Ebay Marketplaces Director on IMD and investing
Andrea Rota, a member of the new IMD Alumni Community (ACE) for Entrepreneurship, gives advice to up and coming angel investors
IMD interviewed Andrea Rota, eBay Marketplaces Senior Director on his relationship to IMD as an MBA alumni and a member of the IMD Alumni Community for Entrepreneurship as well as his role as a successful angel investor.
IMD: How did you get involved with IMD?
Andrea Rota: At the time I applied to IMD (2002) I had been working in the United States for eight years, and I wanted to move back to Europe. I was also relatively old (33 – doesn’t sound old to me now) and so it was the best choice, since IMD is well-known to be a great place for more experienced executives, to upgrade my technical education with an MBA. I looked for the best European school that would cater to someone with 10 years working experience, and IMD was the obvious choice. Last but not least, the admission office somehow let me in.
IMD: Tell us about your time in IMD’s MBA program.
Andrea Rota: It was a great experience, it reinforced my confidence in taking roles that were beyond purely technical. It also forged some friendships that last to this day (I would say that a large part of the friendships I enjoy today date back to IMD in 2003).
At the time it felt like a pressure cooker. It was scary and hard, especially for the first few months. Our program director Seán Meehan (MBA director at the time and soon to be once again Dean of the MBA program) encouraged it and whilst it was sometimes harsh, it really was an important part of the IMD MBA – all the pressure was an amazing positive developmental experience. On graduating I felt motivated to make a difference and was ready for any challenge.
What impact did the MBA have on your career after?
My career was already going fairly well in the USA before the MBA, and since then it has grown. I would say that the biggest impact was that it helped me switch in a very smooth way both geography (US to EU) as well as Industry (B2B Technology at SAP to Consumer facing Internet at eBay). It was always intended as a personal enrichment experience and a “transition” period between US and Europe, and it worked very very well.
Tell us about your angel investment experience, lessons learned, pitfalls to avoid, recommendations to future angel investors?
My experience in a nutshell: I joined Italian Angels for Growth (IAG, Italy’s largest and oldest business angel network) some four years ago, I did some 15 investments, of which 50% in club-deals with IAG and 50% on my own. I have had one good exit (10X) and the rest of my portfolio looks reasonably ok. I think that in 10 years, on the investments done so far, I will probably have a 2X to 4X return, which I consider a solid return for anyone who doesn’t hit an absolute home run (i.e. investing in Uber).
I don’t use the heuristics that some more experienced investors do (If you are interested in more structured thoughts, I find Fabrice Grinda a good example www.fabricegrinda.com) and I tend to follow my gut, with a number of supporting guidelines – none of which will sound really new to you:
- The team (and how well you know them and trust them) is what matters most. I invested in AdEspresso, my one exit, because I knew the entrepreneur well, I had worked with him before, and I knew he was trustworthy.
- The second thing that matters most is the market: I invest when I have proof (or at least a well-argumented belief) that there are customers who are willing to pay for the solution. Corollary to that: I tend to stick to what I know (i.e. Internet).
- Third thing I look for is financial flexibility: things take usually twice as long and cost twice as much as planned, so I tend to prefer companies who have enough cash to survive without additional funding for a while (1.5 years is a good runway in my opinion).
- I trust my gut when it says “don’t invest”.
- I don’t trust my gut when it says “invest” – in this case I ask other people (three or more usually) their opinion to make sure I am considering different points of view. In the end, I still make up my own mind.
- I try to make a decision relatively quickly – if I find myself going through a very long due diligence process, it’s usually a sign that I am trying too hard to convince myself that I should invest, so I usually drop the deal. There is an optimum amount of time to spend on getting to know the target company… spend too little time and you are a fool, but if you spend too much time the quality of the decision also suffers.
- Beware of group-think, especially if you are part of an investor club – it’s very easy for one or two senior members of an investors club to sway the audience and determine an outcome that might not be best for you.
- Be very careful with follow-ons. Decide upfront if it’s a game that you want to play (or not). This is where you can get seriously hurt, so always remember why you invested in the first round, and if that hypothesis/bet didn’t work out, consider really carefully whether you should continue investing.
- Last but most importantly… start investing. Don’t wait for “the perfect idea”, write one or two small checks and start learning from the experience. Consider that if you invest in less than 10/15 companies, odds are against you, so make sure when you start that you can allocate the right amount of money over time. It also goes without saying that you must be ready to lose it all.
Don’t let all this discourage you – Investing in early stage companies is incredibly rewarding, and I believe that startup-driven innovation is going to play an important role in the economy and – most importantly – in our careers.
The IMD ACE is a community of IMD Alumni that operates globally in collaboration with local IMD Alumni Clubs.
IMD ACE's mission is to promote the development and consolidation of business ventures/start-ups, proposed and launched by IMD participants, to make entrepreneurship accessible to Alumni and to foster an ecosystem aimed at facilitating mentoring and the funding of business projects as an engine for innovation and growth.