The American University in Cairo (AUC) has launched the first university-based angel investor network in MENA under the name AUC Angels.
“Since 2011, the number of startups has increased; however, the supply of entrepreneurs has surpassed the demand of investors. To create this demand, you need to capacitate high net worth individuals to become angel investors,” general manager of the AUC Angels Ahmed Hatem tells Business Forward.
Hatem says that AUC Angels primarily started in order to catalyze investing in high growth startups. The aim is to support innovative startups in securing seed funding and providing a strong pipeline of startups for angel investors.
What role does AUC Angels play?
What AUC Angels does is recruit high net worth individuals and turn them into angel investors. It provides them with training programs and helps them network to become involved in the process.
The training program offered by the AUC Angels for the investors consists of two stages. The first stage is the base stage, in which the investors are introduced to the elements of angel investing. They learn how to diversify risk, negotiate the terms of deals and deal with entrepreneurs. At the end of this stage, they are introduced to angel investors present in the market to manage their expectations and know more about the process.
The second stage is more advanced, pertaining to follow-on deals and supporting the startup invested in.
“Angel investors’ concerns are not primarily profits, but they mainly get involved to network, give back to their community, be part of the entrepreneurship ecosystem and walk the path with entrepreneurs,” Hatem goes on to say.
What is in it for the entrepreneurs?
Additionally, AUC Angels capacitates entrepreneurs to receive investments and negotiate the terms of each deal. Entrepreneurs join an investment accelerator program in order to help them prepare their financial statements and get ready to pitch their ideas to angel investors.
While entrepreneurs are taken in on a quarterly basis, the recruitment process of investors occurs throughout the year. Each cycle, five promising startups are chosen to join. They spend four to five weeks in the investment accelerator program, which is concluded by a pitch event.
AUC Angels’ first pitch night will take place in September.
Who is joining?
“For now, we have about 30 investors ready to join, and we have five startups for the next pitch night,” Hatem reveals.
In an angel network, the chosen entrepreneurs need to have operating startups that started their product-market fit process and have a growing consumer base. They are usually in need of $500,000 – $700,000 in funding to sustain their growth.
Each investor that joins the AUC Angels should invest at least once every year, Hatem adds. If they are not investing, then they are not eligible to join.
The AUC already has access to startups from its incubator AUC V-Lab, which graduated over 100 startups since its inception.