Efficiency is key to avoid losing good startup deals
In the first year, the Danish NAP managed by DanBAN have received over 150 startup applications, created cross-border investor relations and trained 48 business angels, who has invested more than half a million euros into two Danish startups.
The Nordic Angel Program (NAP) is a three-month training program for Business Angels running simultaneously in Denmark, Finland, Estonia, and Norway in 2018 and 2019. The purpose is 1) educating angels so they become better investors and mentors for the startups 2) increase cross-border activity and 3) doing syndicated investment in European ICT companies.
DanBANs second NAP was launched at TechBBQ in September 2018 – the perfect event for hunting some of the best tech startups in the Nordics. Within two months, we received more than 110 applications from startups seeking funding.
The 110 startups applicants were cut down to 30 pre-screened cases, from which the NAP group evaluated in scores from 1-4, to find the final TOP 10 for a final pitch event. Following this final pitch and sparring event, the NAP group chose to go into due diligence with three of the startups, from where only one startup was selected.
A princess has many suitors
Out of the 110 startup applicants, the NAP group chose to invest 250.000 EUR in the company Obital, developing low cost software-based eye-tracking technology with a vision for changing the way people interact. Obital was chosen out of the 110 cases due to:
1. A strong team, two agile young founders and a pair of highly experienced eye tracking specialists.
2. Great opportunity in the assistive technology market.
3. Prototype with the potential to significantly impact quality of life for the disabled and their families.
Many investors still tend to think, that great opportunities come along without doing the legwork. This is of course exaggerated, but the point being, if you want the princess, you need to step up your game, because a princess has many suitors.
This was indeed the case with Obital, which is why we are very excited to share the news that the second NAP investment is Obital. Obital received total funding of 400.000 EUR, where the 250.000 EUR is from the NAP group with Sune Alstrup and Kim Schrøder as lead angels.
How does one startup handle 23 investors?
We asked one of the lead investors Sune Alstrup, why Obital chose to accept funding from the NAP group, and what the group is bringing to the table, to help Obital succeed.
What was your role as a lead investor, and why is the lead role important?
During the initial phase the lead investor role was about identifying the best startups in the runner upfield, and later in the process, my role was coordinating a proper and fast due diligence process of the top 3, ultimately resulting in an investment offer to the best company. The best startups out there will get other offers, which is why it is key to make decisions efficiently to avoid losing good deals. Despite being a group of 23 individual angels, the startup should have the sense that they are only negotiating with one angel. Internally towards the syndicate, I believe the main task of the lead angel is to make sure nothing stalls the decision-making process, and that decisions are based on a proper level of due diligence.
What skills are the NAP group bringing to the table, that will help Obital succeed?
The syndicate and Obital chose two lead angels to become active board members in Obital. Kim Schrøder will act as the advisor for the CEO of the company based on his strong management experience, and I, Sune Alstrup will be focused on advising the team on product development and IP due to my background and domain knowledge in the eye tracking space.
What up-sides comes from cross border investment in the Nordics, and why do it in the first place?
Denmark is a very small pond to fish in, so if you are an investor, you should fish in bigger ponds, and due to strong cultural and structural similarities between the Nordic countries, the new Nordics is the obvious place to begin your fishing outside of Denmark.
Fast, precise and thorough from due diligence to the signature
We also asked one of the founders, Frederik Østergaard Neble from Obital why they chose to apply for the Nordic Angel Program, the gains of cross-border investments and challenges getting funding from a big group of business angels.
Why did you choose to apply for the NAP program?
Obital were looking to raise our first real capital and were investigating the Danish funding landscape. We’re still quite early stage, which makes it important to get the right competencies along with the investment. The NAP program came up, and the combination of capital investment and the experienced people behind was very attractive for us. Getting people with an entrepreneurial background or knowledge from the industry is invaluable for us, and we applied right away.
What was your expectations and did they match the reality?
We did not have any particular expectations for our cooperation with the NAP syndicate. However, we were pleasantly surprised by the professionalism we were met with. The angels were well prepared before our presentation and asked challenging and relevant questions. It was a sign of understanding, interest and true commitment, which for Obital also was an important factor besides the money.
What has been the best working with the NAP group?
The will to act and a low level of bureaucracy. Raising capital is usually a time-consuming process. But working with the NAP II syndicate was a pleasure. Fast, precise and thorough from the due diligence to the signature. Each Angel started working on a different aspect for the due diligence, and the syndicate had come to a conclusion within very few days.
What has been the most challenging working with the NAP group?
Agreeing on terms is always a challenge. However, NAP II didn’t complicate it more than necessary, and both parties ended with a good deal. In addition to the investment from the NAP II syndicate, Obital was raising a bigger round and the round did also include a venture fond and external angels besides the syndicate. NAP acted as lead investors without any challenges and made the process fast and transparent.
Why should other startups apply for the next NAP program?
NAP is a great opportunity to take the skills and network of 23 angels and merge them into one representative in the CapTable. NAP is also focusing on getting international angels on board, so the cross-border element will hopefully be very valuable to us, once we go international. Besides the investment, presenting for the NAP syndicate is a unique opportunity for exposure and practice of presenting your business case in a “Dragon’ dens” style and getting feedback from experienced people.