Transcription for Sascha Badelt
Jeffery: Welcome to the Supporters Fund Ask An Angel. I’m your host Jeffery Potvin and today we’d like to welcome Sascha. Welcome to our show.
Sascha: thank you very much for having me today.
Jeffery: Well I can say we’re very excited to dive in and learn more about ourselves and have this great conversation. And after our conversation and having a bunch of research and going through a lot of stuff, I’m going to say that I think you were actually born to work with startups and invest through your career. everything you’ve done just seems to really work around the early stage startup scene. So, it’s amazing that we get to dive into all this.
Sascha: Thank you very much. Yeah, maybe I can start. I was not born into the startup scene because when I was studying in Hamburg in the 90s I wanted to become a journalist, so I studied political sciences and journalism. I even started to work in the radio and then tv, basically news. But then I found that journalism at the end is talking about what other people do all the time which is interesting. you get to know people, very interesting people who do interesting stuff. But after a while I thought, I’d rather do the interesting stuff myself and let other people talk about me. That was my, let’s say, my dream at the end. And I had maybe the great opportunity at one time to start working in a business consultancy that was working around media. So, it was a Swedish consultancy when all the internet started and they helped basically editorials and all kinds of media companies to digitalize. This sounds very strange now but back then, it was like 87, all the media companies and Hamburg was a media capital in Germany. they were under pressure. they needed to basically back then, they had to go on the internet or they had to convert their business into or part of their business. they had to be connected to the internet. So, today we would say they had to digitize their business model. So, that was the connection between my journalism and business. When I started back then, it was called Media Consultant. And then I was at the end, Business Consultant. And I saw a lot of interesting companies. like we worked for example for Battles Man which is one of the biggest media companies in the world. And on one hand, we tried to find ways to offer their content, their print titles on the internet with different services around which is now common sense. But back then, basically we had to think about what else we have to offer as added value around the content because it was not just putting the same content you had in the print magazine on the internet. But that’s where we developed. For example, for all the business titles, we developed interactive added value like portfolios and you could watch stuff like that. I also was involved in the intent of Battles Man to build up an Amazon competitor. Battles Man back then which was much bigger than Amazon, built up something that was called EOL Battles Man online. you have to know that Battles Man had a big branch of book selling so they’re still one of the biggest editorials in the world. So, they thought we are the right company to sell books and we have to do it much better than Amazon because we have invented all this. They have invented, for example, the book clubs. there’re book clubs all over the world whether you subscribe. And there I found out for the first time why big corporations have a problem in innovation and why companies like Amazon can basically move much faster and create much more innovation in a short time than this huge multinational company patents month. And from their failure and from the failure of our project where I was involved in, I had my first big learnings, how innovation should work and that, let’s say big organizations and these processes, that they were working with are not suitable for innovation. But my story then went on because everybody back then in that time in the end of the 90s, in my surroundings, were dreaming of building up a startup. That was a big first. It’s a wave of founders in Germany where people, like the founders of Zalando and Rocket Internet, founded their first company. And one of their stories was they built up a company, an eBay clone, and sold it after four months to eBay for I can’t even remember was millions. let’s say 10 million. nothing to live forever but that was like one of the stories that they were told. And everybody thought we want to build up a startup. We want to be startup entrepreneurs. So, two colleagues of mine started a company. That’s it. It was like an online lottery company connecting with the state lotteries, a reseller of state lottery in Germany. There was no such thing. The lottery is still one of the most analog businesses. It’s state-owned so it’s very slow. And they thought we just built up a reseller. We’ve learned this from a project that we’ve done together for the Swedish state lottery. And Sweden back then and still is always ahead of us in digitalization. And let’s say technology also. So, they learn from this project and build up a company. I was still too happy in my business consultancy. I was really happy with my work and I thought this is the best workplace ever with a great office. It was in Germany. We were like the kings because we were the people who knew about the internet and we flew business class all around Europe. And I was young. And I thought I was so lucky to be here. So, I didn’t quite understand why they would leave all this and build up their own company. But after one year, they approached me and said, why don’t you come work with us. And I was thinking about it and back then I wanted to go abroad. I wanted to work abroad. That was one of my objectives, to work somewhere else. And