KUALA LUMPUR (May 24): To angel investors, the moral compass of a startup founder is more important than the product or service, shared the panellists at Angel Investors Hot Seat panel at the DisruptInvest Summit 2024.

To Audience Analytics Ltd chairman and managing director Datuk William Ng, integrity is one of the most important criteria when it comes to deciding what startup to invest in.

“It takes a very strong entrepreneur to be truthful and to admit when they are not doing well,” said Ng. He also stated that on top of integrity, the owners must also be willing to learn and listen to advice. Ng recalled that there were times when he turned down startups with potential but refused to invest in them because they refused to listen.

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Entropia founder Prashant Kumar agreed on the importance of the integrity of the owners of startups. “Without integrity, how can I trust this guy?”

Prashant shared that he does not look just at the owners of the company, but the entire team as well, and he looks to see if the team can accomplish what the startup said it is setting out to do. He used an example of an education centre but no one in the team has a background in education.

Beyond the human aspect, angel investors also note the business sides they look out for. Prashant said he does not bind himself to investing in just one industry but looks for startups that have gone past the customer discovery phase, startups that know their customer base, and that are not trying to reinvent the wheel.

“For Malaysia, a company that has a product that no one else has come up [with] is very unlikely… I look to the West for precedence,” he said.

Juwai-IQI Holdings co-founder Georg Chmiel, who has invested in many successful e-platform companies, three of which are headquartered in Malaysia, saw the mentality of “I want to build a unicorn” as a red flag. He recalled many pitches of startups that all wished to be a unicorn, but he said that is not how that works.

“Understanding of the industry is needed. How can you build a logistics company [for example] if you don’t know anything about logistics? A fresh perspective can lead to repeating the same mistakes,” said Chmiel.

Ng said that on the business side, he only invests in businesses that already have a bit of traction, and he doesn’t go for businesses still in the idea phase, as long as the startup has some sort of revenue. But what he thinks is the most crucial is their plan in tackling the market.

Ng noted that he often gets pitches where the startups have researched what kind of market gap or potential there is. But when he asks how they plan on capturing even a little of that market, it often gets them stuck. And that is what he looks out for.

“Angel investors are coming in with more risks than even ECF [equity crowdfunding, where the public can invest,] so [angel investors] want to know more to justify their risks,” Ng said.

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