E328 | Super Angel | Angel investing insights with Cyril Chemla, co-founder at ProcessOut (acquired by Checkout.com)

0:00Welcome everyone to the Super Angel Podcast. we are super excited to have you with us and we're particularly excited to have cyril you joining us on the episode today thank you thank you for the invitation very excited to be here as well this is a dream no it's not a dream i'm an angel why would god send me an angel because god knows that everyone needs a little coaching now and then I'm loving angels. I saw an angel. All angels say. For a long day. Please say it's me, an angel. The smile on her face. We're here now together. But don't want me, Angel. Incessed by an angel, girl. This show is not investment advice, and the hosts of this episode may be invested in the funds and companies featured.

0:49Thanks for joining the show, Cyril. Your story is quite inspiring to me personally, so I can't wait to dig deeper today. So maybe let's get started. Do you want to tell us a bit more about kind of your story, your background, your journey, and what got you into angel investing in the first place? Well, it all started my journey when I was actually in school with some good friends, you know, and we're in a computer science school in France, close to Paris. And long story short, we had like all this kind of side projects together, you know, we were rocking on. And at some point, we're like, well, maybe it start to stop doing side projects, you know.

1:23but like work together so we started iterating on a few ideas you know a few things were quite younger back in the days our CTO well the one who became the CTO of the company I started was actually 18 if you want to know everything quite impressive and we kind of started you know like doing some project accepting payments on them and we're like well you know the payment piece of everything we've been working on has been actually one of the most interesting pieces rather than the actual business we're trying to launch. So we wanted to kind of focus on kind of payments. And the good thing is that we did not know anything about this industry, fintech, or even VCs, generally speaking, investment, investing, et cetera.

2:04So we kind of like went all in, you know, and started a payment business named Process Art. Today's episode is not about the story of Process Art. So I will like accelerate and fast forward five years later, We got acquired essentially by Checkout.com, which is an amazing fintech based in Europe, in London specifically. Well, I shouldn't say Europe now. It's based in the UK and London specifically. And that kind of allowed us to see many things, as you can imagine, learned a lot of things as well. And well, throughout our journey, and I think that's the piece that I can share now, we got a lot of support.

2:39We met amazing people, amazing VCs, amazing mentors, angel investors, obviously, that dramatically changed our trajectory and helped us kind of achieve everything we did with the process out and the beautiful part of the story is that all these people are now friends or still close you know to us and we've been doing like more things with them you know not this time on kind of the founding you know startup side but more investing side which I'm excited to talk about today. So for me specifically, it all started in 2020, right after the acquisition of my company. And obviously, you know, when you have been supported by amazing people, you want to kind of give back.

3:24And this has been kind of my mentality and the mentality of my co-founders, to be honest, you know, which is give back, give back everything we received and share, you know, the more, you know, feedback we can to the ecosystem, participate in it and hopefully help other entrepreneurs succeed in the journey. I know we said, and that's amazing. Thank you. I know we said, I'm not going to go on a tangent, but I will for a very small bit, which is, I think we don't have as many inspiring stories in kind of Europe and the UK of like people at 18 years old, like tinkering and really kind of building something that gets acquired.

3:59And, you know, hopefully now as the maturity of the ecosystem evolves, we're going to see more and more of that. Now, as an angel investor, I mean, do you see more of that? Do you advise people to start as early as possible? Would these be types of deals that you'd be looking to invest into as well? To me, there are like two really great times to start a business. And obviously, this is not a run rule thing. Many things can apply to many people. But I feel like when you're a student, you have nothing to lose. I mean, you don't have a job, so usually you don't have a salary. You don't have a family most of the time, meaning children, you know wife and obligations you actually are proactively learning things you know at school outside of school that's when you have like a lot of projects and you're already meeting a lot of people mostly new friends but you're already in that dynamic you know which actually is the dynamic of many entrepreneurs in the sense that you're learning every single day you're meeting new people and that's part of like kind of creating your network you know so it's literally applying the same thing but kind of in the professional world and usually actually kind of the limit between these two words you know is quite thin for many people which is great so starting a business as a student is always to me quite interesting because that's the fastest way to learn things and even in the case the business would fail you actually probably learned way more than if you were to join the company do I need to cheap and this kind of thing so well I started my business as a student and that has been amazing so I would redo it every single day.