one of the possibilities I had was Spain because I knew some Spanish. So, I thought about what I can do to really add something interesting to their business. So, I was looking at the Spanish market regarding the state lottery and the regulation and I thought it was a good market to build up a branch of their company. So, we negotiated and I got a very small share of their company. Still, I was feeling like an entrepreneur and built up a branch in Spain which was a big adventure for me. I didn’t have a clue about building up a company. I was just jumping into the cold water as the same in Germany. And it was a lot of fun. I started in 2001. And when I already had some ideas on how to start, we negotiated a budget to build up the branch. the Twin Towers were attacked and so basically everybody was very much afraid of what could happen in the next years. the new economy in Germany was in a big crisis. stock prices fell down. So, basically the consequence of that was that I was in Spain. i had a little office shared in the basement and didn’t have any budget. I had my salary but nothing else. And they said you can stay there for a while. we will go on paying your salary but you have to find your own way. It was kind of frustrating. But it helped me to learn something that later on became more or less mainstream, the lean startup approach. because I was there, we had plans to build up a big platform. because in the lottery, every market is different. There are different products, different regulations. So, basically, I had to build up a new platform. That was my idea. i spend around half a million euros just for the first setup of the platform because I thought I need all the products to be really be able to approach the market and say I’m an online lottery platform. So, I needed all the lotteries and all the services. And of course, it had to be perfect to start with. But when they cut my budget, I was kind of bored. I started at first. I waited and then I thought let’s do something. And I had a great team because I basically hired those people that dropped out all the new economy companies here in Spain because I was in the middle of a crisis. everybody shut down and I was sharing office with a German company that was basically reducing stuff to a minim and later on closed down. And I took the best people of this this team. And then we sat together and said let’s do something on our own with low budget. what we did is we used existing software which is now nowadays, basically the way to go. there’s so much software as a service around. But back then, there wasn’t. What we had was Excel Access which was a database for Microsoft. And what we did was basically build an HTML facade in front and in the back end. We had Excel and access and manual work and we started with one simple product which was a subscription to the basic lottery here in Spain. And it was really successful as a subscription because it was impossible for us to do a real real-time business. or you buy it today and then tonight you take part in the lottery. So, the subscription was. you bought your subscription today and you started next week and that was something we would handle in the back end manually. So, we learned a lot about the customer. We learned a lot about marketing and we generated cash which helped us to then build a step-by-step platform. That was the greatest learning I’ve ever had as an entrepreneur because I understood that if I had the money that was promised, I probably would have failed for sure. because all the years afterwards, I saw so many people with this idea. We have to first build a huge product and then we go and talk to the market. And I saw myself in a lot of companies, successful companies who started like this as well. And then basically it became mainstream with the books Eric Reese and Rice and all the others. So, I was still learning basic skills as a manager, because I had a small share of the company. And then I had to learn another very difficult lesson because of the company in Germany. They did an IPO basically. they realized all their dreams. They built up a company in 2000, went public in 2004 and had both of my colleagues. then had 30 million in cash in their bank account and another 60 million in shares. So, I think 0.1 which they bought from me before the IPO saying that they had to clear all the cap tables. back then it was money. For me, it was interesting money. And I had a big salary and a good bonus and stuff and I was happy. But I didn’t really negotiate hard enough believing that this company has a great future in fact the company still exists. It’s now called Seal Ventures and it’s the world market leader for online lottery, digital lottery products in the world. And they’re investing in a new type of product around the lottery. So, it’s still a very common thing that occurs when companies are going IPO or founders are being bought. And it is tough learning. But it’s actually a great learning that you have because now you can, while working with these companies. you can kind of give them the gauge of being faced with these things. And this is going to happen. And I think that’s pretty valuable. And I can obviously, on the same side of it speak from the same kind of experience. And it’s interesting that you feel that this is the right way and you’re like you’re right, I should do this but at the time it’s the lack of knowledge and it’s the same thing when you’re signing a contract for a new employment job or a new partnership. And you say, oh, I don’t need to go to the lawyer on this. And you’ll just kind of scoot through it. So, you kind of got a different type of learning. But at the same time, if you learned this in school. That said, hey, don’t ever sign a contract and