Business Angel Richard Lucas about investments in Poland – Interview

Business Angel Investor Richard Lucas about investments in Poland - Interview

Business Angel Richard Lucas about investments in Poland – Interview by Close Europe IT Recruitment.

Close Europe IT Recruitment would like to share with you the results of an outstanding interview with a very special guest. We had a pleasure to speak with Cracow-based Business Angel Investor Richard Lucas. He is an owner of several successfully developed businesses in Europe. This article will provide you with insights regarding criteria, which are used by investors to choose companies. Also, we will discuss how a business angel can distribute his portfolio. We will determine what profit you can expect as a business angel and what type of companies are the best to invest.

Introduction to the interview: about our guest – business angel Richard Lucas

The interview was conducted by Vladyslav Muzhylivskyi, founder and CEO of Close Europe IT Recruitment. Our guest – Richard Lucas (hereinafter “R”), a successful businessman, business angel, private venture investor, which has 13 companies in his investment portfolio.

Richard, tell me about your first job. What made you become an entrepreneur and a business angel?

R: I’ll tell you about my first “job”. I was trying to make money selling sweets in my primary school in Oxford, that I bought in a sweetshop and sold them for a higher price to the boys in the school. I think that sweets business gave me a very misleading idea of how easy business was because I could make 50 or 100% margin without much effort.

I just was conscious that was the relatively easy way to make money and I somehow imagine that being an entrepreneur is simple than a regular job. As I was in school I tried some small things that involved any scope, like buying and just trading.

What made me become a business angel? My first business in Poland was profitable, but those days I didn’t speak Polish, so I was really forced to delegate from very early. In my first business, I was applying the rule of getting myself out of the processes as much as possible, so I could do other things. I realized that this business wasn’t my last business, so I was really looking to expand into other areas.

Richard, in your opinion, is it better to become a business angel investor and not just invest in a VC fund?

R: I think that there are pluses and minuses. There is a very good book by Jason Calacanis “Angel: How To Invest In Technology Startups – Timeless Advice From An Angel Investor Who Turned $100,000 into $100,000,000″, where he advocates investing via syndicates. These are popular platforms, I am a shareholder in two: Crowdcube and SyndicateRoom in the UK. But there are also many others.

The advantage of doing that is that you learn the process of being an angel investor, investing with other people before you place much time in a single project.

By investing in a VC fund you are basically outsourcing the decision-making process to someone else. VC funds give you different options. You can put your money and forget about it for some time.

Business angel investing is attractive when you like the idea of being involved in a business. You believe that you could bring more to the business, not simply money. It is much more personal you gonna get. It is a different experience.

Richard, you mentioned platforms, such as SyndicateRoom and Crowdcube. Do you have any success story of utilizing these platforms to find a company for your investment portfolio?

R: I invested in one company through CrowdCube which taught me how risky these platforms are. Due to lack of control, strange things happened: the company changed its business model, location, and didn’t make financial reports. Syndicate Room works much better, I think. I believe they do offer opportunities and can certainly make you more aware of these kinds of risks.

An experienced angel investor and a friend of mine, called Peter Cowley, has a podcast called “The Invested Investor”. He says that in view of professional investors the best deals which reach the platforms will pass around the personal network of the higher wealth, higher value and the wealthier angel investors.

I think that might work for someone in your situation looking to get involved. You can start putting together a small portfolio of companies and just make a note of your process.

You need to think about things you want to know, the questions you want to ask, and answers you would like to receive.

I would strongly recommend Jason Calacanis’ book that gives good insights since it explaining a very interesting observation. Once you’ve invested, and other investors invested, it doesn’t matter if you invest as much money as the other investors in terms of higher ratio. But rather if you could help the entrepreneur and company with contacts or suggestions, they will value you as an angel investor. Then you could build yourself a reputation as a good angel investor.

But the other thing is the diversity of risks. If you are not putting in very much money, then probably people who talk directly to individual angel investors don’t want to talk to someone who can give them a 1000 EUR or 5000 EUR. Those amounts can work with some smaller projects, but they will want some hundreds and hundreds of investors to deal with. So, maybe a platform is a good way to get involved in a syndicate investing with a lot of people together and receive practical experience.

Richard, how do you find the companies for investments as an angel? Is there a good way to network and find them? What’s the best way which works well for you?

R: I’ve been fairly opportunistic. I think there are people who regard themselves as full-time professional angels. They belong to associations, there is an increasing number of angel investors associations. I’ve met people who run them. I am not a member of such associations.

