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Inside The Mind Of An Investor: The Ins And Outs Of Angel Investing

After having watched every single Shark Tank episode, concluding that every investor is, well, a jerk, the guy we sat down with really wasn’t what I was expecting. The person in question is young, intelligent, humble and unbelievably well spoken as he intensely gave us the ins and outs of the investor’s world. His story is a true inspiration that resonates with thousands of people out there, and his quest to become what he always dreamt of becoming will give you that little extra push that will get you off the couch and follow your dreams and aspirations.

His name? Yousef Hamza, an individual who leads by example, a role model for driven entrepreneurs to follow and look up to. We had the chance to sit down with Hamza in order to get an insight on his life, unique work ethic and of course, what really goes on behind closed doors when it comes to angel investing.

Childhood

Although Hamza claims he had an average, regular childhood, it’s hard to believe that jumping grades, graduating early and showing premature signs of genius is anything close to “normal”. “I started out very young, I skipped grades, and although I was doing well academically, I was so uninterested about the whole academic curriculum – my mind was elsewhere”. You see, he doesn’t hide the fact that the schooling system was holding him back, conditioning him to become just another student. And frankly, this rings true with a lot of students and countless entrepreneurs out there who attend weekly classes and academic seminars just to feel like they’re almost internally drowning, having their creativity slowly bashed and drained, till finally, they’re turned into a number in a database headed to a corporate job with a set salary – from 9-to-5, five days a week.

There is a lack of support systems in today’s academic landscape. I experienced that at a young age and I wish things were different. Creativity should be nurtured, curiosity should be fed and risk should be rewarded. That’s what school should be about, not grades, exams and endless assignments.

The growing distrust in education today is something strongly reverberated in Yousef’s stream of thoughts. From Peter Thiel, the co-founder of PayPal, who has been paying students 100k to leave college and work on actual projects, to an increasing number of millionaires and billionaires who happen to be high school or college dropouts – the relevance of schools today is strongly put in question.

“Education today is becoming irrelevant. There are certain degrees that are important given their technical nature, such as doctors, engineers etc. Others you just don’t need. Sometimes formal education ends up being a bad investment, a move towards the wrong direction. You can’t learn, absorb and have everything taught out in a bordered classroom, it just doesn’t work out that way anymore. You have to build a consistent mindset of persistence and determination to learn on your own. There is a clear lack of interest in emotional intelligence (EQ), on learning how to learn, observation skills and body language. We get bombarded with so much standardized rubbish, so much irrelevant knowledge that consumes us and our time, only to forget “ the value of x” two days after the exam. Education today impedes growth in some cases, and we need to understand that, not on a personal level only, but on a societal one. Back in the days parents were also more involved in the education of their kids, giving them the missing pieces they lacked in their academic quest, but today, most parents are busy most of the time, assuming that school alone would take care of their kids’ education.”

The reality check Yousef gave us didn’t stop here, and as expected, University education didn’t escape the wrath of his opinions. “I went to university and ended up skipping most of my classes. I was told that 80% of the material wouldn’t be applicable by the time I graduated, so I decided to ‘learn how to learn”. Fitting into the “usual expectations in Arab families and societies in general of the ‘Engineering-Medicine-Law holy trinity’” didn’t lead to much salvation. He then went on to reveal that “I jumped from law firm to law firm, but it still didn’t cut it. I was always adapting and changing, trying out new things and experimenting in the quest to find what I was truly passionate about. Some people settle for less than they deserve, some people settle for average or mediocrity, some people accept to be uncomfortable and bored, and others, well others just keep on grinding to find their true calling. “

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The story obviously doesn’t end here, as a matter of fact; we’re just getting started, since Yousef’s rise in the world of angel investing started with a casual elevator chat.

“I was in an elevator and stumbled upon David Moleshead the co-founder of Envestors, one of the only active Business Angel Network in the region at the time. I asked him what he was doing, and he asked me whether I knew how startup funding worked. I knew all about it, with stories from friends and family as well as personal experience. Knowing that it was a completely unstructured, inefficient and an under-served landscape, I simply responded ‘yes’, to which he then said ‘We bring structure to that’. When David then further told me about their work at Envestors and how they were trying to change the rules of the game when it came to angel investing, I instantly knew that ‘this was it’ and decided I had to join the team. I told David that this wasn’t an option or a request, I wasn’t negotiating. I told him I’d join their firm regardless of whether they wanted it or not. . I quit my job as a lawyer that same day and began my exciting journey at Envestors.”

