VC who backed billion-dollar AI firm shares two red flags in founders
Man and woman having a small business meeting in smart casual clothes
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A successful angel investor revealed two red flags that kept him from investing in a founder at the first meeting.
Carles Reina is an angel investor who backed voice cloning AI startup Eleven Labs while it was still in its early stages in 2022. The firm was co-founded by Mati Staniszewski and Piotr Dąbkowski and raised $180 million in Series C financing at a $3.3 billion valuation earlier this year.
In September, the company announced that it would allow the sale of shares to its employees. $6.6 billion valuation. Reina is currently vice president of revenue at the AI firm.
When Reina first met Eleven Lab co-founder Staniszewski, he told CNBC Make It that at the time, no one wanted to invest in voice AI. But after just one meeting, Reina decided to try her hand at Eleven Labs.
“We started talking and 30 minutes into the first conversation I asked him, ‘How much money do you want?'” Reina said. I said.” he said.
He explained that the first meeting was critical in making the decision and that Staniszewski exhibited some characteristics that attracted him as an investor.
“I generally don’t want to waste anyone’s time if the early signs aren’t there… I think you’re always optimizing for high-quality interactions, [it’s] “It’s like you’re trying to determine if this is something you really enjoy and want to spend more time with the founders.”
After the first meeting, Reina explained two reasons why he did not want to invest in a founder.
two red flags
One of the main things Reina looks for when meeting a founder is technical specifications.
“It’s very personal, especially at different stages. But for me, if a founder is not technical, like if they’re not literally building products, if they’re not a researcher, or something like that, I don’t see the value in that because they’re not going to be able to move that quickly,” he said in the interview.
Reina 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 problems of the entire ecosystem before he actually had any product or actually talked to any real potential customers,” he said.
The second red flag is that the founder is trying to start a company in a “very crowded market,” which Reina often tries to stay away from.
“If there are a lot of venture capitalists looking at this market, because it’s sexy, I’m not interested because then valuations will skyrocket and you end up in a pricing war where everyone is trying to give them term sheets and stuff,” he said.
According to Reina, when too much venture capital wants to invest in a company, it inflates the company’s valuation, which puts unnecessary pressure on founders to demonstrate rapid growth and maintain or increase that valuation.
Other reasons may be that the founder is in a sector that he is not interested in and that this sector does not suit his investment profile.
“If someone sends me an offer or I meet someone who doesn’t immediately catch my attention, I’ll immediately tell them ‘I’ll be happy to help you with anything you need.’ [but] “From an angel perspective or an investment perspective, this is not for me.'”
