Ruth and Gideon Eden demonstrated their commitment to BioLumix by investing their own money first. This commitment along with a compelling story and proven track record from a previous start up helped them convince angel investors to provide funding to bring BioLumix's products to market.
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For Ruth and Gideon Eden, BioLumix is their second startup. They began their careers as employees. As they found their jobs buffeted by corporate takeovers, they decided to launch their own businesses in industrial biology. The first business succeeded well helping them establish a track record in the venture community.
In this segment, we continue our Financing Innovation series by focusing on how they used angel investments to fund their current startup. Angel investors are individuals who typically contribute less than $1M to a company's capital. Highlights include:
- An important motivation for Gideon and Ruth was maintaining control of their company. Because angel investors put up less capital, they are willing to accept a smaller ownership stake.
- Angels also look for less risky investments than venture capitalists who can spread risk over a larger investment portfolio. As a result, angels are less likely to push a company take business risks that might lead to very high payoffs but also carry a significant chance of failure.
- In Gideon and Ruth's perception, angels value the following items when considering whether to invest: a compelling story, a good track record for the management team, commitment from the management team often signaled by the team investing their own money first.
- BioLumix has signaled to its investors that it expects to sell itself in five years to a larger company.