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One successful angel investor revealed two red flags during the first meeting that prevented him from investing in founders.
Carles Reyna is an angel investor who backed voice cloning AI startup Eleven Labs when it was still in its early stages in 2022. The company was co-founded by Mati Staniszewski and Piotr Dombkowski and raised $180 million in Series C funding at a valuation of $3.3 billion earlier this year.
In September, the company announced it would force employees to sell stock valued at $6.6 billion. Reyna currently serves as VP of Revenue for an AI company.
When Reyna first met Eleven Labs co-founder Staniszewski, he told CNBC Make It that no one wanted to invest in voice AI at the time. However, Reina decided to take on Eleven Lab after just one meeting.
“We started talking and within 30 minutes of our first conversation, I said to him, ‘How much money do you want?'” Reyna said.
He explained that the first meeting was critical in making a decision, and that Staniszewski exhibited certain characteristics that made him attractive as an investor.
“I usually don’t want to waste someone’s time if there are no initial signs…I think it comes down to always optimizing for high-quality interactions. This is something I really like and I’m kind of trying to triage if I want to spend more time with the founder.”
After our first meeting, Reyna revealed a couple of reasons why she didn’t want to invest with the founder.
two red flags
One of the key characteristics Reina looks for when meeting founders is technicality.
“It’s a very personal thing, especially at different stages. But for me, if one of the founders literally can’t build a product, they’re not a researcher, they don’t have the technical knowledge, I don’t see value in that because they can’t move as quickly,” he said in an interview.
Reyna saw this quality in Eleven Lab’s Staniszewski, who holds a First Class Honors degree in Mathematics from Imperial College London.
“It was really interesting to see him think about the whole ecosystem issue before he actually has the product or actually talks to potential customers,” he said.
The second red flag is if a founder is building a company in a “very crowded market,” which Reyna often tries to avoid.
“It’s a sexy market, so even if there are a lot of venture capitalists looking at that market, I’m not interested at all because then valuations would skyrocket and you’d be in a price war where everyone is trying to give them term sheets and things like that,” he said.
According to Reyna, when too many VCs want to invest in a company, that company’s valuation is inflated, which in turn puts unnecessary pressure on founders to show rapid growth and maintain or increase that valuation.
Another reason could be that the founder is in an industry he is not interested in and that industry does not fit his investment profile.
“If someone sends me a pitch or introduces me to someone who doesn’t immediately interest me, I immediately tell them, ‘I’m happy to help you with whatever you need, but from an angel perspective or an investment perspective, that’s not my job.’
