Literally translated into Spanish, Deal Flow would mean the flow of operations. Eneko KnorrFounder of Hostalia or Ludei and now investor and CEO of AngelClub, took advantage of his participation in the New York Summit edition to make a speech clarifying that “dealflow” in the investment field must be understood as an investor’s struggle to become visible and to be entrepreneurial Promote ecosystem so that startups look to you as their first option for raising capital and don’t come to you after others have rejected them.
By becoming an investor in this first alternative, you can reach the best new projects, which are likely to be the most profitable. This is the goal of many incubators and accelerators, but also the goal of the most important venture capital funds, business angels and other investment companies. The more project or investment proposals they receive, the greater the chance of success. “At least a portfolio of 10 investments is necessary to increase the likelihood that an investment company will be a complete success and we can achieve the profitability of the entire portfolio,” is the opinion of Peter Bibalresponsible for the site long live startups and leader of the network innovate in València. “If you get that number of holdings you are very close and even surpass them, you can expect to make some interesting returns and even then no one can guarantee that but at least you will see the likelihood that this will be the case , significantly improving will happen,” he says.
But in addition to this key factor for a good investment, Eneko Knörr wanted to set up a fairly simple rule that, in his view, should be observed by all those interested in investing in startups. And it is that you only invest the money that you will never need. If the advice to invest in the stock market is that you think about it slowly and in the medium term, the recommendation here is to completely forget about the deadlines and, a priori, consider the money lost. This should be the stance of an investor in startups, given the high disappearance rate and abrupt evolution of many of them. “A startup can be worth 15 days and then zero the next day,” reads the warning. The incentive is the high profitability that can be achieved if successful.
Aside from attitude, there are other factors to consider before deciding on one project or another: the team, their ambition, and the scalability of the project. Also remember that the earlier you invest in the project phase, the greater the risk, but also the opportunity to increase profitability. Hence another piece of advice from Knörr to combine startups at different stages of the portfolio to make it as balanced as possible.
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Spain is the 5th largest European destination for foreign capital in startups with 800 million investments in 2017