make sure that you always go to a lawyer. it’s going to cost you money now but it’s going to benefit you later. Maybe that would probably help all of us. But we tend to learn on the fly and sometimes it does become tougher to learn. But I guess as you were going through this mean startup phase which I think is the most valuable experience anybody could have. And it sounds like you really pulled your way through this. It kind of goes to the way startups work today, which is you really need to get in there, roll your sleeves up, learn all the jobs and all the roles in the business. be really lean because as you start to grow you become further and further away from what you first started and that learning is what’s going to allow you to keep steering the ship. And if you don’t take that learning then you have a high chance of failure because you never really spent time learning what it took to build that company from the ground up. So, of course it’s good. On the one hand, the lesson is you have to think about contracts and lawyers. On the other hand, I was a very bad negotiator at that time because I felt so happy with what I had. I just didn’t really think about what kind of value I created because back then, for example, the company was active in Germany and in Spain. So, you can imagine in the IPO story. How valuable was the fact that they were able to basically scale up the business and start in another jurisdiction and market? So, I don’t know but I would always think it’s at least a third of the IPO valuation. It might have come from this fact and that’s something I created. But that’s on the other hand. Another way of learning is to just pass, don’t think about it too much and go ahead and think about how you can do something better in the future. So, then after the IPO, I thought it’s time to go and I also thought it’s time for me to start up something myself all alone. So, I found a partner who was working in the company as well. And he was also very keen on starting up and we found that we are quite complementary because he had a very tough time in the UK. he was working for Marks & Spencer. They had a great time managing the training program. So, he was like a real manager training program where they’ve learned negotiation where they’ve learned for example turning around companies. So, he was like a very well-trained manager. And I was like I mean, I was a do-it-yourself startup guy. maybe creative. Maybe I knew quite a lot about digital strategies and stuff like that. But I never had manager training. So, that was. And he was Spanish. So, he was trained in the UK but he was Spanish so he also knew how the Spanish businessmen work and how they think. So, that was quite a good complementary team. And then we thought let’s try. And we built up a company that was working in the same space, lotteries. But completely b2b. We didn’t want to build up a competition with my other company. Even though I didn’t have a non-compete, it was b2b. So, we wanted to do business with the government first, basically selling to the state lotteries. our technology and our knowledge marketing and digitalization of the state libraries and learning that this is too long of a sales cycle. We also started offering it to private companies. So, we built lottery channels for Telefonica, which is the biggest telecommunications company. one of the biggest in Europe, we built the lottery channel accordingly which is like the markets Marks & Spencer, or like big department stores here in Spain. And for El Pais, the biggest media titles here, and print media, and it worked really well then. In the end, we ended up licensing a big lottery brand here which is the Golden Witch in Spanish. And there, it really skyrocketed our sales. And we reached in our best times sales of 100 million euros. It’s a small margin business but adding value to all the purchases of lotteries like subscriptions or syndicates and stuff like that. we managed to get 20% of that. So, it was a great business. We earned really well but we had a problem. That’s another learning I had because at the beginning, we got in a strategic investor from Germany who basically gave us 2 million in cash and 1 million in kind which was their technological platform. So, we had a kickstart to the market. they also were working business to government and also business to business. So, it was a perfect fit. So, we thought about how they took a majority share of our company because we had a PowerPoint. So, they gave us two million cash to one million kind, so there was no way to say you get the 20 or something like that. So, they got a majority. But we thought we were so clever that we maintained basically control of the company. And we thought about how we can make liquid or 36 or something like that that we have in the company. And we negotiated a very clever exchange because they were stock listed in Germany. And we thought at one time, after two years, we can exchange our shares that are not liquids into liquid shares on the stock exchange. So, we developed a way to calculate our value based on their value in the stock extent. So, we said turnover. There were like three parameters; turnover Ebitda and profit or something like that. margin and profit. I don’t really like the turnover, gross margin and profit. So, we put together both sides and then we would know how much our company is worth in Spain and we would exchange into their shares which could then sell on the stocking stage. But what we didn’t have in mind is what happens if their performance is really bad and ours is really good. That’s what was happening. So, they even had a negative result when we started. After two years when we started the best time, when we could exchange, they had a negative result and