Ep#5-Learn How Angel Investors Choose Start-ups for Investment | ft. Tariq El Titi

Join us on today’s episode of #Alphapreneurs, where host  Rayhan Aleem chats with Tariq El-Titi-Angel investor & the Managing Director of Janus Ventures for an insightful entrepreneurial discussion!

Tariq begins by reflecting on his early days in Dubai during the 2000s following his impressive professional years in the UK. He shares how he collaborated with stakeholders to work closely with the government on various projects in efforts to develop key business sectors that shaped Dubai’s thriving investment scene as we know it today.

Drawing from his inspiring experience as a diverse Angel investor, Tariq provides invaluable insights into both sides of the funding partnership drawn from his long adventurous experience as an Angel investor across diverse industries. He also breaks down the essential skills that every ambitious founder needs to attract angel investors and scale their startup. 

👉 Follow Tariq El-Titi  on LinkedIn: Here

👉 Website: https://janus-ventures.com/

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Chapters

• 0:00 Intro
• 1:23 Tariq’s Move to Dubai & Early Career in Healthcare
• 5:00 Establishing Janus Ventures
• 9:00 First angel investment experience
• 10:16 Portfolio strategy and diversification
• 15:34 Regional unicorn exits and angel investor perspectives
• 20:01 Timeline expectations for startup returns
• 23:58 Aligning stakeholders for a successful exit
• 31:58 Transparency during acquisitions
• 36:57 Key Traits Tariq Looks for in Founders and Startups
• 43:14 Healthcare Industry Trends in Dubai and Post-COVID Innovations
• 47:43 Final thoughts and closing remarks

Transcript

[00:00:00] Tariq: Their personal story is really important and what drives them. What kind of person are they? What's their backstory? Why are they passionate about this particular problem? I prefer it if they have knowledge of a particular industry. I know there's two schools of thought, right? an industry outsider coming in to solve a problem, might see things and things differently.

[00:00:22] Tariq: The thing about early stage ventures, it's a lot of it is access to deal flows. A lot of it is credibility. Friendships, relationships, and then, access at the right time, very early where it's not well known mainstream. 

[00:00:37] Rayhan: Welcome to the Alphapreneurs Podcast. I'm your host, Rayhan Aleem, founder of Taxstar and Alpha Pro Partners.

[00:00:44] Rayhan: Join me on each episode as we talk to inspiring Dubai based entrepreneurs who share their stories, challenges, and secrets on building world class businesses.

[00:00:57] Rayhan: Tariq, welcome to the show. Thank you very much for joining. I want to just get into, Janus Ventures. it's one of the projects that you're working on. you have a lot of your investments in there as well. Do you want to tell us more about Janus Ventures? what made you, create an entity?

[00:01:17] Rayhan: What are the objectives? What was so far, as an investor? 

[00:01:23] Tariq: It's been, it's been quite an interesting journey. I moved to Dubai. Dubai. Just to give a little bit of the backstory, I moved to Dubai 2003, so just over 20 years ago. 

[00:01:33] Rayhan: Wow. 

[00:01:34] Tariq: Quite a while. Yeah. people say, oh, you were here so early in the Dubai journey, but I was late, there was a lot going on in Dubai and people had been here for quite a while already, and there was a lot of dynamism and and it just, Dubai has just continued to build and, the, momentum of the Dubai story just continued to accelerate.

[00:01:55] Tariq: yeah, I didn't feel like I was early that time and, I. Part of the founding team at the Dubai Development Investment Authority, which was His Highness Sheikh Mohammed bin Rashid. when he was the Crown Prince, it was his, private, it was government, but it was where he was developing a lot of the diversification of the Dubai ecosystem.

[00:02:16] Tariq: helping to build different sectors, hospitality, leisure, entertainment. So I ended up, building, that was the start of my healthcare, experience and career, building companies and building healthcare businesses here in the region. So as part of the team that built my healthcare city, had my own healthcare financing, started with a business partner of mine and we raised venture capital, high IT healthcare.

[00:02:41] Tariq: Providing health care financing for elective treatments, things not covered by insurance. Quite early in the cycle, this was back in 2000 and about 2008, 9, 10, went down to Abu Dhabi, was part of the leadership team that built Cleveland Clinic in Abu Dhabi with Mubadala Healthcare at the time. And I'd been there for eight years.

[00:03:00] Tariq: Joined in 2010, we launched Cleveland Clinic Abu Dhabi 2015, stayed there till the operation stabilized early, early 2018. Very successful project, very blessed to be part of the team there from very early. I think I was number, employee number 21 or 22 on the team. We were, working out of a, residential apartment that was owned by Moorbadla, opposite Memorial, their headquarters.

[00:03:24] Tariq: Wow. It was a residential building and that's, where me and the head of pharmacy, started working with our laptops out of a bedroom in one of their, residential apartments. So true startup, but just, sovereign wealth when backed. 

[00:03:35] Rayhan: Yeah. 

[00:03:37] Tariq: so once that project was completed and I rolled off, I thought a lot about what I to do.