5:33The other phase but obviously I am young so I did not yet experience that but intuitively I would say when you actually have a few years of experience you understand the business world you understand you know what it takes you're not yet in the phase where you get like all these big salaries if you're if you're ambitious etc so it's kind of fine to take a risk when you know how it works, you understand like a market, the one you probably worked on, you know, over like the last five, ten years, and you already, you still have kind of the energy and time to actually achieve things without putting everything at risk.

6:08Obviously, I might be biased because it's easy for me to say without having lived it, but that would be kind of like my intuition. I think it's, I think it's exactly right. I think that understanding that kind of risk profile of people and seeing people at different stages of their career, and obviously, as Anthony says, in Europe we haven't had that many people who've started companies so young. So you're probably perfectly placed to identify that type of profile when you see it. So yeah, very, very interesting. Taking a look again back at the angel investing that you've done to date, is there anything that strikes you or sticks out as one of your most memorable deals?

6:45Is it the first deal or the last deal you've done or anything on that side of things? Yeah. So that's an interesting question. You know, I was actually uh i cheated but before you know like this recording you know i was looking at my portfolio and i was like what's like kind of like the biggest memory i have and why do i think of like a certain deal i think well so i thought about one that i will share you know which is a company named predico they are based in the uk and i think like that there is like many stories associated with this company uh the founder company yuri and nicola obviously and myself so So I was willing to share a bit more about them and why I thought about them.

7:24So to give you background, and this is kind of a big story. So the founder of the company, the CEO, Yuri, he was actually a roommate of my now brother-in-law. So that's how I met him. We had kind of like a mutual connection. Yuri was starting his business and he was willing to kind of hear from people around him that started businesses. and obviously you know if there was success associated to it or like good learnings that's what he was looking after so I connected with him and usually like kind of my thesis is I don't want to mix family you know and business so anything that comes from like close family so obviously my father is low is in low sorry his close family to me like was ticking this box so initially I was kind of like hey you know I'm happy to support share like all the feedback I can but as an investor I'm not sure but Yuri he's well a great a great guy and after the first call you know well like most founders and first-time founders you know the the first deck of like his company was we're doing five products at the same time we're going up to these 10 markets and we're gonna do something like crazy you know that will revolutionize everything from fintech to marketing to sales well I'm kind of obviously like exaggerating a bit here he would kill me if he would hear that but you get the point you know that was a bit too much you know and it's better to start with a niche and go after a big market with a clear vision and after like many calls he was iterating taking all the feedback i gave him like extremely well you know i was like well you know i actually i want to invest in his company you know that's actually a that seems to be a quite good deal and not so much related to the market because if i'm honest you know i did not know a lot about like inventory forecasting because that's what they're doing but i knew enough to recognize an amazing founder and i knew that yuri has it you know and nicola that i got to meet the cto you know later same thing obviously and so i was like well this one i want to be a part of it and funnily enough and i will give you something that has never been published before but i'm traveling a lot obviously for my company and for checkout today and he was and so i'm going to the us quite often in 2020 and 2021, remember, we could not travel as European to the US.

9:37We had to go through kind of a neutral places, a neutral country first, to then be able to travel to the US after two weeks at least in this neutral place. So luckily enough, Checkout has a strong presence in the Middle East and I had to go to the US. So I went to Dubai first for two weeks. Yuri, who was kind of ready to raise around, you know, and kind of look at the ecosystem in the US, also wants it to kind of go to the US, but did not have yet, you know, the budget because he did not raise money for like such a long trip and two weeks in a neutral place. So I told him because we became quite close friends, well, you can come with me to Dubai.

10:13So we literally slept in the same room for two weeks in Dubai before doing like a whole trip in the US for like a month. So we traveled for a month and a half together. And obviously that's kind of a crazy memory that I have with Yuri. And well, the outcome of this trip is that they raised a$5 million round with amazing investors and they have been killing it since then. So, you know, very cool to see. Very, very cool. I think Felix, right, is invested in them. I think you're his first. I have many of my co-founders, the checkout mafia as well. He's been surrounded by amazing people. Very, very cool.