It’s really very often being my personal contacts and networks. Someone who knows me knows someone who is looking for money or is a supplier to one of my businesses. I didn’t mention to an audience, that I have 12 or 13 businesses. None of them is famous like YouTube, Google or Facebook. Some of them have 50, 100 or so people in individual companies. Sometimes you come across opportunities.

In regards to networking events, I go to those ones from the startup community. People sometimes come up to me, they approach me over the Internet, via LinkedIn and email, but I don’t go to the pitching sessions. I was there a couple of times but I don’t like being a competition with other investors.

I get in extremely early when it is very risky and quite often lose everything.  In my case, I decide within a couple of days because I don’t have to consult with any supervisory board. So, I have a very quick decision-making process. Also, the founders trust me that I would be a supportive investor. I could also bring contacts particularly in terms of people who might be suitable senior executives or managers to help business work.

Most of your companies are from Poland. Is it important to invest in the companies which are locally close to you?

R: I think it is important to invest in companies with good trust in leadership and it’s very hard to judge that remotely. Honestly, in two cases I’ve invested in companies in the US, where in one case I never met the leaders. In another case, I met the guys once. And, it went very wrong.

I think you should invest in things where you can understand and check how the business can make money. You need to ask yourself, can I understand what problem it solves? Do I want to do this business and be involved in?

Considering remote business, I see two scenarios:

  1.  It could be a risk that I could easily afford to lose. In this case, I mean small amounts of investments (for example less than 5000 USD) perhaps in a low-cost country. However, the founders should convince me that they have a good business model and a good profit margin. In this case, I might consider it.
  2. When it comes to another, long-term business abroad, I have another concept. When I am starting to back someone and the project becomes successful, then very likely they consider me as a partner of new ventures. It could start from selling chips or ice cream to tourists on the beach and then it can make up to fibre optic business because I’ve got the relationship with the person. I don’t have that many examples of that, but I do have some.

Not all of the companies become successful and this is related to high risks. Can you advise on how to lower the risks? Are there any warning signs?

R: Of course, it is risky even if you did everything to lower the risk. The key thing which I am always saying, every time I am talking to people who are looking getting into businesses is not so important what my perspective is. What is really important is the perspective of customers, users and clients.

Quite often you see quite a nice business plan somewhere along the road where it says that this market is very huge. ”If we can even get 1% of people who, for instance, buy dog food, then we gonna be fine”. I say “I want to meet 10 people who have dogs, who can’t wait for this food to be available” and ask when you can start to supply them.

It can be the hardest thing when you are not experienced because you are not imagining “how do I going to talk to people?” about buying my product or my service before it’s ready. But, in fact, it is cheaper to talk with them before it’s ready and receive some feedback.

If an entrepreneur gets excellent feedback from potential customers, you can ask them to provide their data and use their opinions as consumer reviews that will be valuable to a potential investor. If customers are potentially ready to buy, this is very important.  It’s all about clients. That’s one important thing.

The second issue is unit economics. It’s showing the gap between the cost of delivering the service and the overall product price charged.

Every entrepreneur should take care of their expenses and, if possible, minimize them at the early stage. If a small business brings only a small profit due to high costs, this is a point that is worth paying close attention. I try to look for high-margin businesses. It doesn’t guarantee that the business will be successful, but, once again: have customers and have high margins. There is a whole lot of other things, but these are the two most important you must look for.

Do you worry about the companies you invest in? Do you sleep well? ☺ Are you totally sure and believe in a project’s success on the investment stage?

R: Do I sleep well? Well, if I don’t sleep well, it is not to do with worrying about my portfolio. Sometimes, there can be particular situations and companies which are really worrying. One of the attractive things to be an investor, is you get involved with things which are very important, like strategic decisions – hiring a key person or being in crisis, you do get involved. And, you know, the crisis can be really stressful.

How do you deal with stress?

R: I do time management. So I have a to-do list for all the companies and weekly cycle of what I need to do in order to help my portfolio companies.

I would say the following: if you want to save your money and don’t want to worry about it, then angel investing is probably the wrong thing. It’s much better just to buy stocks and shares on a stock market or go hire exchange-traded fund and just put your monthly savings into a diversified portfolio. If you want to worry you still gonna worry :) But this is the last you can do. You can’t eliminate risk from your life, it is just how you manage risk in your life.

Richard, do you think business angel investor should stick to his areas of expertise?

R: That’s an interesting question. My father, John Lucas, advised me to be a generalist, not a specialist. He said: if you need a specialist, you can always find someone who specializes in another thing. If you can be a generalist than you can do anything, so being a little bit good at a lot of things.

