UACOOPERA talks to Pedro Bandeira, UA alumni and business angel

A nurse by training and a business angel by profession, Pedro Bandeira shares with the University of Aveiro (UA) some of the aspects he takes into account when evaluating entrepreneurial projects, highlighting the role of the team at the time of selection. He also gives some tips on the role of universities in promoting entrepreneurship and introduces his latest company, YAngel, which is dedicated to training and consulting for business angels and companies that want to get involved with startups.

Being a nurse by training and a Business Angel by profession are areas that, at first glance, do not seem to have much connection. What lessons did you learn from the course for your current activity?

Yes! It may seem like it has nothing to do with it, but it does! Contrary to what most people think, investing in startups is not a financial business, it is a people business. As business angels, we do not invest in business plans or financial feasibility studies, we invest in people, in entrepreneurs who are committed to dedicating a good part of their lives to solving someone else's problem. Most of the entrepreneurs I have met over the last 12 years are community leaders, missionaries and altruists. And what does this have to do with nursing? Nursing is not about injections, medication, catheterizations and bed baths! Nursing is about people, about bioethics, about holistic care for patients, families and the community. Nursing is about working as a team to solve someone else's problem, which is often complex. One thing I learned in nursing and has never forgotten is that empathy is not about doing to others what I would like to be done to me if I were in that situation. Empathy is understanding the other person in the complexity of their particular situation, the context in which they find themselves, their values ​​and past experiences, and doing what they want in the situation they find themselves in, if they are in a position to make an informed decision. Now, when I started creating companies, I realized that, in companies, empathy is called design thinking, the ability to design a solution for the client, understanding what they want and not what I would want in their place. When I started studying startup creation methodologies, I discovered that customer development is design thinking, it is empathy. As business angels, we are not called upon to carry out financial analyses first and foremost; we are all the more successful the better we are able to work as a team with entrepreneurs and be co-creators of value, helping to build solutions that best meet the needs of others. Finance is an instrument like a syringe that it is essential to know how to use, but that is not where we make the difference.

Over the past 20 years, you have founded nine companies and ten associations. Do you think that this journey has been essential for you to be able to better assess the projects to invest in?

Without a doubt! It is difficult to be a business angel without having gone through the difficulties of creating a company! The principles of management are different from those of entrepreneurship. That is why many good entrepreneurs are bad managers. Some become managers later and others have to find a manager to help them, but in the beginning the necessary skills are different. Knowing how to live in chaos, being agile in decision-making when you have little information, being good with people, being relentless in the search for a solution that works and not being satisfied with so-so are skills that are not so common. It is much easier to identify people who will make a difference when you are able to recognize these skills.

What are the main characteristics that a Business Angel should have?

Well, we can schedule a conference for this, but it is clear that it is essential to have some money available to invest, money that if lost will not ruin our lives. But it is also important not to think that it is essential to be a millionaire. Most business angels invest between 25 and 50 thousand euros. But they are usually either entrepreneurs or directors with good salaries. There are also some who have inherited significant amounts or sold an asset and are left with liquidity to invest. However, having some financial capacity is not enough. Most people with 200 thousand euros in their account will invest in savings or low-risk investments. That is why it is important to have an appetite for risk. It is also necessary for the investor to have experience and knowledge in business and companies to be able to contribute with more than just money. Some get frustrated because the entrepreneurs do not listen to them or do not call them to discuss strategy. This may not be the entrepreneur's problem (sometimes it is!). But at the end of the day, what we see empirically and which is documented in some (unfortunately few) academic studies is that business angels invest mainly because they want to be involved in innovation, learn about new business models and technologies, they want to be riding the wave of modernity and feel that they are contributing to the creation of the next big thing! Financial return is also important, appearing as the third factor that most contributes to the satisfaction of the business angel. Certainly no business angel is happy if they have a great experience but in the end lose all the money. On average, business angel investments yield 25 percent per year, but it is important to know that you lose in some investments to gain in others, so it is important to diversify, investing in groups and in portfolios.

When analyzing a new investment request, what aspects do you take into account (of the project and the team)?