[00:03:47] Tariq: and there was a lot of interest. In early stage venture, entrepreneurship, government was really pushing it. There was a lot of, it's very well known for the SME sector here in the US already. and there's a good entrepreneurial spirit, so they were really trying to harness that.

[00:04:05] Tariq: So I really wanted to get into that, space early and I'd already, set up my own company, finance company earlier, raised venture capital, built companies for the company. You've had the experience before. I'd had experience all my career. I've built startup companies even in life. I was working in telecom startups in the city, so I wanted to get into that space, and I was a bit disillusioned by healthcare as well, which I spent 15 years of my, yeah, about 15 years, of my career here in healthcare.

[00:04:36] Tariq: very important industry. My parents are, my father's a surgeon. Came from a healthcare family, but not the most dynamic in terms of, entrepreneurial, disruptive offering in healthcare. It's a very regulated environment, patient's lives at risk. So it's fairly cautious, a lot of scientific journals and they take their time.

[00:05:01] Tariq: And there was a lot of activity happening at that time in the fintech space. It was early days to what, 2018 B2B SaaS or some interesting stuff going on. So, I set up Janus Ventures originally to work with early stage founders. and companies and to help develop their scale up, strategy, help them to develop their offering across the 

[00:05:27] Rayhan: expertise to help them.

[00:05:28] Rayhan: Yeah, so a lot of them, the early 

[00:05:29] Tariq: is a lot of the founder, the entrepreneurs and co founding teams. They didn't have much budget, much capital, right? And they, wanted, people with experience expertise. I had, a variety. mostly in healthcare, but with a lot of early stage building companies, early stage startups.

[00:05:46] Tariq: so I set up Janus Ventures to really just do some fractional advisory work, CFO role, COO, board advisors, commercial roles, helping to bring companies in. That I've had experience in the UK. UAE a bridge to bring in companies from the UK or Europe into the region.

[00:06:07] Tariq: and I did that with one group, Proximy. Or working with early stage companies here that, that wanted to, tap into expertise that they couldn't really afford full time. And that was really how Janus Ventures started. That was the concept. And then the journey just evolved and then I started getting, once you get deeper down the rabbit hole, lots of things start to present themselves and opportunities.

[00:06:28] Rayhan: Did you, so I take it you found opportunities and you thought, okay, this company looks quite interesting. I'd like to put my money in there or was it a pull with the days come to you and how did that work as well when you was. adding it to your portfolio. 

[00:06:45] Tariq: Yeah, it's, it was more the form.

[00:06:49] Tariq: what happened was it organically developed. So I started, I started working as a kind of fractional commercial role UK to come into the region. Then I started to build a portfolio of two or three different advisory mandates concurrently. One in the salesforce sector, another one in the energy, oil and gas and energy sector.

[00:07:14] Tariq: and invariably all of them were either looking to raise funds, scaling up and trying to build a proposition so they could then go out and raise funds at a better valuation, or, or bring in debt, if equity didn't make sense to them. But a lot, all of them were looking at, needed working capital, needed growth capital.

[00:07:34] Tariq: That was the kind of the common, commonality across all of them. So I, helped raise a debt. I'm a chartered accountant from the UK and a lot of finance experience. we raised a debt instrument for, one of the groups, another group to help them close their Series A funding round, equity round, another group, we, positioned, for an acquisition, which, which took some time, but From there, I started to get experience of the kind of fundraising, debt and equity side. I started to get more involved in the ecosystem. and I started getting invited to, to come in as a mentor. and some of these accelerator programs, I was invited with, to, with the WAMDX program, Vatican doors program.

[00:08:21] Tariq: There was a few others invite me as a mentor. So I started getting exposure to very early stage entrepreneurs and founders. And that seemed to resonate and, two way, resonate two ways from me to them and them to me. And then, it didn't take long. And then I started getting access to opportunities to invest.

[00:08:39] Tariq: 'cause a lot of the founders I friends with or was in the ecosystem starting to raise. Yeah. And then, and the thing about early stage ventures, it's a lot of it. It's access to deal flow. So a lot of it is credibility, friendships, relationships, and then, access at the right time, very early, where it's not well known mainstream.

[00:08:57] Tariq: So a lot of these opportunities started to present themselves, Jane Austen's 2018, 2020, so 24 months later, it was a very accelerated journey. Then I started getting opportunities to, put some money in early off my own balance sheet. she's always nervous when you cut your first check, hard earned dollars.

[00:09:16] Tariq: And, there's a bit of a leap of faith in there. did my first angel investment early, worked out very well for me and the other syndicate of angels I went in with, and I've done many more since. once you, you, break the, fear barrier on anything in life actually, then the second one, the third one becomes, just becomes easier.

[00:09:41] Tariq: it doesn't necessarily mean that they are going to be more successful, but you just get more comfortable with, with doing it. 

[00:09:48] Rayhan: Yeah. Now, even with VCs, they're, in their portfolio, they may have 20 companies and of the 20 companies, one or two may become a unicorn, right? the others may not do so, great.

