How to find an investor. Anuar Lenzat on what to pay attention to when investing in startups

Anuar Lenzat, city — Almaty, investor relations manager at Activat VC, Hokage RSBootcamp, @lenzat

About Me

I am the founder of the venture studio RS Bootcamp — we launch startups and help existing projects. I also serve as the Investment Relations Officer at the investment company Activat VC, where I am responsible for working with investors and syndicated investment deals.

It all started when I wrote my thesis on the state of the venture investment market in Kazakhstan in 2019. Thanks to this, I later got a job in this field. At that time, I considered this sector underserved, with significant growth potential, few strong managers, and limited expertise. Since then, I have had the opportunity to work as the director of a business incubator at another investment holding company, MOST. I went through a rigorous school of experience, working in various roles within corporations, startups, government organizations, and international institutions. All this experience helps me in my investment activities.

Investor

I work with investors as part of the Activat VC business angel club. Based on my personal observations, every investor must be able to understand people, because founders are the most important element that drives the project. Identifying strong and energetic founders is sometimes even cooler than finding a good idea, because ideas can change as the project develops: something takes off, while something else doesn’t. Qualities such as financial literacy, analytical thinking, and flexibility should be the default. In addition to these, it is important for a startup founder to have long-term thinking, patience, and a good appetite for risk.

We are accustomed to calling problems tasks. We see that most startups do not realize why they are creating their startup and what truly large markets they can cover. Most simply dream of becoming a “unicorn.” But for us, venture investors, this is not always important. We want to make money, preferably more than what risky types of investments offer. Most often, we manage other people’s money along with our colleagues and must show results. Therefore, we want to see and understand where the startup is heading, which markets it touches, and what large-scale problems it plans to solve in the future.

Within the venture studio RS Bootcamp, together with the USAID FGI project, we created a digital tool for startups that will help calculate market size and forecast how large the problem being solved by the startup is, and whether it can be profitable.

About Investments

At Activat VC, we have invested in 26 startups. The most successful experience was our first exit — zypl.ai. Over two years, we managed to earn 4x or 200% annually. What other business can provide such returns? And in June 2023, Time magazine included our portfolio startup ZeroAvia in the list of the 100 most influential companies of the year.

We have an investment committee consisting of specialized experts, where each evaluates their own areas, such as the market, finance, IT, legal aspects, and the team. Considering potential risks, we compile a general summary of evaluations. If a startup reaches a certain threshold of evaluations, it may receive a positive decision on investment.

We are ready to invest in entrepreneurs from Central Asian and Caucasian countries who are scaling into larger markets. We have already invested in projects from the USA, Azerbaijan, Uzbekistan, Ukraine, Spain, and Tajikistan.

If we see that a startup is not yet ready for funding but has high potential, we can take it under mentorship. In this case, Activat VC employees will allocate time for each team in specific areas of expertise. For this, we can take a small stake of 1-3%.

In the venture studio, we have our own platform for startups, where anyone, regardless of time and location, can try to launch a startup. And we bring the best ones to investors.

Previously, at Activat VC, we invested between $50,000 and $100,000. Members of the business angel club can also invest alongside us with smaller checks.

We primarily focus on the financial model. Each startup undergoes a stress test by our CFO, who provides a conclusion: whether the requested amount is truly necessary. After all, we want every dollar to work, not sit idle. Currently, we are working on opening a venture fund to increase the investment amount to $500,000.

Our investment strategy involves exiting a startup through one round of investment or, on average, within three years. We want to provide more liquidity to our investors. We do not focus heavily on the large number of “x’s,” as many others do; we want to enable earnings for the next investors after us. We are glad to have the opportunity to earn 4-5x in a short period.

Advice from an Investor

First, learn how to earn money. Earn salaries and cover operational expenses. Only then look for investments to scale. Many do the opposite: they first find money, then develop and start selling. Later, they realize that the model is not working, but the investor’s money has already been burned.

I recommend preparing a data room — detailed information about the startup, including many aspects to present during a meeting with the investment committee. This will always be a sign of your preparedness. After all, such details are important when making decisions; they show the structure of your thoughts and discipline.

About Plans

If you are working on a large-scale project and targeting big markets — Latin America, Arab countries, the USA, Southeast Asia — we are ready to consider each of you. So, go for it!