If you are an early-stage startup, the team is always by far the most important thing. The more mature the startup, the more important the business is and the less so the team. The selection criteria depend greatly on the stage of maturity, but focusing on the early stages where business angels invest most frequently, the team being the most important. In fact, when we are evaluating other things, we end up evaluating the team. When I ask who the customer is and what problem they solve, I am actually evaluating the team's ability to read the market and find opportunities. When I ask how much they think they will earn in the next few years, I am evaluating the team's ambition and realism. When I ask about the product and the competition, I am actually trying to understand whether they are capable of building a differentiating solution. When we invest in very early stages, it is very normal for the business model or the solution to change, we call this a pivot, so what matters is whether the founding team has the skills and attitude to try, learn and adapt, failing fast to get it right faster. However, we have some criteria to quickly discard most projects - if the problem they are trying to solve is insignificant (in size, frequency or importance), or if they are copying a solution that already exists, or if they don't know how to make the product, or if they have no idea how to sell it...

In your opinion, how do you define the entrepreneurial ecosystem in the Aveiro Region?

Let’s see how I can hit the nail on the head and then the horseshoe! The first thing that is important to say is that things are completely different from what they were ten years ago. The UA Incubator has played a fundamental role and we have been fortunate to have some special people who dedicate themselves to the community with great passion and commitment. It is fair to mention the importance of Adriana Costa, who is a very valuable asset to the entrepreneurial community in the region. The UA has also evolved and created more and more initiatives for those who want to create a startup. Can we do more? Of course! Much more! But the most important change that we should be able to implement and that would have a transformative impact would be to hand over the leadership of the community to the entrepreneurs. It is natural for institutions such as incubators, universities and city councils to have the instinct to lead and control, but all the most dynamic entrepreneurial ecosystems in the world have one thing in common: there is a local organization of entrepreneurs that leads and articulates the various actors and imposes the dynamics. The other actors, including investors and institutions, should be community nurturers and not community leaders. Until Aveiro has this, it will not be able to compete among the best cities to create a startup. On the other hand, Aveiro has managed to attract many startups, particularly foreign ones who find Aveiro the ideal city to create their startup and settle here, often with their families. This is a victory for the region. And we have attracted foreign technology parks here, which demonstrates the recognition of the work that has been done. I must also say that the most active group of business angels in Portugal was born in Aveiro - REDangels. There were 66 business angels from 11 different countries who invested through an Aveiro company in 27 startups, some of which are already worth tens and others hundreds of millions of euros. And the largest global network of angel funds was also born in Aveiro - COREangels, which has business angel funds from the United States to Egypt and Portugal as well. So, we have done a lot of good things in Aveiro or from Aveiro. This dynamic then attracts large and medium-sized companies, industry and technology and a qualified population.

What role do you think universities should play in promoting entrepreneurship?

As I said, universities are nurturers, not leaders, and so they must nurture. They must nurture the academic community, not only by creating entrepreneurship initiatives, programs and events as UA has done, but also by taking the academic community outside the campus to participate in other national and international initiatives, programs and events and by bringing other initiatives from outside to the campus to contaminate the environment with the entrepreneurship virus. We create entrepreneurship courses, but we forget that entrepreneurship is much more a culture and an attitude than a methodology or technical knowledge. All professors and researchers should have entrepreneurship training not only to consider transforming their knowledge into companies but also to be able to influence students to consider this path. It is essential that there is coordination between the various actors in the ecosystem so that they can feed and become enthusiastic. Then there is another role of the university, which is fundamental, which is the transfer of technology, but which should be more about transferring knowledge, helping researchers and professors to make the transition to the world of business, collaborating on projects or being integrated into existing companies or creating new ones. Or even helping to bring together entrepreneurs and researchers so that together they can create more value.

You recently created YAngel, an entity that aims to support the business angel ecosystem. What activities do you plan to promote and what profile are you looking for?

It's true! In 2014 we created REDangels, in 2019 we created COREangels, and in 2023 we created YAngel. A company is a way of solving problems. We have thought and said several times that business angels need training and credible content and they need help to make exits (sell the shares of the startups they invested in). We also see a great interest from mature companies in getting involved with startups but without knowing how to do it, whether to create an investment fund, set up an acceleration program or open innovation. So YAngel is a training and consulting company for business angels and companies that want to get involved with startups. Once these problems are solved, we will look for others to solve, but for now there is still a lot of work to do.