10:50Talking about intense bonding with your angel investor. And I'm kidding. That's fantastic. And also you touched upon something maybe we will touch upon later when we talk a bit more about kind of investment strategy and the likes, which is an interesting tension that I find myself grappling a lot, which is, you know, specialization versus kind of being slightly naive, right? Like you can sometimes overgeneralize and put too much weight into specialization and forget about team and people, right? You just mentioned, you know, too much about the market, but like Yuri was a force, right? And maybe just before we go to the next segment, the quick question I was going to ask is like, if you were to kind of, you know, take a step back, generalize, like now all these years, you know, been doing angel investing, what would you say, you know, angel investing has given you both kind of personally and professionally in terms of, you know, learnings and beyond?

11:38Yeah. So, well, first of all, let me just do a disclaimer. I don't travel with all the founders I invest in and they don't sleep in the same room all the time. Just want to make that clear to make sure I don't receive messages. is, hey, can you take me to Dubai? That's not the goal. With that out of the way, the first thing that I learned is that I know nothing. And I think that's a very important one. Everything I think I know, you know, is every single day, you know, proved to be wrong in some ways, obviously. And so I would say that the first thing is there is not only one way to achieve amazing things.

12:14There is not only one way to actually deliver on an amazing growth on a specific market or you know a specific hire there are actually many options which is quite reassuring if I'm honest you know it means that when you take a decision and people told you otherwise it might actually also be a good decision that you're taking so that's one of the things you know that I've seen and learned personally because often when I receive kind of like investor updates from and call with founders I hear about like things they do that I would not have done but hearing how it helped them and where it took them is actually quite impressive so personally you know that's one thing is that well that's kind of the imposter syndrome you know you recommend something and then you realize you were wrong you're like oh maybe I'm an imposter but I think it's actually a good syndrome to have because at the end of the day it forces you to question yourself like all the time learn and like iterate on your on your ideas no matter who you are no matter where you come from obviously i'm far from being kind of a famous big you know ceo whatsoever not at all but still all the little thing i thought i knew about like investing you know and founding a company sometimes proved to be not wrong but proved that there are like so many ways to do things so that's definitely one point that i would share here yeah i totally agree i think that that's that's something that i find myself thinking in constant basis in this job like having the privileged position of meeting founders and yeah you can have a view but you have to have the kind of mental elasticity to be able to change that view and be and be kind of persuaded out in a different direction from you know many of the founders that that we get to get to meet and work with and and that's what i guess that's what's interesting and that's what keeps you learning 100 and i think the same thing applies to actually assessing founders we all tend and it's something natural, you know, to go to people that look like ourselves.

14:05You know, we like to see people having a similar network because there is like a network effect, obviously. We like to hear about, you know, second-time founders that can start things a bit more usually than first-time founders, not because first-time founders cannot be great, don't get me wrong, but more often because they have more experience, etc. But it's crazy how, you know, the right person with the right mindset can actually, yeah over deliver on like so many things and i think you know for my company we're a good example imagine having like a bunch of like 18 to 19 people well we had a co-founder greg who is also amazing who was a bit older than us so that gave us a bit more credibility but you have to think that among the six co-founders we were so a lot of people five of us were like below 20 when we started so imagine yourself now having these guys in front of you saying hey we want to start a payment business so all the revenue of a company will have to go through us and we will help do xyz well that did not help raise money not helped you know look serious at the beginning and if you want to know everything the first two times which attended to raise around we got like only rejections and even kind of all the big names you can think of that usually invest like in two or three deals per week?

15:22They said no. So for us, it was quite tough, you know, and I had so many meetings with people telling me, hey, well, your business seems to be a good idea, but obviously it's hard. The market is big. You have big players. It would be better for you to maybe learn in another company and then you can start something in a few years. And that was always quite tough. But well, you know, the good part of the story is that with resilience and because we were altogether kind of, you know, we had like this motivation, rage altogether, we actually delivered. So that kind of shows that even though, you know, the founders in front of you can not look like the right person at first, if you get to know them, ask the right question about, you know, what's the reason behind, you know, their kind of will and rage, you know, they can actually like deliver.

16:11And so I always try to kind of not have this bias specifically because I lived it and it was tough, you know, and reproduced that with founders. Yeah, no, I think that grit and determination that you kind of personified during your journey. And that's such a key characteristic, such a key characteristic. Oh, no. Not about the thesis segment.

