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Insights from CEO Carl Wong on angel investing, syndicates and building early-stage technology businesses
By Carl Wong, CEO at Baltic Ventures
I think what Baltic Ventures is fundamentally about is enabling founders to have a greater chance of success.
There are lots of learned skills in terms of building companies successfully, but fundamentally the lifeblood of building your typical technology business is that you need cash. There’s no escape from it.
You need the ability to have a year of bringing skill into your team, developing product–market fit, winning early customers, and then winning more customers. That requires inward investment into your business.
Raising capital at the earliest stage
Angel investors are the most likely audience to raise capital from in the early stages of a technology business. In reality, it usually starts with friends and family – but once you get beyond that, you need high-net-worth individuals who are willing to back you as a team.
That’s the origin of our early investors in Baltic Ventures.
They are relatively experienced at investing in early-stage technology businesses. They have experience spotting the right type of founder profile and are willing to back teams early – which is high risk, but also high reward from a commercial perspective.
It’s also something people genuinely enjoy. It’s hands-on, and it’s engaging.
Why angel syndicates matter
The reality is that early-stage investing is so risky that it’s often better to do it in groups.
By investing collaboratively in syndicates:
You share risk
You can look to others for guidance
The cumulative cheque size becomes far more impactful than a single smaller investment
If you’re an individual angel investor, you’re writing what is a relatively small cheque in terms of a company’s runway – but it’s a relatively large investment for you personally.
It’s also a high-involvement process.
You meet founders, and if you find a business where there is real chemistry, that’s what you’re looking for.
You’re looking for:
Chemistry with the founding team
Insight into a sector so you can offer an informed opinion
Domain expertise
Resilience
The ability to build, execute, and commercialise
How angel investors make decisions
Typically, you build conviction over a small number of interactions.
That might be three meetings with the co-founding team, alongside reviewing further information. Founders will take you through a semi-structured deck, there will be extensive Q&A, and then they’ll share more detailed materials – an information memorandum, a more detailed pitch, and sometimes a financial model with enough rigour behind it.
After that, the decision is often made instinctively.
If you’re doing this on your own, it’s hard.
Like everything else, you need to accumulate a lot of these experiences to understand what good looks like – and to identify the riskier areas or teams. That is the inherent risk of being an individual angel investor.
The advantage of investing as a syndicate
If you’re investing as part of a syndicate, some of that filtering has already been done.
It’s often done by a more experienced set of eyes. Within a syndicate, there are usually people with different domain expertise who can assess different types of businesses and help form a more informed, collective view on what the right bets are.
The more experienced and commercially focused the syndicate is, the more the due diligence process has likely been professionalised.
But it still covers the same ground:
The quality of the team
Domain experience
Credibility
Understanding of the problem
The solution they’ve created so far
Product–market fit
Commercial traction
What traditional due diligence misses
All of that is important.
But none of it demonstrates:
How hard a founding team works over time
How receptive they are to coaching and feedback
How quickly they learn
How agile their response is
That is exactly what Baltic Ventures is.
A different model of early-stage due diligence
From an investor perspective, Baltic Ventures is some of the best due diligence you’ve got in the country for early-stage technology businesses.
Our process is based on having assessed approximately 1,200 businesses over the last three years.
Once founders enter the programme, that becomes an additional layer of due diligence for follow-on investment.
It’s the best insight you can have because you’re literally walking the path with founders for three months. You get a clear view of their effectiveness because you’re working with them every week.
There really isn’t a better way to shortcut this.
Outside of a structure like this, it can take 12 months or more to build that level of understanding. Here, it’s fast-tracked, and done, to an extent, on your behalf.
Built for busy investors
You’ve only got so much headspace.
Most angel investors are busy people, but still want to support founders and be involved in early-stage investing.
Being part of a wider team means you can do that – while the platform also operates proactively on your behalf.
Increasing the likelihood of funding
The other thing we do is significantly increase the credibility of the businesses that come through our programmes.
More importantly, we connect them to a deep network of follow-on capital and venture capital.
That dramatically increases the likelihood of securing a funding round.
Raising money is a learned skill. We give founders that skill and support them through that process.
If they successfully raise, they gain the one thing every early-stage business needs:
time.
Time to build.
Time to learn.
Time to grow.
The outcome for investors
If you’re an angel investor coming into our syndicate, the odds are that the businesses you invest in through Baltic Ventures will go on to raise funding rounds.
That’s not something you can say about many other angel syndicates operating at this stage.
The point
And ultimately, that is the point: giving founders a greater chance of success, and giving investors a better way to back them.
