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A successful angel investor revealed two red flags that prevented him from investing in a founder on the first meeting.
Carles Reyna is an angel investor who backed voice-cloning startup Eleven Labs when it was still very early stage in 2022. The firm was co-founded by Matti Staniszewski and Piotr Domkowski and raised $180 million on a valuation of $3.3 billionin Series C funding earlier this year.
In September, the company announced it was allowing employees to sell shares of a A valuation of $6.6 billion. Reyna is now vice president of revenue at the AI ​​firm.
When Reyna first met Eleven Lab co-founder Staniszewski, he told CNBC Make It, no one wanted to invest in voice AI at the time. However, Reyna made up her mind take a chance with Eleven Labs after just one meeting.
“We started talking and within 30 minutes of the first conversation I said, ‘How much money do you want?'” Reyna said.
He explained that the first meeting was critical in making a decision and Staniszewski had shown certain traits that attracted him as an investor.
“If the first signs just aren’t there, I usually don’t want to waste anyone’s time… I think ultimately you’re always optimizing for high-quality interactions, (it’s) like you’re trying to sort out whether or not it’s something you really enjoy and want to spend more time with the founders on.”
Reyna revealed two reasons why he would not want to invest in a founder after the first meeting.
Two red flags
One of the key traits Reyna looks for when meeting with a founder is technicality.
“It’s very personal, especially at different stages. But to me, if one of the founders isn’t technical, like literally can’t build products, isn’t a researcher or something like that, I just don’t see the value in that because they’re not going to be able to move as fast,” he said in the interview.
Reyna saw that quality in Eleven Lab’s Staniszewski, who has a first-class honors degree in mathematics from Imperial College London.
“It was really interesting to see that he was thinking about the problems of the whole ecosystem before he even had any product or before he even talked to a real prospect,” he said.
The second red flag is if the founder is trying to build a company in a “very crowded market,” which Reyna often tries to avoid.
“If there’s a lot of venture capitalists looking at this market because it’s sexy, I just don’t care because then the valuations skyrocket and you end up in a price war where everybody’s trying to give them term sheets and so on,” he said.
When too many VCs want to invest in a company, it drives up that company’s valuation, which then puts undue pressure on founders to show rapid growth and maintain or increase that valuation, according to Reyna.
Other reasons could be that the founder is in an industry that he simply isn’t interested in and doesn’t fit his investment profile.
“If someone sends me a pitch or they introduce me to someone that just doesn’t grab my attention right away, I’ll tell them right away, ‘I’m happy to help you with whatever you need (but) from an angel or investing perspective, that’s just not one of my things.'”
