for the home run. But it's,
it's, I mean, every time you see someone IPOing
and there's been so many cases of that. It's
very much hit or miss, isn't it? Yeah, there
have been amazing success stories, but there's
also been really bad ones where you just think,
this didn't work. Actually, mentioning work,
WeWork was, you know, it's a very well -known
example where the evaluation was crazy, but then
it went to Mark, it was like, hold on, you guys
are not a tech company at all. How can you be
justifying and saying you're a tech company?
Yeah. So that did actually happen a couple of
times already. So yeah, it's an interesting one.
One final question. which is if people want to
reach out to you and talk to you, and I'm pretty
sure you're going to get a lot of startups after
this, how can you do so? I think that the easiest
way is through LinkedIn. Peter Bandena, LinkedIn.
There are not a lot of Peter Bandena's around.
So kind of easy to find. Or through Red Angels
or Core Angels or Y -Angel. You can always reach
me. But the easiest way, the more direct way
is through LinkedIn. Peter, thank you so much
for your time. It's been an absolute pleasure.
Thank you very much, Ricardo. It was very cool
to chat with you. Very good conversations. Thank
you. The podcast is also sponsored by Notion
.so. Notion is offering six months for free for
new users. Make sure you check out our website,
the startupevents .co .uk to read in the software.
This podcast is also sponsored by startupnetworks
.co .uk. Startupnetworks, it's an online forum
where you can find all the resources you need
to run your startup. From grants to investors
to tips and tricks on how to be successful in
your startup. This podcast is also sponsored
by ODEV Tech. ODEV Tech is your premier software
development partner. Make sure you check them
out at odev .tech.