they underperformed. So, on the one hand, the value in the stock extension is very low, not very appealing for us to exchange. And on the other hand, if you have a negative parameter, how do you get this together? so you have ten turnovers, five a bit and minus three. And how does this work together? and so we started to argue with them and so we started to have a worse relationship. And over the years, because it didn’t really get better and we didn’t know how to, that we were trapped. So, we had a great company doing quite a good business and a lot of people were interested. But we couldn’t sell. And because nobody would buy our 36 percent and we couldn’t basically execute our clause in the contract, it took us four years to argue and think about what we would do. And then at the end, we bought their shares back because they were. So, at one point, they were so in need of cash that we took the chance, took some loans and bought their shares back,
Jeffery: I think that works out quite well that in the time when things are going the wrong way you guys are analyzing it and probably obviously hitting walls and trying to understand what you’re out. And how do you move out? and the real thing was how do I take back my business. And it sounds like you took the right approach and stepped into the business and found a way to remove the power of that and bring in more of the good. So, it sounds like more challenges. But what I love about all the things that you’ve been sharing through your journey in business is that all of these are so relatable to startups today. And it’s not something that just happened because it was in the early 2000s. And you’ll never see this again but a lot of these occur quite often and quite frequently in startups today which is anybody that’s building a company. they’re going to go through these types of maneuvers that are happening. they’re going to have business partners. And you brought up a lot of great things even with the one part you brought up about your business partner and how you had very complementary skills. And what I like about that, is that you’re already going into it looking at how do I find somebody that has skills that I don’t so that we’re more effective and we can benefit from the growth. And I think that’s a very valuable point because a lot of startups when they get into partnerships, a lot of them do fall apart and sometimes they forget that you need to look at those little pieces of partnerships and relationships because they’re going to make a big difference when you’re growing a company. And it sounds like you did that and you put together a great partnership with someone that you trusted. And you guys found a way to leverage business going forward. So, lots of great pieces of advice that you’re sharing. So, this is great. That’s it.
Sascha: Basically, all these things help me a lot when I work with startups because there’s always the question. shall I take in a strategic investor or just a financial investor? Both have pros and cons. And of course, it depends a lot on your position when you’re negotiating. depends a lot on where you want to go. But at that time, I thought we were in a very regulated environment. And at that time, it was not so easy to find software as a service and platforms you can use. so, we had to build up things from scratch and for me it was a quick start to use an existing platform. And a strategic investor brings in but hey, it’s not a clear binary thing and the other thing is how do you negotiate with those people that bring things in kind and how do you liquidate your shares. There’s always a problem and for me as a business angel, it’s very difficult to take care of that at one point. I can sell because as a business angel, you enter into a business and typically when you do investment rounds everybody wants you to stay. Now you typically bring in your reputation. you say this is a great company then you can’t say before they send their money. And ah, by the way, I’m leaving you now. So, that’s something that isn’t very common at all. And I think there’s been many people that have tried to figure out how to tackle that as your business is growing. a lot of investors who said I took from the pre-seed to a series a. Can you leave me out now? so I can keep doing this. So, your commerce or your equities are tied up until that company goes public or is bought or sold. So, you’re right that that is there for a long time. And I think that a lot of the early stage investors would look at whether somebody would be interested in taking me out. Is there a secondary market that would be interested in these shares? so there probably is a solution out there somewhere and it has been quite tough but I’m assuming with NFTs and all of these blockchain and everything else that’s going on in the world, there’s probably a way to be more liquid in the future on how you can start selling your shares at a series a or series b and trying to move out and secondary markets do help. But I think there are options that are coming out.
Jeffery: So now just to kind of move what you’ve been doing into the today and all the great things that you’re part of so many amazing groups, and I’m not sure how you have time to rest with the not-for-profits working for the schools and you’re spending a lot of time and I’ll call it the getting backstage helping educate entrepreneurs so that they can overcome a lot of what you’ve gone through. And maybe not just what you’ve gone through but things that you see in the market. And being able to go through these hurdles maybe we can share just a quick summary of DNC 10 and the networks that you’re building. I think it would be great to learn a little bit about that for sure. if you could share a little bit on that.