Tradition & Modernity

A lot of people would question whether conservative societies are actually ready for the 21st century’s fast moving, ever changing, entrepreneurial landscapes. We do concede that it’ll be unimaginable to see something like Tinder, Grinder or CodeBabes emerge in traditional communities, yet that doesn’t mean entrepreneurship, angel investing or technological breakthroughs cannot grow in Eastern societies. A great example is the notion of “Majlis”, the precursor to Hackathons and pitch forums where the elderly will gather to pitch each other and discuss innovative ways to help their community.

“What drove me towards angel investing was the personal element. I missed the Majlis culture, which used to be prevalent but is slowly dying out. Just friends, from all walks of life, sitting around a campfire and sharing. . I used to be told stories of how, back in the day, Majlises are what grew Dubai. Simple conversations between friends, everyone from the ruling families to the average Joes, discussing ways to improve the community or simply coming up with recommendations and suggestions. Everyone was open to learn about new things, to find ways to collaborate and to solve society’s most pressing issues. Back in the day, it was trust, friendship, partnership, vision and the wisdom to listen to others, consult, observe and act that created the UAE into the amazing place it is today, and I wanted to re-create that through investing into new ideas and entrepreneurs via a Majlis that would likewise begin to change the shape of the UAE for the better. “

Do What You Are Passionate About

As cliché and “mainstream” as it might sound, doing what you want, pursuing your dreams and finding new avenues for growth is indeed the way of life. We’re not brought up on this earth just to survive. We’re here to thrive, and thriving starts with people doing what they are motivated about. In those regards, Hamza had a pretty insightful recommendation to everyone out there: “Do what you love and you’ll never fail. When my work became my passion, I was going that extra mile” See, his passion is not to make money (although that doesn’t hurt) but to observe, understand and invest in people. “ I enjoy dealing with people, so I decided to shift my focus to social intelligence. I wanted to develop an understanding of people, to get to know how they function and analyze what they really are made of.”

But in all honesty, how do you do that? Well, the key is to know how to observe. I’m not talking about a glance, giving the person a quick look and then just going back to your smartphone. Actually observe. Observation is an art, perfected over years, and Hamza seemed like some kind of Jedi when it came to using that skill.

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Investor Talk

What makes Hamza’s work ethic unique, whether it’s with Envestors or any other project, lecture or advisory position, is his ability to blur the lines and support entrepreneurs not only with their business needs, but with their life struggles and questions as well. “We give more than just professional support, we find ourselves often times giving life advice to entrepreneurs, supporting them across a range of services that were not included in our areas of expertise. We even dealt with people’s depression at times!” Business isn’t just about business anymore, it’s about people. Investors back the people behind the project, not the idea. If we like the entrepreneur pitching the idea to us, that’s 90% of getting us to say yes and invest, and when we say yes, we invest ourselves in helping that entrepreneur to be the best version of what he or she can be, whether in terms of business practices or character.”

Pitch Perfect

Now for all the entrepreneurs and wantrepreneurs out there making it this far, the burning question everyone is trying to have answered is: How on earth can we execute the perfect pitch? How can we get investors to sign those checks and believe in us, allowing our startup to take off?

“Investors are sensitive to everything around them. They are sharp and can read people instantly. Investors are getting smarter so don’t assume you can lure your way into their pockets. The truth is, you have one chance, a tiny chance to get their attention. When that happens, you have to win their hearts and minds from the first encounter. I remember a specific entrepreneur who entered the room, greeted me and walked straight for the chair. Before he even pulled it out, and went straight to the chair and sat down. You know what happened? I promptly asked him to leave the office, not wanting to hear his idea or pitch, saying I wouldn’t invest in him anyway. Every single movement he made, from how he walked, smiled, where his gaze went, the tone of his voice and a thousand other things, was something I had seen in an entrepreneur countless times before. The inability to be flexible and look after his cashflow, as well as a lot of arrogance. Surely enough, 5 months later, he raised $1m from family, friends and fools, and burnt through that in the first 3 months of operations, forcing him to close down. ”

“We invest in people, and in that spirit, we need to trust and get well with entrepreneurs we’ll be working with. Everything is critical about the person pitching to us. Their personality, background, body language, tone – we analyze all the little details to have a thorough understanding of the individual we will be giving our money to. All of that has not only an impact on how much money they can raise, but also at what valuation.”

Stubbornness and inflexibility are two traits that will truly kill your mojo when you’re interacting with investors. “They need to be open to new ideas, changes to their business, recommendations and be able to pivot. If they’re flexible and able to adapt to new circumstances, they’re a winning ticket for sure. We love entrepreneurs who are confident yet humble, full of happiness and positivity, sure of themselves and excited about their ideas.”

Any pitch tips?