There is a good counter view to that point of view, which is a book by Cal Newport which called “So good they can’t ignore you” which advises you to get very good at something.  I think when someone is younger, it’s probably Cal Newport’s advice is best. Get very good at something.

It just means it is easier to make money doing that thing based on your skills and knowledge. Everyone can cut the grass near the house, but you can be incredibly friendly in the neighbourhood, ring the bell door and just say that you will handle it for them. They are maybe happy to pay you because you are the best person at that who is available right now.

But in terms of being an expert, it thinks there are areas where I am more familiar with. For instance, B2B, where the customer to one business is another business. I am quite experienced in selling to large organizations, I know how long it takes and how complex the decision-making process there.

It is so easy to become quite knowledgeable about something these days, enough to make some Google research and Wikipedia. The internet has made it very easy to get quite detailed knowledge quickly if you really care. So maybe it makes more sense not so much being an expert by yourself, as being able to tell if the other person knows what they are talking about. That means being good at asking questions and listening to the answers.

Considering being a generalist rather than a specialist, are you looking for some reasonable metrics which helps you to make a decision on a particular investment? 

V: Do you use analysts, lawyers and other services to assist you in the investment decision-making process?

R: No, I don’t use advisors.  I mean, sometimes, if I am not sure, I’ll ask my friends.  But the other thing is that I am not a professional investor, who is like “I’ve got to invest 10000 EUR”. I am not doing it at all, because I was trying to simplify my life, so I made a decision to invest. All investment decisions I make by myself.

For me it is simple enough to answer the following questions:

  • Does this company solve a problem or does this idea solve a serious problem of the customers?
  • Are the unit economics is good?
  • Is it possible to scale it at all?

In your blog, you wrote that the main areas to consider are the idea of product, market and the team. How can you assess the founders and know, that they will execute?

R: A very important question. You can never be sure. Obviously, you meet them, talk to them, listen to them, watch them. You have to not just judge how much energy they have, but how good they are at motivating other people. It’s always better to watch them with other people because if they are going to execute, they have to attract and manage talent.

So, it is not just them, you are projecting what they gonna be like with other people. Of course, they gonna be friendly with a potential investor. But will they be good with their employees – fair and demanding? It’s easy to be nice when you have lots of money, but you are hiring people and are you getting performance from those people. That is the key thing.

Another key thing is to understand, have they done things in the past? If they had a very easy life, come from a wealthy/middle class family, they always had holidays paid for, overall you can see that their life was quite comfortable and they don’t have a sense of hunger and drive demonstrated in their past, doesn’t matter the direction of activity (student radio, charity, newspaper, help with resettling immigrants or a TEDx type project). Question is – do they have self-motivation and drive within them?

If they haven’t done much then I will be cautious, and also ask do they care about stuff? It’s a tough process to establish. As a result, you need to understand their incentives and motivation.  You’ll probably see that in their past.

Please share with us some lessons learned due to investments which failed, if there were such in your life?

R: It’s a good question. I think that I can come back to the market, the people, the leadership and the unit economics. Leadership is the ability to manage and motivate other people. But it doesn’t matter how brilliant the leaders are and how impressive they are if the unit economics aren’t very good. Then, you can be phenomenally hard working and you are still not really gonna do very well.

In Krakow, small outsourcing companies quite often start from one person who can charge 50-70 $ an hour which is a lot of money in Poland, even more in Ukraine. If you are really good at programming you achieve quite a good income by local standards and that’s attractive.

But then if you are trying to start a business you have to pay people. You start putting together a team. You know, it’s okay to spend 40$ an hour because clever people will do what you did – find clients directly in other countries, so the unit economics aren’t that good unless you have a really good process for instance for recruiting software engineers.

It’s tricky. I know that companies become very big and very successful in doing this, but I think that unit economics looks not attractive to me because you end up with rapidly inflating costs. Everyone in Krakow is aware of the price of the talent going up and up and up. The smart people setting up offices in small cities, not in Krakow. Also, they can choose Belarus or Ukraine in order to bring the cost down. If you could do that, then okay. In this case, if your costs are not high, I can get the unit economics.

How many companies should an investor consider to invest in, and build his portfolio to make it balanced for a leverage of risks?

R: Other people say that it should be at least 10 to 15 companies, but I am not sure this is correct. I think one important thing to realize is mentioned by Peter Cowley, who is an angel investor and wrote a book about it, says that every time he invests, he imagines that he lost all his money. So like if you invest 10000 EUR, think that they are lost. That’s a starting position.