16:35So that was the sound of the investment thesis segment. So now we're going to move to looking a little bit more deeply, Therial, at your kind of investment strategy, you know, outside of making sure that founders want to come travel with you to Dubai. But looking more closely, things like, you know, how many investments you've made, expanding a little bit on your portfolio, and where you are in your investing journey as an angel at this point in time. So it'd be great just to unpack that a little bit. So I actually checked, and I think I did like a total of like 20, 24 investment in total. and i include in that like both startups and also vcs so as an lp so out of the 24 if you want to know which thing there are three vcs so far so most of the investments i did were directly into companies if i look at the portfolio i have like a strong majority of index obviously i come from the space that's what i know and when i say that's what i know that's what i know how to evaluate assess, you know, and consider, you know, in the market.

17:38And that's also the easiest for me to kind of understand and test, you know, with potential customers, which I think is extremely important because no matter what we think and how smart we think we are or not, by the way, the end customer, you know, is always the one right because if they are paying for it, it means that there is something. If I look at my thesis and the type of thesis I have done and why, well, nothing new here, but the first thing I look at are obviously like the founders. Yuri again is a great example but there are like many others. If I talk about Eileen, it's another company I invested in in France this time.

18:13The founders they were coming, they came from like kind of a big consulting firm, I think it was, or like no sorry, an investment bank, Morgan Stanley, and they had like no you know background in tech, they had no background in the space that they were looking at and you know at first it could have been a bit scary but if you know these guys and you have spoken with them you see how energized they are how hungry they are and you also see how hard working they are which is extremely important so within just a few calls because i never i try to never do like one call and invest you know i try to have like multiple to kind of have time to think, see the person in different moods, potentially as well.

18:58He's also quite helpful. And this guy kind of like ticked all the boxes. Very impressive company. They were among like the first, well, they were the first ever French company to do like ARK, you know, the Sequoia program. And they raised with Headline and other amazing investors like Mottier and other. And they have been killing it as well. So big kudos to them. And if I look at them, you know, they are an interesting use case. If we talk now about like one of the second thing or well, among the most important thing that I look at beyond the founders, there is obviously the market. And when I say the market, I do not mean specifically the market size, which I know can be strange to hear because an early stage company iterate so quickly.

19:43They can pivot so quickly that evaluating like a market or like a specific product idea, you know, very early on seems to be a bit counterintuitive to me. in some scenarios. I'm more interested to see how quickly, you know, a team can iterate and how they are evaluating if they are onto the right topic or not. Because a VC will never invest in a company that has been growing like, let's say, 50 % year over year, you know, early on. So if you have a company doing 1 billion euros of ARR year one, you want it to at least double, triple, quadruple it, you know year two and specifically if the company has been you know alive for some time on the other end if you don't have revenue e or like a little revenue but you spend your time iterating until you find the one thing that is actually bringing like the 5x type of growth momentum pipeline that will excite this is way more than 1 million ARR but which is flat year over year or like close to be flat and this as an angel investor is extremely hard but important to assess you know in founders because if someone is happy with one million ARR but like a growth of 20 percent 30 or even 50 actually growth year over year that doesn't show kind of like the hunger that you want to kind of have like the 100x that we are all after and so this is part of like what's background what's the story what do you want to achieve you know over the next five years where do you want to be if you were to be successful what does success mean to you you know all these type of questions which are a bit wide but actually they have a ton of value to hear about the ambition and where a company the company will be actually over the coming years if everything works and and often i'm quite like disappointed by some answers because that doesn't show kind of like the ability to really iterate and do like this goblins that is so important in the market.

21:43You know, because you've spent so long, you know, you've built a company within the kind of fintech vertical or within the domain that you operate now. And then obviously that company has been acquired by one of the leading companies in that space. And this, I suppose, applies for anyone who's a, you've become a domain expert, right? You are a domain expert, you see so many facets of that industry. But then your angel portfolio sounds like it's still like highly also kind of like focused on that area as well. Do you ever find it difficult kind of going back to some of the conversations we're having earlier to park some of the maybe like negative bias or bias that you might have because you're so close and so entrenched in the industry because you've seen so many things when you're meeting new founders who are building in spaces, which aren't necessarily like competitive, obviously, to where you are, but are so closely related.

