An excellent event on Wednesday at Garage Society, hosted by Angelflow and featuring Sean Greenhalgh, TJ Yen and Lui Tong. Turn out was immense - I am reliably informed they had to deny some people! - and the content was meaningful. In my experience, the angel situation in Hong Kong has seemed dire. Hong Kong gives off the odour of a risk-averse Series A town despite the push to encourage start-ups here. That never made sense to me, as Hong Kong is still one of the best jurisdictions in which to start a business. Both TJ and Lui gave meaningful insight into the angel process, how they approach risk and reward, access deal flow, and a little history into how they ended up as angels. I made plenty of notes in the form of Notion to-do items as I prepare to return to the gate later this month on an investment push (now I have a product in the market, entirely bootstrapped). There were some things I thought were missing. I would have liked a little more nitty-gritty on subjects such as typical investment amounts and valuations and, for syndicates, how these deals are structured, for example, whether they use Special Purpose Vehicles. This event is being held because Sean, whom I am privileged to consider a friend and a named advisor to meed is launching Angelflow, a platform that allows for the easy creation of angel syndicates. This is beyond welcome. We need more early-stage pathways for businesses with investment structures that allow for inherently greater risks - and rewards. If Hong Kong is to be a start-up town, then it needs more genuine start-up capital options. Photo courtesy of Eric Tong.
This was a fitting summary, Phil Ingram, and definitely agree that it was an excellent event. I also agree with your observation that Hong Kong, despite its current issues, is an ideal place to start a business. Singapore may have a slight edge due to its government's focus and dedicated funding but I'm confident that Hong Kong will catch up soon as our startup ecosystem matures. Sean Greenhalgh, when will you organise a follow up event on valuations?
I wish I was there as well
Startups, Technology and Angel Investing.
5moThanks for the kind words Phil Ingram! I do agree that time went on and sad we couldn't dig deep into startup valuations - but honestly this could be a session in itself which i'd be happy to run if the demand is there! But the main thing is in Angel investments the data simply isn't there to make a very good formal valuation as many companies are pre-PMF and some even pre-revenue. Some simple rules of thumb that people use are 10x revenue or as i'd seen many times a while ago just using a US$1M valuation as a simple line in the sand (though this is rarely done anymore). But what is truely the case in tech startups is the valuation is literally a negociated amount of "how much it's worth is how much is someone willing to pay?". Instead in Angel rounds we try as much as possible to put off doing any formal valuations which is why investment structures like SAFE notes (most common) and convertible notes. These put off the valuation of the company until the next equity priced round where hopefully at that point there are more figures and track record to be able to make a better informed valuation.