Aunnie Patton-Power is an academic, advisor, author, and angel investor focused on directing innovative financing to organisations that create positive impact. She is the founder of Intelligent Impact, a technology for social impact advisory firm. She is also a university lecturer on innovative finance, impact investing, and technology for impact.
In episode #5 of the Future Females Show, hosted by Media Personality & Transformational Coach, Susana Kennedy, and Co-Founder & CEO of Future Females, Lauren Dallas, Aunnie shares her tips on how to attract angel investment for your business.
How did you get into angel investing and Dazzle Angels?
It all started out over coffee. A couple of women I’d been introduced to, and whom I didn’t know, asked me to go out for coffee to potentially talk about angel investing. It was exciting for me because I’d been advising other people’s money for a very long time, but I’d never done my own. So we got together and created Dazzle Angels, a syndicate of 20 women in Johannesburg, and we decided to invest our own money in female-only entrepreneurs. The whole point was not just to invest money, but also to teach other women how to be angel investors. It’s something I’m super passionate about! I work with lots of women investors and we really engage with our entrepreneurs.
What is a zebra company?
“Zebra companies” is actually a term that a friend of mine from the States created. They were three women who did this essay which was called “zebras fix what unicorns break”. The idea was that unicorns are these mythical billion-dollar companies whereas zebras are real companies – because zebras are real, unlike unicorns. The stripes represent both profit and purpose. It’s a REAL and sustainable company that is trying to be both a profit and purpose-driven company. The idea has really taken off. Being able to talk about companies that aren’t looking to be billion-dollar exponential growth businesses, is amazing.
When you’re looking for purpose-driven businesses, what are the things that you look for and that stand out?
The first screen for us is always whether there is a female that’s a 51% owner who has sizeable influence in the company. We’ve met a lot of entrepreneurs who are husband and wife teams and it becomes pretty clear in the first interview that the wife isn’t really running the show. For us, it’s the first piece – a woman should be running the show. We also really wanted to make sure that we had a diverse portfolio, so we ensured that we covered women of all different races. That was also important for us at Dazzle Angels and now we have an amazing mix of women from different backgrounds in the team.
Then, we look at companies that have a really good idea and the ability to execute. Entrepreneurs often forget about that second part. It’s not just about asking if something is going to be the most incredible product because you’ve identified a market gap and a need, but also about whether you have the ability to actually execute it, or do you have a plan within the budget that you have to actually execute that. We get a lot of entrepreneurs coming to us and yes, with R10 million they could absolutely hire a massive team and become very successful, but that’s not always what they have. So, we look for really good ideas and interesting market fits and we ask ourselves if it’s a real need. I think that’s something that often gets overlooked in Silicon Valley because people ask whether or not something is cool or if a lot of it can be sold. We’re looking for something that’s a real need, and that’s something about purpose-driven companies that we like – they are actually creating a product or service that people need. For us, it’s also very much about the team because we do tiny little cheques. It needs to be someone who will be able to execute down the line.
What are these tiny little cheques?
Essentially we’re looking at somewhere around R300 000 to R500 000. We had the syndicate, all of us put all of our money in and we decided that we essentially could do somewhere between five and eight investments.
On the flip side, what would be a dealbreaker for you?
When a woman isn’t running the show, that’s a dealbreaker. And then, it’s not about traction but really about a path to traction. These are really early stages so you don’t necessarily have to have paying customers yet, but you have to be able to say what you are going to achieve with a small amount of money. So for me, a really hard no is either if someone doesn’t have enough traction, or if someone doesn’t know their competitors. You should always know your competitors, learn from them, be differentiated from them and frankly, you should stalk them.
Do you advise women to go out and get funding, or to try and figure it out on their own?
In general, I always tell entrepreneurs to try and go as far as they can without raising outside capital. Now that’s not always an option for a lot of people and, particularly in South Africa, people don’t have the money to be able to pay themselves or to hire someone. It’s a bit of a different situation than in other parts of the world where people have an idea and then immediately start writing a proposal to a business accelerator or an incubator. I think people need to be really careful with the type of funding they take on and who they get in bed with because it is really like a marriage or a relationship. Signing your first term sheet is like a prenup because everything in that term sheet is what happens when things go wrong and what happens when things go right. Entrepreneurs often jump to venture capital funding and my book that came out last year (which I wrote during the pandemic) is about options outside of venture capital because I don’t always think equity is the right choice and actually, at Dazzle Angels we’ve done a couple of different alternative structures that allow entrepreneurs to use their revenue to essentially buy back our shares from us so they don’t have to go down the equity rate like that. There are lots of different options outside of just taking equity capital.
What would be the best piece of advice that you would give to young entrepreneurs?
It’s really important to know who you are, what funding you need, and who your funders are. It’s like going into a relationship – you have to know who you are before you can actually have a good relationship. I think often entrepreneurs make the switch over to becoming angel investors and I also did that recently, but some advice that I was given as a first-time angel investor was to not expect to make any money out of it. So my question is: Can you make money as an angel investor? The answer is, it’s like gambling. The smaller the cheque, the earlier you have to go and the riskier it is. You can absolutely make money – just don’t expect to.
I want to encourage everyone to put some money into something. Find a way to put money into another company, just to say that you have invested. It’s not just about taking a chance, it’s about supporting dreams and supporting someone on their journey to achieve their dreams.
What advice would you give to first-time investors?
Just do it – that’s what I always tell investors. You learn so much and you get to be on someone else’s journey.
How do you get in touch with angel investors without a warm introduction?
Strategic networking is important – go onto LinkedIn and look for people who have the term “investor” in their profile and link back to find out who you know. Twitter is also super useful for angel investors. Everyone always wants a shortcut to finding investors but unfortunately, finding the right investor takes some research.
Women need to stand up and ask for what they want!
Watch the interview with Aunnie here.
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