Angel investing is phenomenally illiquid in terms of convert it back into cash. Usually, it is impossible, unless it is an exit when the company sold. You want to sell your shares, but no one else wanted to buys them. I’ve only once got my money back from an angel investment.

Very often, even if it is the additional capital raising round, another investment round, the entrepreneur doesn’t want people selling out. It shows a lack of faith in the business. If that is such a good business, why would anybody want to sell their shares? You may need to be ready to invest in future rounds.

Have you ever managed to make an exit and sell your stake in the company?

R: Yes, once in April 2019, and a partial exit to one of my business partners where he bought some share in a company we co-owned to change the balance of our investments.

If you have a 100 000 zloty to invest and you might need that money to buy an apartment or pay for your wedding or school fees or your hobby, then don’t put your first 100 000 zlotych of savings into angel investments. Maybe, do ten or twenty thousand just to learn how it goes. Because unless you are extraordinary or lucky, you are not going to find a way of turning that 100,000 into 2 million in 2 or 3 years. It can happen, but that’s what happens to other people, not to you or me :)

Coming closer to the money issue, what is the amount of money one’s need to become an angel investor here in Poland? What should be the minimum?

R: My investments are a lot lower than people think. The thing is that you need to pick the right type of project. I wasn’t joking when I gave the example of the guy cutting the grass. If you have ten or twenty thousand zloty to invest then that’s not a lot of money in a world of formal seed capital/venture capital, but it is a lot of money for those who don’t have any money. It can be the thing that makes possible for someone to start.

And so you might meet students who can do something valuable: they could be the guys from the high school with the machine learning society. You know, because you are recruiting in IT, there’s a huge demand for machine learning.  If you knew someone who wanna buy that kind of services then you can say: “Look, I can invest 5-10 K PLN to help you”. But there should be a problem you can solve. If a small amount of money could make a difference, then you can start with that.

The main question is what value could your money bring in this particular stage? In my assumptions, you are not going to bring only money, you’ll gonna bring something else: experience, knowledge or network. In your case, you need to ask yourself: What do I know? What am I good at? How can I help? And then you somehow between a co-founder and investor, you are close to the business. You need to work on your relations with this business. Some angel investors make very detailed processes, like the reports, repeatable meetings and so on. This is the sort of thing which is very important.

Which IRR should be considered as good?

R: I didn’t make exits, but I’ve got from the one business many times my return in dividends in cash. So, to some extent, you’ll never know your IRR until you sell the shares. I would say, that business success is if you have more money afterwards then before. If I put 50 K zloty into a business and within the next 5 years I get 50 K back in dividends or consulting fees for helping them and I still earn 20% of the business, because the business is valued 250 K (which is about 60 K EUR), then it is a success. Because I still have the share in the company and I got my money back.

I have to say, that investments funds will be looking for 30% a year and I think it very often quite difficult for them to do that.

You mentioned shares. Which split between shares of business angel and founders you consider as optimal and should it change in future?

R: That’s a very important question. I think it is a very risky mistake which I made in the past. I’ve seen other people becoming greedy. You need to have people working on business and having a significant shareholding. And until you have such a scale they could be pretty well paid for their work. In Poland, let’s say 100 thousand USD, 370 thousand PLN annual salary is a very good salary for most people, as the leader of a successful private company. For sure some readers will know examples of people who get more, and some will think this salary sounds too high.

In the early days of startups, you want to have a situation, when the founding team is owned probably 60-80% of the business. And, if you are the first cash investor, you can own other mentioned part of the business. If you own 80% of the business and the young founders has 20%, actually in a way they are more working for you then being an entrepreneur. In such a case, I’m not sure how you could ensure that the motivation of the people leading the business is very high unless you are paying them like employees

In my experience, if you are investing a lot of money, millions of dollars, which is more money that I’ve got, then you will have maybe very different conversation, because in order to put 30 mln USD and the founders will have 80% of the business that implies that the business has 150 mln dollars evaluation, which is unlikely in most startups.

What is the average percentage of companies which may succeed and become a very fast growing (even unicorns) in a business angel investor’s portfolio?

R: If fast growth is associated with product market fit where the people are actually selling the product by word of mouth and then having a very good sales process, where people understand how to generate sales leads and how to get people to buy, and there is great unit economics then this is possible, but Unicorns are rare.

It is very important for the company to realize the possibility of scaling and to have the resources for this. I’ve got some businesses, where we are growing, but still haven’t got a well-defined sales process and not for lack of trying, we are trying different things.