[00:09:58] Rayhan: And I guess as an investor, As an angel, is that how you see your portfolio? where you see maybe one of the 10 or one of the 20 will become the, the unicorn and the rest may, not do well. What's your kind of mindset when you invest in, in, startups? 

[00:10:16] Tariq: It's a great question, actually. I venture investing, when I first started doing it, not too long ago.

[00:10:25] Tariq: we're talking 2020, just, four, four years ago. It wasn't, it's not like I've been doing this for two decades. And, yeah. 

[00:10:31] Rayhan: But you have some great companies in your portfolio though. 

[00:10:33] Tariq: Yeah, yeah, there's some great companies, I would say there's some great founders. It's also the founders that I've been fortunate to come across and get involved with and put some of my own money.

[00:10:47] Tariq: They create good companies, by brand and by reputation. Good leaders, good founders, they tend to do the right thing, get good people around them and then hopefully good things happen. Early, right? So they can, be good by reputation and good by brand, which is very important. But, obviously as an early stage investor, you want a multiple on an exit.

[00:11:12] Tariq: Of course. and so that, that for many of them remains to be seen how well they will do, but hopefully there's some, winners in there. For me, to be honest with you, I'm a big believer in learning by doing. I read a lot of books, around the topic, early stage venture, the legalities of it, notes and structures and safes and terms.

[00:11:36] Tariq: And I did a lot of reading around it, academic reading. It's when I, when I jumped into this, actually putting my money, into companies. I didn't really understand a lot of what it meant. And you don't really appreciate the nuances of the technicality of all these things until you start to have some experiences with them.

[00:11:56] Tariq: Things actually happen and, you get diluted. Or someone else, the captain was an MFN, what's that? so a lot of these clauses that I didn't, I've read about, but didn't really understand. And they're quite new 

[00:12:09] Rayhan: clauses as well. So like the safe agreement.

[00:12:11] Rayhan: Which Y Combinator invented. Yeah. A lot of these are new terms as well. 

[00:12:17] Tariq: Yeah, I mean it's become like the de facto, document. the safe. there's the other group, I forget the name of it, they have a KISS document. And in London I've invested in this from the start. They use an ASA, Advanced Subscription Agreement, which has a, six month drop off date, so where you automatically convert to the cap table.

[00:12:36] Tariq: But here in the region, certainly safes and, YCSafe is, And it's pretty standard, but, what you learn is that, knowledge is power and also, and also, leverage is power. So a lot of the VCs that, good reputation, they've got big funds behind them.

[00:12:55] Tariq: They, know they can really, especially the accelerators, they can get very good terms, certain clauses that are important, to protect, right? So everyone hopes that everything goes out really well and everyone wins. But in downside scenarios, there can still be some winners. In that, it's a zero sum game and so there can be some winners at the expense of others and, those early clauses that, become important.

[00:13:22] Tariq: just to come back to your question, when I started, I didn't really have much of a strategy of, I didn't really know what I was doing, to be honest, I was, getting access to various different deals. Some of them were, pre seed, first money in, paper business plans. Interesting founders or founder, some of them were, different geographies, US, later stage, series A, beyond, that I had just happened to have access to through the network.

[00:13:52] Tariq: Others were pre IPO or much later growth stage rounds. and there were secondary opportunities, much higher value, a bit of everything. And then over time, you start to, I started to refine my thesis about what it is I was looking for, what stage did I want to go in at, what did I feel was a good ticket to put in.

[00:14:12] Tariq: but always from the beginning, my, my kind of vision was, I wanted to be in this, I continued to build companies, in the health, my kind of bread and butter industry, health industry at the moment. And we can talk about that later, but I always wanted to, I wanted to stay in the venture space.

[00:14:33] Tariq: As an early stage investor, maybe in time have my own fund, with a fellow GP or solo, deploy capital on behalf of family offices alongside my own money. so I, so in time I started to come to the conclusion that what I wanted to do is take a kind of VC, an institutional VC approach, right?

[00:14:54] Tariq: So take a portfolio approach to my investing. And then I, once I'd done six or seven, I knew that I needed to reach probably Minimum investments anywhere 10 to 15 because then you diversified try and be a bit more consistent in terms of stage. I'm looking at sectors. I like sectors. I'm going to steer clear of that.

[00:15:11] Tariq: I don't know what enough and it's just not for me. and then, yeah, in theory, like you say, that one return one, one, investment will return the fund in time, right? That's how VCs do it. They want, a unicorn or a, a double digit, multiple return on their money returns the fund.

[00:15:34] Tariq: and then everything else is upside. I think it's. Unicorn exits in the region, still quite early, there hasn't 

[00:15:44] Rayhan: been that many, 

[00:15:46] Tariq: there's about 10 or I think 10 to 15 in the region, increasing numbers coming out of Saudi, Saudi is an interesting market, right? Everyone knows about, Karim and, Souk and, some of the other kind of more well known ones, Fintech in Egypt as well.