Sascha: Okay, so on the one hand, after I made some money, I started to invest in startups in a way which back then we called venture builder, together with my partner because we had a lot of access to bank loans because we have great relationships with all the banks in Spain. So, we thought we have financing, we have knowledge and so we helped build up startups in the venture builder model where we had a big office and we took the entrepreneurs into our office and helped them with marketing with financing and even with technology so that they could focus on their business and their product.
Jeffery: This was great. I learned a lot.
Sascha: But it’s something that is not very scalable and it has a lot of downsides. The advantage is you can use the cash because we built up a structure where we were majority shareholders in all the companies and we used the cash from here to there. But when something goes wrong in one company, then the whole system has a problem and it’s not scalable because we ended up having an office with 150 people and it was just too chaotic. So, we had to basically resolve this by selling parts into joint ventures closing down other parts. So, I thought it’s much better for me to invest in startups independently. But in those startups, I really add value. But not with a structure, but with my network and with my knowledge and where I can step in and take a position like a board member but really make a difference. That’s my thesis at the end. And in the meantime, I started working as a mentor in IE business school which is a very famous business school here in Europe, always in the top five in the world for the international MBA. And they built up something that is called a venture lab. It’s something they have seen in MIT , Harvard , Stanford. So, an incubator on campus which is not only for those people for the MBA, but also for alumni and the whole ecosystem and some really good people to help incubate and accelerate their small business ideas. So, I had the chance to be part of the beginning of that and that was really helpful for me to learn again from those people because when you’re mentoring you probably do have the same experience, when you’re mentoring you learn as a mentor almost as much or more than the mentee if you do it right and if you select the right people. So, there, I had very bright people from all over the world with great enthusiasm and I always learned a lot from them. So, there I start building let’s say deal flow over the whole ecosystem of this university which is let’s say the top one of the two top universities in Spain. And on the other side, I started working with accelerators. One of the accelerators I really like is an EdTech accelerator called Secular. It belongs to a big company of private schools and universities and they are very open to innovation and they have their own accelerator for EdTech startups.
Jeffery: That’s a lot of fun.
Sascha: And I’m mentoring there. So, that’s a little bit where my deal flow comes from and I’m also a member of the entrepreneur’s organization. I don’t know if it’s probably more famous in the States or in Canada than here in Spain, but it’s an American organization with 60 000 to 16 000 members and all entrepreneur owners of a company that at least has a turnover of one million dollars and that’s the threshold. So, mid-size entrepreneurs, startup entrepreneurs, a great group of people and together with them we organize the Global Student Entrepreneurs Award every year. That’s also great fun where we have people from 55 countries competing. they’re all students that build up their own company, very bright people. So, there, also I find a lot of talent for either investment or for startups that I know that ask me to connect or tell them. So, that’s more or less the work. I do pro bono but my main activity nowadays is I invest in let’s say up to three four startups a year. But I really step in and even sometimes I’m operational. So, for example, at this time, at this moment, I’m working for one startup opening a new market, the British market. And we want to go to Germany as well. So, there. you could say like a managing director what I did here in Spain. I do the first strategic partnerships and I set up the whole thing and open up the market. But this is the most operational I do. Typically, I’m a board member and I’m there basically on the side and very much aligned with the founder. They call me most of the time when they’re in crisis, when something happens, when they’re afraid, when they don’t know what to do, when they don’t even know how to negotiate with their own partners. So, that’s I think the most valuable part. And the other part is connecting people, connecting businesses and helping with fundraising. I mean a startup founder is typically overwhelmed with everything. He has no idea of most of the things. He’s never done what he has to do. The only thing he has is a great attitude and the capacity to listen to go straight towards their goals. But typically, they don’t. there’s a lot of things they don’t know about and so I try to help them there. But always very much aligned. So, I will share. Typically, I enter startups where I can take some reasonable share. maybe five to ten percent. So, it has to be a startup with a low valuation or where they really accept my added value and they say I want you on board and it’s not so much the money I put in. But basically, I look for startups where they value my money double. Okay, just at the beginning where they say okay you get shares as if you would invest double the money. That’s more or less my rule. I also try to get somebody else on board so that I have some feedback from somebody I really trust on this so I don’t go crazy investing in startups just because I love the idea. And on the other side, I’m quite agnostic regarding the topic. It has to be something that is interesting for me where I can learn, okay. So, for example, this year, I entered a startup that is working with artificial intelligence and crypto currencies. Both topics I really like and I really find interesting. I don’t know too much about it so I’m learning a lot on the crypto markets and also on blockchain in general, how this will change our lives in the next few years and artificial intelligence the same thing. So, this is basically my main driver. But it could be any kind of topic. Typically, the startup has to be with relatively low valuation. I can’t enter a startup that is already valuing itself five million euros or dollars or whatever and that’s not my field. My expertise is to seat from friends and family, financing to siege more or less. I typically want to see that they have some financing, that they were able to raise something even though it’s among their friends and family. And I take them to see it and beyond depending on what’s the plan because seed financing is typically then when you need metrics and you need traction and so that’s the most difficult part.
