We recently chatted to Francis Santora, a seed-stage angel investor in B2B SaaS and consumer software companies.
He was in the SaaS industry for 14 years before discovering angel investing. What's fascinating about his story is that he didn't have any network or knowledge about it when he started out. So he bought himself a book and joined a syndicate to get hands-on experience.
Read on to learn about how he learned to angel invest, how he built up his network, his criteria when selecting startups to invest in, and more.
I spent around 14 years in the Enterprise SaaS sector, primarily working with medical software for hospital systems. However, after that long in the same field, I was looking for a change within the technology realm. I came across the concept of angel investing, and after reading Jason Calacanis's book "Angel," which offers a practical guide to investing in startups, angel investing didn't feel like a "mystery" anymore. I was intrigued, and I began my journey in angel investing around two years ago. I now have a portfolio of 21 companies, and my first investment was in a startup called the Crafters Box.
The Crafters Box offers a unique combination of a subscription box and a master class, targeting craft enthusiasts. Imagine wanting to create a beautiful leather belt; the Crafters Box would provide you with all the necessary materials through a subscription box. Then, they offer high-quality online classes taught by experts in that craft. It's a successful model that I found appealing, and I discovered this opportunity through Jason Calacanis's syndicate.
In the beginning, I lacked connections in the startup world, but I gradually expanded through syndicates and online networking.
I started with Jason Calacanis's syndicate, and from there, my network grew over time. While I occasionally engage in cold outreach, most of my investments come from inbound sources – whether directly to me, through other investors, or investment groups.
My investments mostly center around SaaS and marketplaces. These are areas that have proven successful across my modest portfolio. I believe in focusing on what I understand well. Having worked in SaaS for years, I possess an in-depth understanding of those types of companies. I find these sectors have a greater chance of success, particularly with business models centered around saving time and money for customers.
I strive to be supportive without becoming an obstruction. I review their investor updates closely and address their specific asks. Occasionally, I'm able to provide assistance, like connecting them with resources or experts.
Recently, I even helped one of my successful companies find a head of marketing, which is a crucial hire for them. It's gratifying to contribute in a meaningful way.
One recent investment, which closed a couple of months ago, is Tango Builder, a San Francisco-based company. They develop design software for structural engineering, powered by AI. This software significantly accelerates and enhances the creation of engineering drawings for buildings. It's not just about rendering how a building looks; it assesses its structural integrity and compliance with building codes. Tango Builder's speed and accuracy can save real estate developers a substantial amount of time and money, making it valuable for anyone involved in construction.
Another noteworthy investment is Rebank, headquartered in London. This company specializes in transfer pricing software, a complex area. Transfer pricing involves determining the price of goods, like Nike importing shoes from Vietnam to the United States, and considering legal and tax regulations.
This field can be so intricate that even experts dedicate Ph.D. dissertations to it. Rebank offers a clear software platform to simplify this process, particularly useful for businesses operating across multiple countries, potentially saving them from hefty legal and accounting expenses.
One important lesson is the significance of focusing on the market. A great product in a suboptimal market can limit growth potential. It's crucial to choose business models that can scale effectively and address significant demands. I've also learned the importance of diversification – not putting all your resources into one startup. You need to be willing to invest in multiple companies to increase your odds of success.
While I'm still relatively new to this role, one trait I value is the ability to think independently. It's essential to avoid the herd mentality and make decisions based on your own judgment.
Furthermore, persistence and dedication to learning are vital. Angel investing is a continuous learning process that requires adapting to new information and evolving trends.
My advice would be to avoid putting all your capital into a single startup. Instead, spread your investments across multiple opportunities to reduce risk. Angel investing is a long game, and building a diversified portfolio increases your chances of success.
Additionally, don't rush into decisions. Take the time to research and understand each opportunity thoroughly before committing your resources.
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