Northern Ireland’s Business Angel of the Year Norbert Sagnard gives his advice to start-up founders.
As well as being an angel investor, Norbert Sagnard is a consultant and teacher to budding business people.
As managing director of Sagnard Associates, he was an early contributor to the mobile revolution, marketing mobile phones as far back as 1987. Now, he is an award-winning investor in mobile technology, and angel to 12 digital start-ups in Belfast, Paris and San Francisco.
Sagnard also lectures in mobile marketing and developed a diploma in a mobile marketing programme launched at Ulster University this year.
Fresh from being named 2016’s Business Angel of the Year by Halo, Northern Ireland’s angel investor network based at Catalyst Inc, he offers his advice to founders and entrepreneurs.
What do you do?
I consult, teach and invest. The three activities feed each other nicely. The best marketing practice we put in place with my clients is shared with my students, creating, in turn, new ideas for my clients. The founders of tech start-ups I mentor or invest in benefit then from business and marketing strategies and tactics that deliver tangible results.
Where are the greatest opportunities in science and technology?
Wherever you look in those sectors, there are new opportunities. The internet and wireless technologies have brought information and knowledge at the nexus of ubiquity and connectivity, and we’re seeing now a tsunami effect on innovation.
The greatest opportunities for change are coming from AI (artificial intelligence) and quantum computing, for better or worse. As a society, we need to ensure it remains beneficial to all. The speed at which AI is already impacting our daily life is truly baffling, and quantum computing will massively speed up science and engineering innovation between now and 2020.
Are good entrepreneurs born or can they be made?
I’m not convinced that entrepreneurs are born. Good entrepreneurs are the product of their social environment, parental education and early life experience.
The entrepreneurs I work with are all very creative and tenacious. These personality traits would have been nurtured and supported from a young age, or self-developed due to adverse conditions in life. Through these experiences, they would have learned that grit and resilience pay off, and made it their attitude.
‘Good entrepreneurs are the product of their social environment, parental education and early life experience’
Successful entrepreneurs have passion for what they and those surrounding them do, a thirst for success and recognition, because, on Maslow’s hierarchy of needs, they live at the top two levels.
What are the qualities of a good founder?
In the early years of a start-up, a great founder will motivate others to embark on a business venture together, and I mean not only co-workers, but also customers, investors, the media and the rest of the population.
They will motivate through their vision and determination, their ability to draw really smart people for everything the business needs, and be generous with all these stakeholders. To refer again to the Maslow’s hierarchy of needs, they operate at the middle level of love and belonging.
And the ultimate quality of a founder is to know when to step back smoothly from the CEO role, unless they’re capable to lead the company to an ever-larger scale.
What does a successful entrepreneur need to do every day?
Talk to customers (if any) or prospects – directly, by phone, face-to-face, chat, email, SMS. Check on their satisfaction with the product and the service. If anything can be improved, what value does it bring to them? Use this feedback to iterate towards MVP.
Talk to your team and assess their motivation. Everybody needs to keep moving together towards the goal.
Look at the cash flow. Know how many weeks are left on the runway. Adjust burn rate if necessary.
What resources and tools are an absolute must for your arsenal?
I use email for long-form communication, Slack and Skype for short-form, and my YotaPhone smartphone to last three days per charge.
As an investor and mentor, I need to scan the market every day, as innovation evolves so much faster than even five years ago. I start my day checking LinkedIn for relevant news from my network; Product Hunt, The Hacker Bot and Mobile World Live on Twitter for tech news; TechCrunch, Fast Company and Inc for US-based tech analysis; Wikipedia for background info; and TEDx and the Insider YouTube channel for inspiration.
— Halo Angel Network (@CIHaloNI) November 28, 2016
How do you assemble a good team?
The founder needs to have a very good emotional IQ to read people accurately. If possible (eg after funding), hire a few people at the same time, so you not only select the right person for each position, but also relative to the others, as they may become part of your management team.
Enthusiastic people are great, yet experience makes the difference. It gets things done quicker, yet comes at a price, so balance out the need for speed and the cash available.
Make sure that, not only can you trust your team members, but that they trust each other too, like in a good sport team. It helps if they’re hard-working, as a start-up will struggle with people who just want a cushy job. There’s too much for everyone to do for this type of attitude.
What is the critical ingredient to start-up success?
The five ingredients that have been highlighted through research into start-ups are, in order of importance: timing, people, market, product and funding. From my own experience, it could not be truer.
An A-team will work out a great product in any given market, or pivot until a better product can be launched – then funding will come to a start-up of that ilk. Even having all four together does not bring success unless you tune in with society. I got involved with Apple in 1994 trying to sell their Newton MessagePad. Then the idea got recycled in 2011 (the iPad) to greater success because people had matured to this type of device, in part thanks to using smartphones.
‘An A-team will work out a great product in any given market, or pivot until a better product can be launched’
Timing can be a drag on cash flow and overall motivation if too early (survive until the market accepts your innovative ideas) or too late (spend the budget on marketing activities due to hyper competition). Check the Gartner hype curve to see at what stage your target market is.
What are the biggest mistakes that founders make?
Not engaging enough with their angel investors after funding is secured. Of course I’d say that as an angel investor. Those willing to participate should be made part of the team, as they can bring so much more to the business than cash. We’re not active to monitor the use of our investment but to make a great story come to fruition.
‘I have yet to see a three-year revenue forecast of a start-up that has been achieved’
I still have yet to see a three-year revenue forecast of a start-up that has been achieved. It’s partly due to the process of funding. If the objectives during the pitch are too low (but realistic), there won’t be appetite for investing. Yet too many founders try to achieve these numbers after funding, and misallocate resources.
I think it is time for investors and founders to admit that the pitch story will never be the real story. So, once funding is in place, revenue forecasts and sales plans should be rewritten together with active investors, revised to a more realistic level, including stretch goals. If the right investors are on board at the beginning, they will invest again every year to keep the start-up surviving and thriving.
Who is your business hero?
Anybody who brought something great for society, and monetised that idea. I have a bias towards engineers and scientists, though. I think they are currently the true innovators and I am awed by their intellectual power.
What’s the number-one piece of advice you have for entrepreneurs?
Feel free to experiment, on all aspects: product, pricing, features, team, message – and pivot if necessary during year one. Use it like the foundation year at university.
Then, in year two, select and consolidate a repeatable product and revenue model (if one could be found), and focus on a few customers (not free users).
In year three, hunt for more customers. That should shape your start-up for series A in year four, all being good.
All along, remember why you started all this. Maybe it was to improve how we eat, sleep, work, travel, pay, heal the planet or people. Keep the original flame alive and keep trying.