[00:16:00] Tariq: Saudi jazz, unicorn exits. And, but I think if even if you as an early stage investor, especially as an individual, when you're investing off your own balance sheet, what I've come to realize is that, what's really important is to get an exit of your mind. Money in, let it grow, contribute, support the founders as much as you can and help them wherever you're able to add value.

[00:16:29] Tariq: And then if there's an opportunity for an exit, and I learned this fortuitously, I had the opportunity and I wasn't sure, should I stay in? Should I go out? There's a very close friend of mine, Angels and it proved to be a good, really good call for us at that stage. You get your money out, then you, get a good return on your mind, then you can recycle that.

[00:16:48] Tariq: And 

[00:16:49] Rayhan: as an angel investor, what's the duration? So for the entrepreneurs out there who are looking to get angel investors on board, what kind of timeline should they be looking at in terms of giving? In your opinion, anyway. 

[00:17:03] Tariq: Yeah, really good. Very good question. so there are different categories of investors, right?

[00:17:10] Tariq: You got individual angels that maybe come in early before institutions. You got the seed, pre seed, first institutional money in. growth VCU as well. So they all have different kind of lenses and different, different horizons. I would say for the angel segment, if we just focus on that, if the ecosystem here in the region, which is still fairly new, want to, and it becomes a community.

[00:17:39] Tariq: So entrepreneurs are current generation of entrepreneurs, including yourself and also later generations of entrepreneurs. I think you need to, they need to, be cognizant of the fact that if they can give angels liquidity events. And exits, they're much more likely to recycle that money, tell friends, maybe put bigger checks and put more money into the ecosystem.

[00:18:02] Tariq: And the angels are really important because they're the, typically the people that were, you've got friends and family. They're the backbone 

[00:18:08] Rayhan: of startups, right? 

[00:18:10] Tariq: they're the, segment that will put money in really early. 

[00:18:14] Rayhan: Yeah. 

[00:18:16] Tariq: A lot of it on faith, a lot of it, based on the relationship.

[00:18:21] Rayhan: Yeah. 

[00:18:21] Tariq: And I wouldn't say it's, untethered or it's, it's free money, but they won't, have the pressure of LPs behind them and certain metrics they need to hit and certain milestones and certain timeframes. so they can be a bit more patient, more relaxed about the investment. It can cut both ways.

[00:18:39] Tariq: You can get not very sophisticated, don't really understand it compared to real estate, and then they can be a real burden. you won't, You want to get the right type of angels that, that get it and, can be a bit more relaxed and a bit more patient. and that can really help the entrepreneur.

[00:18:55] Tariq: It can give the entrepreneur room to breathe and to develop different, try different things and things in the market. And, without having someone there back every two weeks, month. Not to say that VCs do that. VCs actually, especially in the region of some really great VCs that can really add tremendous value.

[00:19:13] Tariq: on the other side, angels, usually they have day jobs, right? So they're not always accessible. They can't, a lot of it is, to some extent, a little bit of a hobby. Yep. so it just depends on the individual where they are in their career. Do they have bandwidth they can contribute or they is there a genuine curiosity if they're an industry Angel in a certain segment and they typically they were gravity can work two ways You can either gravitate towards companies industries, Yeah you can gravitate away because you know the underlying problems or the Infrastructural problems of an industry because you live and breathe a day and day out with a day job and you tend to stick clear of them so so yeah, I mean they they can be really helpful.

[00:19:59] Tariq: So talking about exits, look, everyone, loves to get, everyone wants to put money in, get money out 24 months, 36 months later, get 10, 15, 50, 100x return on their money. And that's the dream. But I think if you're an angel and you put money in it, 36 months, 48 months, three to four years.

[00:20:23] Tariq: It's a really good timeframe. And if you're getting double digit, multiple year money, 5X is great. 10X up upwards. Fantastic. The unicorn exits and the 100X, 150X, that's a dream for all early stage investors. but you can still do very well, even if you don't get any of those, you don't have to get a hundred X return to, to do well.

[00:20:48] Tariq: but then you need to more than one winner if you're going to get, 10, 15, 20x returns. it's a, yeah, there's no right or wrong way of doing it. It just comes down to what you feel comfortable with. 

[00:21:03] Rayhan: I think what you said about the liquidity event, I think that's the key thing, right?

[00:21:07] Rayhan: you've given money as an investor to an entrepreneur. You want to see that money back because there's many situations, not in startups, but in general, in business anyway, invest in a, business. You don't see that money come back. and I guess that gives confidence in the investor community and you as an entrepreneur taking the money and you've given it back, obviously you want to return on it, but the fact that you're able to give some, you were able to give the money back is.

[00:21:42] Rayhan: A very important psychological thing, as a founder as well. 

[00:21:45] Tariq: Yeah, this comes down to point of view, right? It all depends on the lens you're, looking in at this, arena from. from an entrepreneur's perspective, I would say, you always, have some kind of conclusion, right?