When it comes to your question about the percentage. Even if you have just one company in your portfolio, which has scalability, good product-market fit and a great sales process, that’s good.

Richard, speaking of scaling, are there any companies in your business angel portfolio that are very fast growing “unicorn” companies?

R: Unicorns –  for those who don’t know is a company valued more than a billion dollars in the most recent investment round. That’s an extremely rare thing. I don’t have unicorns in my portfolio and I would be very happy if I had.  If you get a unicorn in your portfolio – congratulations – please give me some money.

You need to be delivering your services digitally online. Many of my businesses work for complicated machinery production lines or into warehouses or rolling ticketing services for mass transit and this is not scalable. You can’t download our services in return for payment So, SaaS business is of the best in terms of rapid scaling and unit economics.

You mentioned, that the angel investor is in between co-founder and investor. I would like to ask, do you participate in the business processes of the companies you invest in?

R: Sometimes, but not always. I try to make myself available to help the CEO, sometimes in bigger companies, we have scheduled monthly board meeting. That’s a mixture of progress report with a certain checklist on what to do with the market, technologies, people, HR issues, finances, strategic development.

If something important is happening or a big problem, then we need to be sure that shareholders are allies in how we should solve it. Maybe, we need to help the CEO, or we need to work on processes.

I want to help people with particular projects if they need me. Sometimes, in key executive hiring, it can be very challenging to persuade the best people to join small companies. Sometimes the CEO wants me to come and for instance get a second opinion about whether a person will be suitable as a senior executive. It’s not just “can I help them persuade this person to join”, this is also “do I agree with the idea that he or she should join”. A senior person costs more in a year than some of my startup investments.

But in terms of day-to-day process, I don’t want to be in a situation when I have to take all the things going to my monthly workflow, like make a sales calls or coming to meetings to manage people.

From the start-up point of view, should the founders look for someone that’s going to be supportive, bring them not only money but mentoring and business contacts as well? What should they look for?

R: It depends – what’s most important is that expectations should be aligned.

One example might be where a software company can fix some very bad manual process which might be improved with the use of the software.   Maybe they should write an application, some management system which solves this particular problem or automates it.  Maybe the client could be a potential investor. You could say: “Hey, look, I’ve written that app. Would you like to invest in this business?”. They might know someone else who might want to invest. So, you can pitch them as well and provide the idea of your product.

If you know someone who can become a first business angel investor and can bring first customers, then you have the critical first reference which gives you insight about product market fit and feedback. They are more tolerant if the product is not working very well, ready to do a pilot.

So, definitely, you would like to get investors which could bring you extra value and it could be markets, people, contacts.

On the other hand, if you just want the money and the investor is a bit annoying/you don’t have good chemistry –  it can be a problem if they give feedback and advice you don’t want to take.

So it depends.

What startups currently raising money could contact you as a business angel? Which business sectors you might be interested in?

R: I don’t really have a limit. If people have got an idea, but they haven’t made a product yet, they don’t have customers yet, I would say – go to customers first, find what customers think about your idea and if the feedback is very positive then contact me.

If you need millions of dollars to get going, say, in mining or machinery – I don’t have 10 or 30 mln dollars as a business angel to help you to make it happens.

But I like technology businesses. If you say you found a solution in a sector which makes some process 10x times cheaper, 10x times faster and its solves a really major problem for clients, helps people (clients) to be more productive and efficient, not just a bit – that sounds interesting.

You can put a link to my blog post with questions of a potential investor. I think that it is common sense. Let me know what you want to do. How do you want to make money? Why people will be very happy to buy from you? How are you gonna do it? How much money do you want? What you gonna give me in return? I don’t think this is rocket science.

V: Thank you very much, Richard, for such insights! It was a pleasure speaking with you. I hope our readers will also enjoy this interview.

Thanks for your time and attention! Feedback is always appreciated. If you want to contact business angel Richard Lucas, we will post his contact details below. Also, pay attention to the literature recommended by Richard concerning the topic of our conversation.


  1. “So Good They Can’t Ignore You: Why Skills Trump Passion in the Quest for Work You Love” by Cal Newport,

  2. “Angel: How to Invest in Technology Startups. Timeless Advice from an Angel Investor. Who Turned $100,000 Into $100,000,000” by Jason Calacanis.
  3. “The Invested Investor: The new rules for start-ups, scale-ups and angel investing” by Peter Cowley. Link to Peter’s podcasts:

You can reach Richard via:

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