Jeffery: Your approach is very well received. Certainly, in today’s world where a lot of startups go in and they don’t get the mentorship or the coaching that they need in order to survive and to be the best. So, I do really appreciate seeing and hearing how you attack this early stage. And what is really interesting about this is that I’m going to call it deep investing because you’re going in. And like you said, you’re not only just putting in capital, you’re also putting in a lot of time and you’re working in the ranks of that business to help them move quicker. And I think that’s very adorable and it works quite well. And those are types of companies that we want to invest in because we want to see that they have a strong management team but they have strong founders, that they have a strong structure on where they’re going even if it is just friends and family around. All of those things make a big difference in supporting the growth of that company. we’re going to kind of transition a little bit based on where we are now. And I wanted to ask one kind of quick question before we dive into the quick questions. And we’ve learned a lot. you’ve got a lot of experience and a lot of things you’ve done which is phenomenal. is there, if I was to kind of dive into a case study, if you were to talk to a case study that you could share about a founder, or what it takes to be an entrepreneur. And you’ve talked, you’ve given a couple of businesses you’re working with now. And we’re kind of looking for that one story that just says this is what it takes, and I look at this founder 10 years ago and we didn’t think they were going to make it and she just blew it out of the water and today they’re a massive firm. is there a kind of a story that really resonates with you that you can share?
Sascha: Okay. And one of the strongest founders I’m working with right now is building up a company that is also around the lottery field. But he wants to do or he does house raffles which is something that is quite common in Australia I think and also in Canada, always with good causes, basically partnering up with charities. And it’s like a fundraising tool for charities. So, he’s a guy from marketing performance lead generation, very systematic way to work, and he is for me kind of the ideal founder because he has a very strong attitude. He knows exactly where he wants to go and he knows exactly where he wants to be. But he’s flexible in terms of the path to get there, okay. That’s very important because typically we all learn this American dream thing, that you only have to believe in your dream and don’t let anybody tell you that you’re a fool. And I think that’s not correct because you shouldn’t fall in love with your dream. you should fall in love with basically the idea, you should fall in love with what you want to be in five years. That should be kind of flexible because you don’t even know if it works out or not. What you have to be very strict upon is going forward and forward to get to the point where you want to be in five years. And he has this quite clear. For example, at the beginning, I mean he came up to me with an idea and I’m quite familiar with the regulatory space here in Europe when it comes to those things because of the lottery, and even if it’s charity, it’s all very regulated. And he came up with an idea and I told him I don’t think this works. this is not legal what you’re doing. And I know it because I even took part in the regulatory process here in Spain being in a lobby group to help politicians or the politicians to design the law. But he said no. I bet somehow, I get this going and because other people would say there’s somebody who has a good reputation. There is great knowledge in that fear and says that whatever, you’re coming up with now, it’s just not legal. you can’t do this. I didn’t tell him that he should leave it. I said if you find a way, that’s great. And I also think that I’m a perfect match for you because you don’t have any idea of this space as I do. So, I stepped into the advantage knowing what he was planning to do. right now, is not going to happen but I was curious how he gets away with it. So, we’ve been together for two years now and he turned out okay in Spain. This is very difficult. It’s not a scalable business. we have to turn it into a b2b and pivot completely with the business model. And the real market for us is the UK. So, now we’re in the UK and that’s a great market there. We have a great regulatory space for us there. But of course, along the way, there were so many obstacles. several times, we got the messages from the regulatory body and here in Spain. they’re very unpleasant. they don’t talk much and they say you have to close down your business and stuff like that. So, I had a lot of calls from him but he is really afraid. But he is this person that listens but still has his own strong opinion to things. But he is able to listen and has a lot of energy and he knows exactly that he would never doubt that in three to four years’ time. He has built up a great combat understanding that there’s an outcome finding the right people to get behind you like yourself and then having that support mechanism. So, when things get tough, he’s reaching out to you and having that debate. But at the end of the day, he’s driving forward and that’s what entrepreneurship’s all about. it’s knowing where you want to go. you might take 12 claps to get there but you’re going to fight it and do whatever you can in your case.