– Always smile

– Be precise and start with what you’ll be doing. If the investor doesn’t completely understand what your business does in the first 60 seconds, every slide, set of numbers and charts that you show afterwards have no relevance and you’ll lose them.

– Try to excite the investors about your business by making them understand what excites YOU about the business.

– Keep the pitch under 8 minutes.

– Do some quick research about body language and implement it to your advantage.

– Everything is assessed: verbal, visual and body messages.

– Observe your audience and adapt to them.

– Don’t play the ‘Smart Alec’ card and definitely don’t be cute with investors.

– Don’t pull a background check on us in order to tell us about our lives – we know what we did or said, rather, use it to understand us and tailor your pitch to what we believe in. Don’t quote me to me or talk down to your investor, remember why you’re there, you’re looking for a partner, not bank account details.

Why do investors come off as highly unpleasant people sometimes?

We’ve all experienced it or seen it at some point. The “typical” greedy, old and grumpy investor, looking down on you while you’re about to pitch your idea, looking like they’ll be biting your head off at any second. Familiar? We’re not talking about the Shark Tank here; forget about that, those guys have ten cameras directed at them, so it’s fairly dramatized. But something close to that happens in venture capitalists’ offices and entrepreneurship events all the time – and there is a reason for it.

Investors aren’t being harsh just for the sake of being harsh. They try to push entrepreneurs outside of their comfort zone, they try to push them to the edge in order to see how much they can take, how they can get themselves out of a sticky situation. We want to see their reactions; it’s all part of our assessment. If you can’t take some heat from an investor, how will you deal with the realities of entrepreneurship?

But don’t be quick to judge investors, because behind those professional facades are amazing people who just want to help others achieve their dreams (while making a nice return on investment). Take Hamza for example, he might come across as stern and emotionless if you encounter him on a pitch competition, but in reality, he’s a humble and comfortable guy to be around – a little surprising I have to say.

“I don’t like to intimidate and push back people through tons of contracts, hitting them up with lawyers here and there, clauses and hidden by-laws. I am a lawyer by profession and education, but I don’t like to abuse that to get the upper hand over entrepreneurs. But that doesn’t mean that the process is all roses and rainbows. Entrepreneurs need to understand that investors take risks, putting their own hard-earned money on the table. We’re not a charity; we look for a return on our investments. That’s why entrepreneurs should never be offended by what investors have to say or put down in a contract. It might seem as we’re being greedy and unsympathetic, but in fact, we’re usually protecting ourselves from situations that we’ve seen too many times to count. Throw your ego aside and don’t take everything as a personal insult.”

Failures

Yousef Hamza’s life might come across as a smooth entrepreneurial ride. A genius student, who rose fast through academic ranks, went on to become a lawyer and then ended up becoming an investor and principal at Envestors who enjoys everything life has to offer. Well, sorry to ruin the Disney-like story for you, but he’s had his fair share of disappointments and he has no problem talking about them.

“I failed a bunch of times. My life hasn’t really been as smooth as it might sound. I faced a lot of challenges, I´ve had relationships fall apart, investments gone bad and projects breaking down, but I learned so much from them. You see, failure speeds one’s learning curve. If people can handle criticism, if they can admit to their failures, they’ll fail forward. But for others who are stubborn, who stick to their projects no matter what happens, don’t want to admit that change is sometimes needed, then at the end of the day their failure is a disaster with no constructive results.”

What Entrepreneurship Should Really Be About

From the number of people who walk around claiming entrepreneur this and entrepreneur that, you’d think half of the world are setting up startups and launching businesses left and right, but the truth is, much of it is just talk. Entrepreneurship is becoming a sign of prestige, a medal people put on to look and sound amazing, but in reality, there are few who take on the battleground and fight hard to reach their dreams. Entrepreneurship is about sweat, blood and tears, that’s what it takes to launch a startup and get it off the ground.

“Entrepreneurship is a mindset. Some people are born to be entrepreneurs; others learn it along the way. The way to become a successful entrepreneur is to get out of your comfort zone. It’s all about sacrifices. Friends, time, sanity – how much you are willing to give up in order to pursue your dream, achieve your objectives and see your business come to light? Some would take a day off or spend a few bucks to attend a conference or a Hackathon and appoint themselves as entrepreneurs. Who are you kidding? The philosophy of entrepreneurship is not about going to a few conferences or attending fancy-titled conventions, it’s about getting things done! And if getting things done is too much for you, then you’re not cut out for this.”

The 6 Keys of entrepreneurship

Stop complaining, everyone is in the same boat, find solutions instead

Always partner with people and ask how you can be of help to others

In the name of learning, most things are forgivable

Never stop developing yourself

 Be prepared to sacrifice

Observe everything

Picture Credit: Funders and Founders