[00:22:04] Tariq: for the journey. So some kind of exit at the end, some kind of return of money to your kind of initial backers and VCs and then their LPs. I think, an important part of this is closing the loop on it, right? Yeah. Not all businesses succeed. not all ideas work. the entrepreneur, which I, I find really, I have so much admiration for entrepreneurs because, they really have a hypothesis and they chip away and build a business to try and disprove that hypothesis.

[00:22:42] Tariq: One way or another, they, reach a, a conclusion on, their hypothesis. But even in sites that don't work out maybe as well as, was hoped for, if you, can, you get a trade acquisition or you get some kind of acquisition, whatever you've built, has created value and it goes somewhere, even if it's not a great exit for the entrepreneurs and they get diluted, I think that's always, I would say the minimum, aspirational target for an entrepreneur.

[00:23:15] Tariq: For the angel, you have to understand that this is a space to be putting money in. Of course. and 90 percent of startups fail. a lot of startups fail. the concept is good. They're getting scared, but they may fail because they have liquidity challenges. Founders fall out.

[00:23:37] Tariq: regulatory changes happen. There's so many, there's, 

[00:23:41] Rayhan: It's an eye through a needle, 

[00:23:43] Tariq: right through an eye of a needle is, you're trying to, is the kind of path to success. It's, very, tiny, margins either side, fall off the, wagon and, and, not make it.

[00:23:58] Tariq: So, for angel investors, You obviously want to get a return. I always ask, founders when I'm about to put some money in, lots of different questions, but one of the questions I ask them is, what does the exit look like? What do you, how do you see an exit?

[00:24:15] Tariq: And, how will we get our money back? And it's not to necessarily pin them down. To understand whether they've thought about it and whether they have some, hypothesis about whether this could be an IPO type of business or a trade acquisition or a merger or what kind of profile of companies would acquire them at what stage, so they've thought about what, who they're building for and what they see as a possible path to this journey ahead and, lead there.

[00:24:42] Tariq: But if they've got that idea, then, then, that they've thought about the whole picture. So for angels, you have to be prepared to lose everything. and, and hope that you can get some money out. And if you're not comfortable with the uncertainty, or if you need that capital, should not be putting it, put that in the bank and get your interest rate.

[00:25:02] Tariq: You can buy, buy some real estate and safe asset classes. And it's always good to diversify. So if you can have a bit, five, 10 percent of your portfolio into early stage, high risk venture. As 

[00:25:14] Rayhan: an individual, basically. Yeah, as an individual, I 

[00:25:19] Tariq: think, Then, you come out with gold and cash and property and, you need to have some money, in case things change and Depends on what stage of life you're at, kids and family and, there's a lot of different stages require consume more resources and other stages, consume less resources, but, if you have yeah, I think it's, it's a good, it's a, good asset class to, to get some exposure to and get some high returns.

[00:25:51] Tariq: We're in a region. It's still fairly new, right? So that's, there's a lot of talk in industry about, path that I. Any IPO opportunities in the region, will Saudi, bring that to the table? So there's a lot of, over time, I think here, there's a, real willingness from the government and the leaders to really make this a sustainable industry over the long period, as they did with the aviation industry.

[00:26:17] Tariq: Now we have some of the best airlines in the world out of here, tourism. we have some of the best theme parks and hotels and resorts, so, when they put their mind to something and it becomes a sector that they really want to, put at the core of their economy, then they, then they back it and that's what they want to do with early stage venture and VC investing.

[00:26:41] Tariq: we're still very much in the kind of early chapters of the story in the, region. 

[00:26:46] Rayhan: So Tariq, one of the things every entrepreneur. Thinks about is an exit in their business. we personally worked together in, one of these projects where there was a regional consulting company.

[00:27:01] Rayhan: and you managed to get them to exit to a global consulting company. I want. I guess the question for entrepreneurs is, how was that process? what kind of things did you have to do to get the company ready for an exit? How was it negotiations? How was it, post acquisition? 

[00:27:26] Tariq: Yeah, I, I, yeah, I've been involved in a few different transactions.

[00:27:31] Tariq: So the one we worked on, was, was a good outcome. I was retained as a, an advisor, a fractional CFO and COO. So I was running the operations of the business and managing the financial management and corporate finance alongside the founder, and the technical team. And, Yeah, what I would say is, these type of transcripts are a meeting of, it's, always serendipitous, it's a meeting of two parties that want, one is looking for a new home, another party is looking to grow and, acquire as opposed to build on their own.

[00:28:15] Tariq: it's always a meeting of minds where there's an intersection where it's a, genuine That's what happened in this case. There was, we had been looking for the right suitor that could have propelled the business regionally. That you was actually looking. We've been looking. Yeah. 

[00:28:30] Rayhan: Okay. Rather than someone coming to you and saying, we want to buy your business.

[00:28:34] Tariq: We had been looking, and we'd had a couple of conversations that, that, that were interesting, but fit culturally, the timing wasn't right. and then once you start looking and you're, clear about what it is, who it is, or what kind of organization you're looking for, it's quite a well known ecosystem.

