Angel Investing is a topic that has not received much academic attention due to the tendency of scholars to investigate venture capitalist topics because of the individuality and privacy of the angel investments. The precise reasons for these predilections are unknown, but the spirit of Angel Investing has certainly captivated our passions in the past few months. The following are interview summaries conducted for this article:
David Dupouy was born in Paris, France, and began computer programming at the tender age of 10. By age 20, he made a big decision to move from France to the Silicon Valley to start his first company, Sensiva, Inc. in Palo Alto, CA, USA. Having no connections, no working visa, he bootstrapped Sensiva by selling a non-exclusive license. A few years later a U.S. patent was granted and he had a few employees hired. That was when investors got interested in his company and after some negotiations, five angel investors jumped on board.
Following the success of his first company, he finally settled in Taipei, Taiwan and began various entrepreneurial projects. In particular, he has been involved with The Founder Squad, which is an entrepreneur support group that features an invite-only membership.
As an entrepreneur, David has dealt with many angels throughout his career and in his experience, because there were a wide variety of angel investors and angel investors in the Silicon Valley, they cannot be characterized by specific traits or characteristics. For instance, when David was working with Sensiva, he received funding from 5 angel investors who were connected in an informal network. All of those angels were involved in the high technology sector and were in their thirties or forties. It should be noted that in David’s definition of an angel investor, he believes that family or close friends who provided seed money are considered angel investors in addition investors who fit into our definition of an angel investor. The vast majority of angels in Asian countries such as Taiwan or Japan are of familial relations.
Professor Michael Liu is the director of the National Taiwan University Incubation Center. His experience with angel investors in Taiwan is limited because there are only a few true angels in Taiwan. The boundaries between angel and informal investors are very blurred. Nonetheless he makes a variety of poignant observations about the key differences between Taiwanese angels and U.S. angels.
According to Professor Liu, Taiwanese angels tend to be more passive, more private with their personal information, and more demanding of decision-making power. Those generalizations should be taken with a grain of salt because Professor Liu also asserts that VC's are more homogenous in their make-up. Angels are more individual and diverse, thus making it rather difficult to make conclusive generalizations. Regarding the perceived passivity, the Taiwanese angels tend to sit back and wait for entrepreneurs to approach them. Taiwanese angels also prefer to invest a little later after an entrepreneur approaches them for money. It is also interesting to note that the angels in U.S. tend to be retired while the angels in Taiwan tend be working still. Though this usually leads to conflict of interest issues, the Taiwanese culture lends to the breaking or bending of laws. As in the U.S., the angels from Taiwan usually look at the start-up by considering the founder first. Afterwards, the business plan is looked at, but the importance is placed on the industry that the company is entering as opposed to the other specifics of the plan.
Overall, the angel investing environment can be explained by the fact that there are many investment avenues available in Taiwan that are not as attractive in the U.S. Specifically, Professor Liu mentioned the tax longs on capital gains to be much lower further encouraging stock speculation as a viable alternative to angel investing. The less angel investors, the more power is given to the angels over entrepreneurs due to scarcity. The lack of organized angel investment organizations can be attributed to the fact that angel investors in Taiwan believe that profitable opportunities only arise in private settings versus a public setting such as a press conference staged by an entrepreneur seeking capital.
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