Sydney based entrepreneur Andrey Shirben is the most active angel investor in Australia and one of the most well regarded investors in the industry. Since the age of 19, Andrey has been investing in and building start-up companies, projects and ventures. To date he has invested in over 30 Australian companies, is a co-founder of Follow(the)Seed and has established SYD Ventures, a revolutionary company that invests in early stage start-ups. Investing early can offer good returns in the longer term but to mitigate the many risks and pitfalls, Andrey believes there are five key factors that are crucial for potential investors to evaluate.
Andrey recognises the importance of investing in people, rather than just ideas. A highly experienced team with proven execution capabilities is the first thing he looks for when assessing an opportunity. This is what he has found in his most recent venture as a founding investor of RiskWise Property Review. The company is revolutionising property investment as it is the first service to offer a projected future view of the risks and returns of individual properties in specific suburbs across Australia. This knowledgeable team have completed the technology and launched 6 months ahead of schedule and as such are currently undergoing their first funding round of $2.5 million dollars from venture capitalists and private investors, with a minimum investment of $50,000.
Andrey shares his top five tips on how investors can spot the next big investment.
1. Look for an experienced, driven team
“The most important criteria is to look for a team that has proven strategic and execution capabilities with demonstrated expertise in their industry. The success of a venture quite often depends on the ability of the founder(s) to attract a great team around them. Venture capitalists fund teams, not business plans as these plans can change day to day when market conditions change and new opportunities present themselves. Ideally, the experienced team should have diverse expertise, philosophies and talents to cross pollinate in a range of areas for the company.”
2. Spot a solution to a real problem
“A critical factor in start-up success is ensuring the business solves a real problem, not an imaginary one. Narrowing down the scope to a single problem with a simple solution that meets a gap in the market provides the best opportunity for success. For example, RiskWise Property Review identified that people purchase properties based on predictions, hot spots advice and hypothetical returns rather than looking at the facts. To provide a solution for this problem, the service created a sophisticated algorithm which combines dozens of property investment variables based on current and historical data and information to assess future risks and returns on specific individual properties and suburbs. This means that Australians can now make informed decisions on property investment.”
3. Review the long term vision and short term execution plan
“A business that can articulate their long-term vision and demonstrate the short term execution plan is more likely to succeed. It is most effective when the team can act quickly to short timelines to achieve their goals. In my experience, teams that adopt a ‘no excuses’ philosophy with big visions to become leaders in their industry in Australia and globally are much more likely to succeed and thrive.”
4. Ensure a solid understanding of the target audience/market
“A business should know who their key demographics are and how they can efficiently reach them. This includes identifying the age, gender, geographic location, socioeconomic status and other psychographic traits of the customer segments who are most interested in purchasing their product or service. Can they demonstrate they understand and can meet their customers’ needs now and in the future?”
5. Check it’s a very sticky product
“Having a ‘very sticky product’ can easily rocket a start-up to success and be worthy of investment. Find out what the product functionality is and the customer experience the business is offering. It’s also important to know the value of the product or service and how the business will earn money. It’s crucial to see if the company is focused on the future too, including upcoming movement in their industry. If they can’t anticipate the next big thing, then they’re destined to fall behind and may not be worth investing in. The most successful business owners are those who can foresee what’s coming and can adapt and evolve.”