22:34As a kind of, obviously, as a VC, even, you know, when we've spent more time in spaces, sometimes we can come to those spaces really well prepared. But sometimes I find myself actually potentially more negative on some of those spaces, because you know, all of the like traps and all of the issues, whereas you come to something completely fresh, and it's easier to get lean in and get more excited. So I just think that whenever we speak to and we get the opportunity to speak to people who are like industry experts yeah i'd love to see whether that means that you're more attracted to the industry because you know you know where it's going or actually sometimes you find it harder to get excited because you've seen some of these ideas kind of play out maybe internally from your seat yeah well that's a great question um if i look at the fintech generally speaking it's obviously quite a broad space you know we're talking about anthony about this you know within fintechs you have like a 10, 15 different verticals and there will always be more.

23:26So interestingly enough, and your question makes me realize this, I have done only one investment in the space in fintech that I've been working on. It's a company called Revio and they are essentially like a payment provider in Africa and South Africa specifically. And if I ask myself why I did this, it's because I knew it was a pain you know i know all the big companies we can think of that process like a lot of like payments online they all struggle with the african market because it's extremely fragmented it's visa and mastercard are not as strong in this market as other markets and they were kind of solving this pain you know and making it available for like many companies so for this one you know it kind of fits from the narrative you were sharing which is i already had a thesis in mind and this company happened to like tick you know all the boxes you know for for this thesis so it was an easy investment and they have been like doing really great so far they raised like a follow-up round like last year if i now look at all the other investments i did in fintech i think i found the right balance between things i knew and things that excites me typically if we look at pay flows i'm sure you saw the recent news they raised like 25 million dollars with Balderton together with Rebeat, Headline and other great names as well.

24:46I did their seed round, so the round before this one. Pauline and Joseph were like amazing founders. They were touching at a space which I knew because obviously procurement, namely and treasury touches is very close to like payment as in payment processing, etc. Because we're talking about different currencies, different bank accounts, different regions. So it's actually intertwined. Because I also worked with kind of like big enterprise merchants such as L 'Oréal, you know, with Process Art and other big names. I knew that at their scale for L 'Oréal typically there was a lot of things happening, you know, in treasury that was closed to payment.

25:24And so for me I was like, wow, this company, amazing founders, amazing early traction and they are actually the right complement, you know for a company like mine and so I knew that there was something to be done here and then on the procurement side well I'm sure you experienced that as well but like procurement companies are a bit old school you know there is a lot to be done in that space and there is a lot of company raising money also in the space so when you kind of mix that with amazing founders etc you know that was enough to bring the excitement but also the expertise which is usually kind of a nice fit and so far they proved me right which is great and then generally speaking yeah it's tough for like many of the fintechs for me because I'm also very not pessimistic but I also know how hard the market can be in the sense that many large corporations they take forever to close you know sales cycle you know in fintech when we're talking about like big money movement like the minimum usually is like six months and you know i can't share names but you know at checkout i have been working on deals that have been you know uh being worked on for like two to three years so obviously the roi for this deal is usually amazing but imagine you spent three years working on something and it ended up the not working well you better have kind of like a strong strong financials and money to make sure you know that you did not lose like too much time um but yeah it worked in my say in my case, you know, so all good.

26:55Loving this topic. And a lot of that, by the way, something I'm juggling myself. And I've been actually reflecting on some of the founders I've backed, like the majority of the founders have been like in some respects, like obsessed by the pain point, but not necessarily like industry insiders. Like they might have been the broader industry. I think capital markets is an exception, but like it's rarely the case that, you know, I don't know, I've backed something in insurance and it's like, you know, a corporate person from a big insurance company, like starting that, which is actually an interesting other way of thinking about naivety from a founder's perspective.

27:28Anyways, just going to another topic, which is you talked about having backed also some VCs. My question is less about like naming the VCs, more about your strategy, right? How do you think about collaboration, you know, with other angels and other VCs, right? How do you work with others? I think this answer should be universal, but the collaboration with your peers is like extremely key and for like so many reasons. So no matter if we talk about VCs, angels, you know, it's so important to make sure that you have like the right connection and not for you as an individual, but like more for the companies that you back.