Jeffery: But I wonder what the story is about. it’s not just about building a company in one jurisdiction or one country. you guys realize that the roadblocks were just too big in the country or in Spain and you actually switched countries. And that’s brilliant because a lot of founders will just fail and walk away when they don’t realize that there’s 197 countries. There is a country out there that will accept and need the solution that you spend three- or four-years building. And it’s not worth dropping it and walking away. And sometimes, it’s the fear of, well I can’t operate in another country being European union and not in the area. That’s a lot of value. But there’s still risk everywhere and I do appreciate the fact that you guys took that moment to figure out, hey, maybe we can work in this area and it’s taking off and getting into a space that’s supporting you, okay.
Jeffery: So, we’re going to jump into the rapid-fire questions. So, the way this works is you’ll pick one or the other and this is coming from the investor standpoint, from your cell phone. when you’re looking at companies so ready to roll, okay, go ahead, awesome. So, founder or co-founder? unicorn or four-year 10x exit?
Sascha: It depends a little bit on my liquidity. But I would say a four-year 10x exit.
Jeffery: I love it. Tech or consumer?
Sascha: product goods. Definitely technology.
Jeffery: NFTs non-fungible tokens or web 3.0?
Jeffery: ai or blockchain?
Sascha: That’s a difficult one at the moment. I would say blockchain. I really believe that this will change the world like nothing else.
Jeffery: I wholeheartedly agree. first time founder or a second- or third-time founder?
Sascha: second- and third-time founder.
Jeffery: first money in or series a?
Sascha: Series A would be great.
Jeffery: Okay. Angel or VC?
Jeffery: board seat or observer?
Sascha: That’s a difficult one. I’ve had experiences with both. it’s not binary but I would say to follow and innovate.
Jeffery: Perfect. equity or interest payments?
Jeffery: Okay. favorite part of investing?
Sascha: spend good times with the founder.
Jeffery: Okay, number of companies invested per year?
Sascha: three to four.
Jeffery: Okay. any preferred terms when you’re investing? terms on investing equity?
Sascha: typically, with an equity kicker on objectives of added value that I can bring in.
Jeffery: verticals of focus?
Sascha: no verticals. My focus is on companies that generate cash quite soon.
Jeffery: Okay. And then two qualities of startup need in order to stand out.
Sascha: definitely the team. definitely and of course that. Everybody says that but that’s probably the main quality of a good business angel. It is to distinguish between the winning team and the others. And the other is what I just said. It should be a business model that is able to generate cash quite soon because that’s the only way you can survive in tough times. And I don’t like startups that have to raise money every three months.
Jeffery: All right. we’re going to jump into the personal side. book or movie? Superman or batman?
Sascha: I’m not sure if I understand this question right now.
Jeffery: Which one would you choose either the book or the movie? Superman or batman? Which one do you reference yourself to be closer to?
Sascha: Ah, in the book. well just in general. So, the questions are more personal.
Jeffery: So, which one do you refer to yourself? So would you rather side with Batman or would you rather side with superman? restaurant or picnic?
Jeffery: five minutes with Bezos or Oprah? climb a mountain or go to the beach?
Sascha: climb a mountain.
Jeffery: bike or run?
Jeffery: Big Mac or Chicken McNuggets?
Sascha: Chicken McNuggets.
Jeffery: What was the first thing? trophy or money?
Jeffery: beer or wine?
Sascha: I don’t want to be kidding these days. It’s a tough time.
Jeffery: concert or amusement park?
Jeffery: fortune cookie or birthday cake?
Sascha: fortune cookie.
Jeffery: Ted Talk or book reading?
