Complementary Law 155/2016, enacted last November, established new rules for the special taxation regime of Simples Nacional and provides protection for the angel investor. The law, in its articles 61-A, 61-B, 61-C and 61-D defined an angel investment structure and legal certainty for this type of capital contribution. Cassio Spina, founder and president of the Anjos do Brasil organization, assesses that “this law resolves one of the main obstacles to the growth of angel investment in startups, providing legal certainty for investors and, consequently. making it possible to increase the volume of capital available to startups”.
Now, individuals and legal entities will be able to make capital contributions, but they will not be considered partners, without participation in the management or vote in the management of the company. The advantage is that these investors will not be liable for any of the company's debts, even if they go into judicial reorganization. The capital will have to remain invested in the company for a minimum of two years, and a maximum of seven years.
The ABES portal interviewed Spina about entrepreneurship, angel investment and perspectives for the startup ecosystem in 2017. Check it out:
– What are the aspects that angel investors should look at in a business before investing their resources in a company?
The investor must research the entrepreneur's profile, so he must be able to take the project to the next level and transform the startup into a successful business. Associated with this factor, one must also consider the execution capacity of both the founders and their employees, whether they have the necessary skills to manage the business and whether they have total dedication to the company, in addition to assessing whether the market opportunity is real and big enough, and whether it can be monetized. I particularly look for startups that can build a competitive advantage and impose barriers to entry for competitors. This new business must be able to solve a big problem, the proposed solution must be innovative and difficult to copy, as well as being a scalable business.
– Are Brazilian investors still very afraid of risks? How to solve this dilemma in the face of other more profitable investment options in the short term?
Angel investment in Brazil as a proactive action is very recent, but we have a long history of entrepreneurs and executives who invest and help startups when they are wanted, that is, receptively. In this sense, the challenge is to identify these people and connect them so that they start to exercise this actively, as well as encourage and train others who have the potential and interest to become angel investors.
Investors are not very knowledgeable about investing in startup companies. Normally, this investor is aware of the business itself, but does not know how to look from the outside. There are even practical questions about how to invest. Whether it is better to make a direct contribution or create a holding company. What guarantees does he have as an investor? How to minimize these risks? Much knowledge is lacking. One of our main missions at Anjos do Brasil is this: to provide information and show practical experiences. So we form groups, we join more experienced angels with others. One passes its story on to the other. But that takes some time to mature.
Angel investing will likely be your riskiest investment, both from capital loss and illiquidity. As it is an investment in start-up companies and because they have a much higher mortality rate than established companies, this type of investment carries a higher risk than any other conventional investment and, therefore, it is expected that it will also have a higher return.
– How does Anjos do Brasil evaluate the Brazilian startup ecosystem?
This is a growing market, but one that is still maturing in Brazil. We have seen in recent years entrepreneurs shifting from need for survival to entrepreneurs looking for business opportunities and empowerment to create high-growth companies. New entrepreneurs seek opportunities to build great businesses, but they still face numerous challenges, such as the bureaucracy and regulatory environment that do not favor this type of company or the investors that support it.
– What are the main guidelines that Anjos do Brasil gives to a potential investor?
Simply put, the role of an angel investor is to add value to the startup. Obviously, one way to do this is through investment, but the role of an advisor or mentor can be even more important. The combination of the two is called “smart money” and for angel investors to be able to meet this need, they must have relevant professional experience, knowledge and contacts in the area in which the startup operates.
A good combination of skills is also very important. I would emphasize an open approach and collaborative attitude. Furthermore, an angel investor must be ready to accept risk and know that it is the founders who must deliver results. He can't just tell the founders what to do and want to control them.
– Tell us a little about the goals of Anjos do Brasil.
We want to disseminate the culture and foster the growth of angel investment to support innovative entrepreneurship, as we believe that it can represent a great differential for Brazil in the medium/long term, as happened in the USA. To this end, we operate on three fronts. The first is building a network of investors. They are regional groups, because the investor has to be close to the entrepreneur. The second mission is to disseminate culture and knowledge. Empower both investors and entrepreneurs to understand what the investment process is like and get good results. The third aspect is institutional, mainly with the government, in particular with the Legislative and Judiciary powers.
We would like to take the opportunity to inform those interested in the subject, who can access the Guia de Investimento-Angel, a set of reference documents, to increase the knowledge of investors and entrepreneurs, which can be downloaded free of charge through the link: www.anjosdobrasil.net/guia
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