John Ason: Angel Investor Extraordinaire

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John Ason, New York City-based angel investor talks to the Dublin Commissioner for Startups Niamh Bushnell

John Ason has been an angel investor for the past 20 years. Previously, he worked for over 25 years at AT&T, both as an engineer and developing the company’s international business. During that time he worked on “bleeding edge” technology, the perfect backdrop for his future career as an angel investor. John was in Dublin earlier this summer and sat down with Niamh Bushnell to discuss what interests him as an investor, the Dublin-based companies he is excited about and the advice he has for would-be investors.

Can you introduce yourself?
My name is John Ason. I am a seed stage angel investor. I typically invest in companies that are pre-revenue and pre-customer. I look for companies that are going to either create new markets or completely disrupt existing ones. I’ve invested in about 80 companies over a 20 year period, 16 of them were founded by women, and ten are based internationally. 27 companies are currently active.

Is it unusual for US-based investors to invest overseas?
Yes, very unusual. As far as I know, the only other investor that does it is Dave McClure. VC funds will sometimes set up branch offices in foreign countries where they have a local presence.

Why don’t VCs and angels invest more in internationally based companies?
There are several reasons. The legal systems are different. In the local legal system, you may not have protection from somebody taking over your company. You have no recourse for anything that happens. It’s a tough environment to be in unless you have a very strong local presence or a network you can depend on.

You were here in Dublin for almost a week. What are your first impressions?
The first time I came was two years ago. I stayed on Grafton Street at the Westbury Hotel. My view of Dublin was just the immediate vicinity, and I assumed this was all of Dublin’s central business district. This time, I stayed at the Morrison on the Liffey and walked north, east, and south and explored a much more vibrant Dublin. It was much more interesting this time around.

You already have one Irish investment, right?
I’m an investor in LIKECHARITY. We find donors for charities on a fixed-price basis.

You met them only once before investing. What compelled you to invest after one short meeting?
It was the founder. I invest in people, not the actual product or service, and Tadhg O’Toole was very impressive and had a great vision for the future. It was an area I knew nothing about and he had a very good story, so I liked it.

On this visit to Dublin, you’ve met quite a lot of companies. What are your thoughts on them?
The companies were representative of what I would typically see in New York City in terms of quality. It was also pleasant to see the diversity. There were technology companies, local business-types, and a complete range of different applications. When you have that diversity, it means you have a very vibrant situation.

And for you to be interested in them, would they need to be coming into the US market?
Yes. Some of them would make great candidates to come over to the US via an accelerator or some other program, learn about the US market and be able to function within our competitive system.

Would you invest in a company that was not coming into the US?
It’s hard to invest in a company that isn’t coming into the US because the investor-startup connection is very tenuous. You can only do that if you have got a very strong network in the country they’re based in or if there’s a local co-investor who can look after the investment for you.

Tell me about the pitches you heard in Dublin.
One of the things that surprised me was that a good number of the presenters were very aggressive, doing a sales marketing-type pitch. I normally don’t see this outside of the United States.

Was that a good surprise or a bad surprise?
Generally, it’s a good surprise, but then you’d need to have the appropriate content level to match it. I don’t want to be listening to a sales marketing pitch. I want to hear an investor pitch because I want to know how you’re going to be in the market, what the size of the market is for you, how you can make money and how you’re going to achieve that. I’m not specifically looking for an explanation about the product and service. You have to remember, your prime objective is to sell equity and content to the investor. You’re not selling them the product or service.

So the companies were selling the product to you more than selling the idea of being an investor?
Yes, which, by the way, is very common. All over the world, people tend to think if you build a better mousetrap, everybody will come to it.

How can a company really engage an investor?
The arena that I deal in is pre-revenue, pre-customer, so the investment is made through an emotional connection. That connection is built if I understand and see the market you’re trying to create and know you have the confidence that you are the person that can take it and be successful. The product and service are important, but it’s not the driving factor.

There’re several ways to achieve that. One is to use fewer words in your executive summary. Words are your enemy, not your friend. The more words you use, the less emotional the presentation becomes. Pictures are nice because you can say a lot in very short periods of time and that’s what you want to do in short pitches. You want to have the investor engaged in a meaningful discussion about your program or service, as opposed to just giving them a marketing sales pitch. That, by the way, is hard for most people.

How does an entrepreneur know that they’re achieving an emotional engagement?
When there’s a healthy conversation. “If you’re doing this now, can you also do that other thing? Can you get into this vertical? Can you add these features?” When you’re having a meaningful discussion, then it makes sense, especially if the investor is talking about other work, future work. He sees the bigger opportunity which is a win-win situation for both. If all the investor does is just hone in on your product or service, he’s limiting the scope of what you’re doing. The more you talk, the smaller the opportunity becomes because problems will surface, solutions won’t be there, and you have less chance of getting funding.

Do you invest in smaller niche opportunities, or do you prefer looking at companies that are addressing a very broad and large market?
I don’t do niche opportunities because of the high-risk nature of what I invest in. 90pc fail so I can only invest in opportunities that return ten times or more my investment.

Is there a market size below which you would not invest?
Because the markets are new, it isn’t the size. It’s got to be interesting and potentially large. If the market is as described, will I get ten times my return? It’s based on an assessment of the market and the potential return. In many cases, the market is big, but it requires 50 or 100 million of follow-on financing to achieve the ten-times return.

Does ambition play into your decision-making process?
They have to have ambition. What I don’t want is somebody coming in with a pure business idea and being purely money-oriented. If you’re only money-oriented, then it’s probably not a good relationship. The passion to succeed is very different from the passion for making money. I want to see the passion for succeeding.

Which did you see more of in Dublin?
Oh, there was a good passion for succeeding, more so than the passion just to make money.

That’s a good sign. Pick out one or two companies that you liked a lot.
The best company that I can think of is SoapBox Labs. What made it interesting is that it can be a platform for voice recognition for children, and it could be a global platform. I like platforms where you invite other partners to write applications on top of it and can dominate a market. It’s hard to dominate a market if you’re doing a vertical or niche slice of a market. That, to me, was the most promising company that could be fairly successful in the US and could go global.

A second one?
There was one that’s a little different – Courtsdesk. It didn’t apply to the US as it was mostly for the British or English-speaking Commonwealth countries but was a very well thought out business model.

I think you also liked DynamicRes a lot, right?
Yes, I liked the idea of them going in through smaller travel agents.

What would you say to people, who have never invested before, about becoming investors? What should they consider?
The first thing is you have to be able to live without the money you are going to invest. The second is that even the best of us have a high failure rate, so you need to diversify. If you’re getting into this world, set aside enough funds to do ten different companies. I tend to get surprised on the upside with many of my investments. Some of the ones I think are sure winners fail. You need to be able to accept the failures, walk away from them, do not throw good money after bad, and just have a little patience.

Apart from having money and being psychologically prepared to lose it, what else does an angel investor need?
That goes back to the issue of the fox and the hedgehog. A fox knows many things and a hedgehog is a subject-matter expert. Most people are hedgehogs, so if they’re from the financial industries, they’re going to invest in financial, fintech-type companies. If you’re a fox, you’re going to look at all kinds of different companies. You’re going to know about how to make a business successful, not necessarily making the product or service successful. Most people are hedgehogs. Therefore, they should look for companies that are within their vertical or area of expertise.

You are a fox, as we all know!
Yes, I’m a fox.

What is your sense of the potential of Dublin as a tech city?
I like Dublin as a place. I think for you to be successful, you need to be more international, bring companies over to New York for visits, presentations or establishing relationships with accelerators. If you don’t do that, you won’t get the visibility and the attention you properly deserve.

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