[00:28:54] Tariq: So there was some good players in the ecosystem that. once people used to having a conversation, people keeping in mind introductions, referrals are being made, and at the same time, you might find that there are other groups looking to get in. In this case, there was another group that was looking to get into the industry.

[00:29:10] Tariq: they were, they were in the kind of customer centricity space and, customer relationship management space. They wanted to get into this kind of the software, ecosystem abilities or talent in that space or experience. it was a good fit and, by having, by us, You have to be careful, obviously, because we were not in a fire sale situation.

[00:29:31] Tariq: We were looking for the right partner to propel the business. The business had been running for about 15 years. the founder on his own, and then we, grown about 35, 40 people plus in three different locations, three different offices. But the business had somewhat plateaued. and we needed fresh impetus, a backer, a partner, with resources that could really help us to grow and to scale.

[00:29:58] Tariq: So that, that was really the genesis of, always in these transactions. there's a couple of key elements that need to be thought through. You need to be organized as a company, right? And this is where we, this is the arena we work in, right? Numbers. Numbers and audited accounts and financials and management accounts, bookkeeping, tax filings, whether it's VAT, whether it's corporation tax, depending on which country and jurisdiction.

[00:30:28] Tariq: Okay. you want all your, legal documents well filed, your supplier contracts, customer contracts, any subscription contracts you have. So the more organized you are. The more chance you have because, unlike when you're in the early stage venture space and you're investing early growth, the due diligence, especially in the early stage is quite limited, right?

[00:30:51] Tariq: A lot of it is just the vision that the founding or the founding team paint your belief in their ability as a unit to execute and deliver. Some of the initial traction and metrics you're seeing and just get a sense of whether there seems to be some potential momentum there. When you're acquiring a company, they're acquiring, depending whether it's an asset sale or whether it's a share purchase.

[00:31:14] Tariq: Yeah. if they buy the legal entities, they take responsibility for everything. To have full visibility and due diligence, legal due diligence, finance due diligence, tax due diligence, they have to have comprehensive due diligence, so that they know there's no hidden surprise, hidden surprises, nothing hidden away.

[00:31:35] Tariq: So if you're organized, that's, I guess you 

[00:31:37] Rayhan: have to be open as well, right? Because a deal and you're hiding a few cobwebs in the cupboard and you don't, you don't be open about it. It's going to bite you later on down the line, one way or the other. And it's good ethical practice to make sure that you are opening from that point of view as well.

[00:31:58] Tariq: Yeah, there's a couple of things there, right? always pays to be honest and transparent, with acquirers, with investors and, obviously you have to, sometimes you have to manage the communication and you have to manage the message and you want to convey it in the right way, in the right time, but it never pays to hide things because you hide things, Yeah.

[00:32:20] Tariq: Yeah. Yeah. And they get discovered, which invariably they do when they've got, accounting firms and lawyer firms, they will find everything, eventually. And then the perception is that you're trying to hide away things and you're not being truthful and you're being dishonest. So you lose credibility there.

[00:32:40] Tariq: So it, it doesn't lend itself well to a future relationship, right? Because if you bring things forward, challenges that are there, some outstanding legal, cases that are there, and you can explain and, and put the context right and communicate it, that can actually, work in your favor, right? So you can build trust.

[00:33:00] Tariq: A, a, trusted general, manager of a business, someone they can work with, right? So you can, actually use what may be perceived as challenging situations actually and let it work in your favor if you can convey it in the right way. the other thing that's important other than being Your ducks in a row and your accounting and bookkeeping and contracts is that, you need to have your investors, the owners of the company aligned.

[00:33:30] Tariq: so some cap tables can be very simple, two or three co founders, with some kind of family investors. Some can be very complex with multiple rounds, multiple institutions.

[00:33:43] Tariq: if there's a decision to exit. then, invariably, it could be a 51%, acquisition and majority position buyout, or it could be 100%. Usually it's 100%. Yep. And then everyone who's on the cap table, no matter Last check in the recent round, or if you're one of the early, original backers, 15 years ago, everyone's gonna get affected by this transaction.

[00:34:11] Tariq: the founder, CEO, co founding team, they need to be very clear in their communication to the, to their investors, their cap table. They're bored. Everyone needs to be aligned. Ideally, it would be a scenario where everyone wins. Everyone does well out of that, situation. Yep. Sometimes you'll find that maybe certain investors don't do well out of a certain acquisition scenario.

[00:34:37] Tariq: Sometimes employees, key employees don't do well. Overlap and, there's, they, part of the acquisition is to remove some costs and remove some functions that are not needed post acquisition. And if you don't have people aligned, then they're not necessarily going to be, incentivized for an outcome to happen, in the way that let's say the founders or whoever's driving the trend, it's never easy to get everyone fully aligned on everything, but you need to manage that.

[00:35:05] Tariq: Yeah. There's a lot of communication and, and, you have to take, the employees and your investors, along, along the ride for a successful acquisition. And then, the other thing that's very important is perceived in the industry, the market, the ecosystem.