Sascha: difficult one.
Jeffery: It’s not.
Sascha: It’s complimentary. But, Ted Talk, I would say.
Jeffery: Okay. the most famous person that pops into your mind right now?
Sascha: Elon Musk.
Jeffery: Perfect. the first brand that pops into your mind?
Jeffery: Just for numbers, I will say that 60% of people that I’ve interviewed said Apple. favorite movie and character that you would play in that movie?
Sascha: Okay. That’s not so easy to answer. It has to be a favorite movie I know. I really like Kevin Spacey’s American Beauty. it’s not really a hero but I really like this movie.
Jeffery: That’s a good movie.
Sascha: Probably, I would replace Kevin Spacey because he is kind of unpopular now.
Jeffery: I didn’t realize that but it is a good movie. And now, with your reference, I’m going to watch that one again. favorite book?
Sascha: favorite book? I really like Hermann Hesse. I don’t know if you know. This book is from a German author. And one of his books is called Siddhartha.
Jeffery: But I’m going to look it up.
Sascha: I don’t know how you translate this. It’s not a fairy tale. It’s like a wise story. He’s a very wise man.
Jeffery: Perfect. Do you have a favorite sports team?
Sascha: What was that?
Jeffery: sorry. Do you have a favorite sports team?
Sascha: yes. It’s a second division football soccer team in Germany called St. Pauli. they are always underdogs but they’re here in, I guess, in America. It’s the same thing. you always have two or three teams in one city and one is the leading one and the other is the underdog. So, this is my favorite team.
Jeffery: Perfect. Well, we’re almost there. We got two last questions. What’s the meaning of success to you?
Sascha: It’s the kind of success that really makes you proud and happy,
Jeffery: Last question. What’s your superpower?
Sascha: I’m a never-ending optimist. That’s a superpower and at the same time, it’s like a weakness.
Jeffery: But I think it’s brilliant. And optimism, the world needs more people with optimism. It’s what helps things go around and keep growing and building. But Sascha thank you very much for all your time today. You were awesome. you shared a lot of great information, lots of stories. As I always do, I take a million notes, but brilliant. I loved it so much, great stuff there. I think it’s very helpful. And of course, we are huge fans and we support all the help you’re doing to give back and help the early stage companies make their way through the ecosystem. And the way we like to end our show is that we want to give you the last word. So, anything that you want to say to investors or to startups I turn it over to you. But again, thank you very much for all your time today.
Sascha: thank you very much to you as well. And for being here, what I would say, investing in startups is not a very profitable business as an angel investor. Okay, that’s the first thing. So, become a business angel only if you really enjoy working with startups, learning from them, seeing innovation, being very close to innovation and somehow creating some profitability around that. because angel investment itself is not profitable. it’s only profitable if you see all the value it gives back to you. The big money is made where the VC funds are investing in sirius a and b, when all the risk is taken out, okay. So, you have to take risks. you have to enjoy pure innovation and you have to enjoy also being on the ground where innovation happens.
Jeffery: Sascha, brilliant. Thank you very much again for all your time today. we’ll certainly be following your journey and keep up all that great work you’re doing with the startups. Thank you again for your time.
Sascha: Okay, bye. See you soon.
Jeffery: Okay, that was fantastic. I think Sascha just brought it all to the table today. There was so much great material there. And just to touch on a couple of things, I love just the way he’s been working on giving back. I think the approach that he does is by investing and jumping into the company and working with them. At the same time, I think that’s pretty valuable in getting these companies off the ground. Obviously, the whole piece is about being complementary to the founder. And when he started his companies and made sure that you had somebody to work with, it was complementary. That’s huge knowing when to get out of a long sales cycle and figure out how to shorten that down. I think that was pretty valuable as well. And again, a lot of great things that he talked about from team and cash first and making sure that you do have a leg to stand on when you start your business. So, again great listen. So, thank you Sascha again for sharing and we’ll be looking forward to staying in touch again in the future. And in the meantime, I want to thank everybody for joining us today. If you enjoyed the conversation, please subscribe to our YouTube channel and follow us on Spotify, Apple Podcast and or Stitcher. You can also check us out at supportersfund.com or for any startup events, visit opn.ninja. Have a great day. Thank you.