28:08You know, there are so many VCs, you know, in this world. Some are like extremely, you know, verticalized and focused on a certain topic. Some other are generalist and they like to kind of cover a lot of different topics and industries. Same thing for angel. You have people, you know, who have like a deep expertise in one field. But the thing is, this one person with this one expertise, no matter if they invest 5K, 10K, 50K, 100K, like they can actually dramatically change the trajectory of your company if they have the right advice, the right knowledge, the right experience. And at the end of the day, that is what should be the goals of any investor.

28:48how do i bring value and make sure you know that um it actually helped the company so to answer your question yeah it's extremely important to uh have like a good network of vc and angels around you first of all because that can bring you a lot of deals you know that better than anyone but like nurturing a lot of like top angels operators uh founders you know is an amazing way to actually get access to like a quality deal flow that's number one second thing related to the expertise we're talking about but like you will by developing this connection you will also develop a network with a lot of like knowledge skills that you can also leverage when you need it as in hey i don't know anything about fintech but my good friend anthony happens to be like a vc you know in the fintech space so surely he has seen a lot of things and can answer a few questions for me third point is obviously momentum it's something that is a bit of a controversy you know formal momentum should you follow kind of like this kind of like big deals crazy etc but it actually is a part of the game no matter if you no matter you if you like it or not you know it's part of the game so when there is excitement and people want to buy kind of like this new founder who happened to be successful and he or she is starting kind of something new and he's super close or she's super close to kind of this tier one VC, well, that creates a lot of momentum.

30:18And as an angel investor, because you're part of this network, you know, like the way that VCs can differentiate themselves is also to show all the people they know and they can bring on board. And so that's where like your network and kind of this momentum can help you like do more and like also enter this kind of crazy good deals that everyone wants to be a part of. Not saying that these deals are also the best because it's very different to have like a good moment to Monfomo and in the end, like a real success and be able to deliver on the valuation you got or these kind of things. But at least you have the option, you know, to look at it if you have like kind of this great network around you.

30:57Makes total sense. Yeah, super agree with that. And I think the collaboration in that network is what retrofits, right? A lot of my thesis has been like, if I can surround myself with the Cyrils and the Toms of the world, it's like the sourcing, the DD, the kind of portfolio value ad you can bring to the table as well, right? So it's the way to go. I couldn't agree more. You're out here learning more about them angels, are you?

31:24So we already touched on one of your key learnings from your time angel investing. Just before we move on into the quick fire, I wanted to ask like if there were many you know any other maybe you know one or two core learnings you would say more from an angel investing perspective or from your time with founders so if I think of like kind of the top three and we already covered some but like first of all there is not only one solution for like the problem you think you have you know so be open-minded try to think differently outside of the box and you will see that there are many ways usually to of like a same problem.

31:59And linked to that point is my second advice is that the right connection, the right support, the right partner can actually dramatically accelerate your speed as a business, the way you execute, the way you take decision. And this is essential, you know, obviously for like a startup because time is money. Usually you're not profitable in the early years. So, you know, you don't want to take like bad decision because that can dramatically impact your chances of survival and success. Yeah, the third one, if I were to give one is continue to have this kind of imposter syndrome, continue to challenge yourself, continue to like, both as an angel, as a founder, by the way, like you also need that as a founder, but like continue to challenge yourself, you know, and challenge, I would say what you think is right.

32:49It's just a good way to live, isn't it? You know, that last one, if you can be doing that on a kind of continuous basis, you're going to be improving and you're going to be kind of a happier person. So I think, yeah, I think that's a really good core learning.

33:09Brilliant. Okay, so we've reached that point of the episode now where we're going to switch into a bit of a quick fire. It's, you know, we love to end the episodes like this. It's kind of like a few questions, 30 to 60 seconds, answers for each. How does that sound, Cyril? That sounds great. I'm in. First question, what is the most counterintuitive thing you've learned since you started angel investing? If I was to say one thing for this question, it would be that generating revenue is not always a sign of success, which is, I know, very controversial, specifically when the last few years everyone is focused on profitability.

33:49I think revenue is something very tricky to look at because you can generate like revenue. you can find customers ready to pay but that doesn't mean that you actually found your product market fit that doesn't mean that you're set up for success for the coming five years and so the question like revenue is important because you are checking the willingness of your customers to pay but it doesn't answer all the question about like the growth and where you should be as a business revenue is one parameter to look at but what's more important is actually if the revenue generate can actually be multiplied by 10.