[00:35:24] Tariq: So the actual stakeholders in the industry, regulators, competitors, customers is a big one. Someone's customers and regulators, right? often you need to have them involved in the process at some point, and communicate to them. And you may not give them the specific details, but let them know that something positive is going to happen, that you're working towards, that will really, strengthen this group in this industry.

[00:35:50] Tariq: And so that they are also not blockers and, and are on board. Customers often will transfer from one ownership, same company, but to another, right into the situation and, certain key customers, depending on the nature of the contracts may have to actually sign off on it and agree and say, yep, so you really have to understand the legalities and you have to understand all of the stakeholders that, that kind of have some stake in the game.

[00:36:16] Rayhan: Yeah. But Tarek, you are an angel. You're the guy that a lot of founders are looking to get in contact with and I'm sure you get a lot of DMs on your LinkedIn. what are the key things that you look for when an investment is, a startup founder comes to you? What are you looking for in that kind of company for you to get your motivation to look into it in a little bit more detail?

[00:36:44] Rayhan: figure out whether this is the type of investment that you would invest in. 

[00:36:49] Tariq: Yeah, it's a good, it's a very good question. and it's very personal to every investor, whether institutional or, or individual. for me personally, a lot of my thesis is in markets that I have knowledge in.

[00:37:03] Tariq: So the UK, which I'm from, UAE, Saudi, I grew up as an expat kid in Saudi in the 80s, 90s. So these are countries I know well, I've lived and grown up. So, that's a, good lens for me, things that are in those markets, interesting for me, I get things coming across my desk from, if it's not to say that, They're not good opportunities to invest in certain parts of Africa or Kazakhstan, Central Asia, but I just don't know those markets very well.

[00:37:30] Tariq: So it's an easy filter for me. It's not for me. It could be for another angel investor that's very familiar with it. But once, once they tick certain boxes, stay The sector, I tend to look at fintech, health tech, B2B SaaS, some areas which I like and, have, I've got some good knowledge and some, acquired knowledge, for me, often a lot of it comes through the introduction.

[00:37:57] Tariq: And so how the founder. often if they're referred by people that I know, trust, other entrepreneurs, other industry experts or friends in an industry, other VCs, much more likely to look at them because, it's important to know someone's background and do. that for me, is usually the best channel.

[00:38:24] Tariq: I get a lot of cold approaches on LinkedIn. It might work for some people. It just doesn't for me because I don't have enough time to do tutorials on individuals and, and I usually like that referral. When it 

[00:38:37] Rayhan: comes to DM me and then I'm going to introduce you, right? 

[00:38:41] Tariq: Yeah, but if it comes from you and you vetted it, I'll, take a look at it.

[00:38:47] Tariq: you have to draw the line somewhere, right? Because otherwise, if you have, if you big VC with three, four or five different people full time on it, then, then you have may have the resource to do a bit of due diligence. You may have other results, when you're an individual angel, time is limited, time is precious.

[00:39:06] Tariq: But once, this comes to the right channel, I feel comfortable often with the founder. I prefer, co founding teams, although I have backed solo founders. but that would be a preference because then, Our journey, entrepreneurship and building a business. So when you're on your own, it can be, there's a lot of uncertainty, a lot of anxiety.

[00:39:27] Tariq: There's a lot of stress. There's a lot, it's good when you're able to share that with, two, one or two other co founders and the other co founders bring something different to the table. One could be an extrovert and a good leader, good communicator, and of course someone could be very good organization, financials, operations, so you need a blend of different talents at different stages.

[00:39:49] Tariq: Their personal story is really important and what drives them. What kind of person are they? What's their backstory? Why are they passionate about this particular problem? But if they have knowledge of a particular industry, I know there's two schools of thought, right? an industry outsider coming in to solve a problem might see things and do things and disrupt things.

[00:40:10] Tariq: Do things differently. Differently. Personally, I prefer someone to have some knowledge of an industry and have been there because then they understand the intricacies, the, kind of the hurdles implications and, things that have worked because, those, conversations within an industry at industry events and trade fairs, you have a good, you tend to get a good sense of what, what's working and what, people understood are not working right.

[00:40:36] Tariq: So someone with industry knowledge, I think for me is very important. increasingly, entrepreneurs that are good people, humble, they really are humble that, that, don't profess to know everything, but are really on a journey to. a growth journey for them personally to personally grow to learn and to prove or disprove a hypothesis and that they're very inquisitive.

[00:41:04] Tariq: And I find that those entrepreneurs that usually the more quieter ones, more humble, more stable, those are the ones that, that will attract other people to join them on their mission. Employees. Those are the ones that tend to gel well with investors. Need to be firm and you need to have a clarity of vision, but staying rooted and grounded and, staying, the, worst thing that can happen for, a founder, someone that is blindsided by ego and, thinks that they, know things and actually then they can, blown off course and go down a, an ugly path.

[00:41:45] Tariq: So those are typically the things I would, look at, in founding teams, entrepreneurs. 

