Business angels (or angel investors) are entrepreneurs who dedicate their knowledge, experience, and money to innovative companies they believe have great market potential. They invest in projects at a fairly early stage, already in the pre-seed or seed phase of the project. By doing so, they take on extremely high investment risk, since there is a significant probability that the project will fail. On the other hand, there is also a strong possibility of multiplying the invested amount many times over, precisely because of this high risk.

The most common form of investment by business angels is a convertible note (convertible loan), which means that the business angel provides a loan that, if certain conditions are met, does not have to be repaid but is instead converted into an equity stake. The convertible note is today the predominant form of investment and is a fairly standardized document, with its most important elements being the amount, maturity date, discount, interest, and other special conversion conditions. The conditions in a convertible loan typically come due during the Series A investment round, when the amount invested through the convertible loan is converted into an equity stake in the company in Croatia or, more often, abroad.

In angel investing, the traditionally dominant form was the equity deal, in which, in exchange for the investment, the business angel immediately received a minority share in the ownership of the company and was entered into the court register. This proved to be a slow and rather bureaucratic process. With a larger number of investors in the company, particularly in Croatia, situations arose with 20–30 minority co-owners in a limited liability company (d.o.o.), which made further ownership decisions and changes impossible. This model also enables faster buyout of shares through the buyout of the convertible loan in some situations, a more favorable tax status for the investor in case of failure, and so on.

The exclusive way for a business angel to earn a return is by selling their investment, in such a way that, once the company has developed, a strategic investor is found who will buy out the ownership from the founders and from the investors – business angels and VC funds. In rare situations, during new investment rounds, it is also possible for VC funds or, later, PE funds to consolidate by buying out the investments of some or all of the business angels.

How much is the project idea itself worth? – Usually nothing without its high-quality elaboration.
How high is the valuation of my startup? – The higher the level of development, the higher the valuation will be. The valuation is subjective and depends on the decision of the startup’s founders on one hand, and on the category of investors the founders are approaching on the other. Business angels are the first step, and a lower valuation is expected here than for the next steps – the seed or Series A rounds, in which VC funds invest.

In rare cases, it is the technology it possesses. Most often, the most valuable component for a startup’s success is its team, which will turn the technology into a finished product or service and bring it to customers, thereby generating revenue and business success for the company. An excellent team consists of multiple people; one person is not a team, because if that person is, for example, on sick leave, then there is no company, etc. The ideal team must be skilled in the technology it works with, in leading the team and the company, must have an excellent understanding of the market and the competition, and must possess knowledge of marketing and selling the product or service it offers – and that is why all of this requires a multi-member team.

An individual angel can invest from as little as €10,000, but investments are usually in the total amount of €50,000 to €250,000 per individual team. Most often, multiple business angels invest together through a syndicated investment, and in special cases when higher amounts are needed and the project is at that stage, they can join forces with other angel investor networks or with VC funds.

The process is described on our website. In short – you need to send us a pitch deck (presentation), which we review, and if we think we can contribute to the project, we invite you to a live presentation under the established conditions. At the presentation we get an overview of the details of the project and decide whether to start discussions or not.

We do not sign NDAs
We do not do individual presentations, business consulting, or training
We do not provide loans
We do not invest through SAFE notes