[00:41:50] Rayhan: Thanks for sharing that. I think we're going to get loads of DMS after this, so be ready. One of the things I also want to dive, do a quick deep dive into is, Your expertise in many things, CFO, angel investor, COO advisor, but you also got a lot of experience in healthcare as well.

[00:42:12] Rayhan: you mentioned you was one of the founding, individuals, with Cleveland Clinic, which is massive. Reputable, institution and you worked obviously in Dubai as well. And you're currently working for, a health tech company that kind of focuses on mental health. So you as a expert in healthcare, how do you see the industry kind of playing out in this and where'd you see the, the opportunities, obviously, if you compare, this region is very different to where we're from, right?

[00:42:48] Rayhan: Cause we grew up in the UK and you've got the NHS. Yeah. a government, a government funded institution. You go places like the U. S. and it's a similar system. You have to get, everyone has to get medical insurance and you've got to pay for health care and it's quite expensive and some people don't get that treatment.

[00:43:07] Rayhan: What, how do you see things in this region? what kind of experiences can you share? 

[00:43:13] Tariq: Yeah, so that's, so healthcare is, bread and butter, has become bread and butter for you over the last 20 years involved with, some really, exciting, successful projects, which is, more by fortune than by design to be candid about it.

[00:43:31] Tariq: and again, I'm currently, working with a really exciting group, neuro care, to build their mental health platform across the country. company out of, out of Europe. and, I've been backed by a very prominent, leading, healthcare private equity firm who I've known for many years.

[00:43:53] Tariq: great team. really have a lot of respect for them and just been a matter of time to do something with them. We're friends for a long time. So, very, exciting new chapter. I think healthcare, there was, in the region. And this is a long conversation. I know we don't have much time left.

[00:44:11] Tariq: So this is probably another podcast, but a couple of, thoughts on that. the region in building a lot of healthcare infrastructure for the past two decades, 20 plus years. Yeah. a lot of it led by Dubai Healthcare City, and then Abu Dhabi, and Qatar, and Saudi, and some of it, much of it has been backed by kind of sovereign wealth fund or public sector investments, infrastructure, hospital, quaternary care facilities, mobilizing the private sector to build clinics and primary care hospitals and secondary care hospitals and general hospitals.

[00:44:52] Tariq: and so a lot of that infrastructure has been built. Yeah. and I think COVID really changed the game. A lot. the, regions, the population of the region have always been very health conscious and they really demand, really the best healthcare possible, the nationals and even the expats that have been here for a long time, long term expats.

[00:45:18] Tariq: and so public sector a doesn't really work here, right? You need, you need that patient experience, that customer experience, the, the, nice facilities that maybe, it's more care focused in the UK rather than the facilities themselves. They're a much, much older institution.

[00:45:35] Tariq: Yeah. but what, changed in COVID was that, people started to really, appreciate the need to take care of their own health. 

[00:45:47] Tariq: mental health became a big kind of, let's say, hidden pandemic that was recognized governments globally. people were locked away, on a lot of devices and, a lot of technologies.

[00:45:59] Tariq: They were Society for a period of time, the youth coming through, with social media and, growing up with tablets and devices and mobile phones, attach them. So mental health has become a huge, it's always been there, but I think the awareness of mental health has really, grown exponentially out of COVID.

[00:46:21] Tariq: I think longevity is another area where people are more conscious of their health. People have those, different views on taking vaccines and ingesting medications and on top of the opioid crisis that we had in the US. So people are now conscious of, what they want medication, trying to monitor their own health, wearables, CGMs, continuous glucose monitors and, so people really want to take control of their health, not be reliant on a system or doctors so that their, well care or wellness is, is in their own hand and that kind of broadly sits under Metabolic disease management, which is a big issue in our region, diabetes, sugar intake, et cetera.

[00:47:11] Tariq: So that's another, area where people can take ownership. So there's a lot of interesting areas that will, play out. And COVID was really an accelerator. that remote care, people taking ownership of their own care, all these things really came out, of, COVID. yeah, interesting time I would say in, in health tech and health innovation, in general.

[00:47:32] Tariq: And now that's the layer that will, be interesting in the region because a lot of the infrastructure has, been built and has been there first phase of the development of the healthcare industry. 

[00:47:43] Rayhan: Thank you for sharing that. Thank you for being a guest today. what's the best way that our audience can get in contact with you?

[00:47:52] Tariq: if I say LinkedIn and don't reply, I'm in trouble. we can pass out my, my, my work email. or they can contact me through the Jane website as well. yeah, good to be here. Thanks. Thanks for that. Thanks for the chat. 

[00:48:06] Rayhan: No, it's been great. Thank you very much. Yeah, enjoyable. Thank you for joining us on the Alphapreneurs podcast.

[00:48:11] Rayhan: I hope you enjoyed the show. Please subscribe and give us a five star rating and a review. Your feedback is appreciated. For show notes and more, check out the link in the description and connect to me directly on LinkedIn and search for Rayhan Aleem. See you in the next episode.