VC who bet on billion-dollar AI firm shares two red flags

A successful angel investor has identified two signs that prevent him from investing in a founder on the first meeting.

Carles Reina is an angel investor who invested in voice cloning AI startup Eleven Labs when it was still in its early stages in 2022. The firm, co-founded by Matiy Stanishevsky and Piotr Dubkowski, raised $180 million in Series C funding earlier this year at a valuation of $3.3 billion.

In September, the company announced that it was allowing employees to sell shares at a valuation of $6.6 billion. Reina is now the vice president of revenue at the AI ​​firm.

When Reina first met Eleven Labs co-founder Stanishevsky, he told CNBC Make It that no one wanted to invest in voice AI at the time. However, Reina decided to invest in Eleven Labs after just one meeting.

"We started talking, and within 30 minutes of the first meeting, I asked him, 'How much money do you need?'" Reina explained.

She explained that the first meeting is crucial when making any decision, and Stanishevsky had certain qualities that attracted her as an investor.

"If there are no initial signs, I generally don't want to waste someone's time... I think you always optimize for high-quality conversations; [it's] like you're trying to decide if this is something you really like and whether you want to spend more time with the founders."

Reina gave two reasons why she wouldn't invest in a founder after the first meeting.

Two Risks

One of the key qualities Reina looks for when meeting a founder is technical expertise.

"It's very individual, especially at different stages. But for me, if one of the founders isn't technical, like doesn't know how to build a product, isn't a researcher, or something like that, then I don't see any merit in them because they won't be able to grow as quickly," she 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.

She said, "It was really interesting to see that he was thinking about the problems of the entire ecosystem before even building any product or talking to any potential customers."

Another risk is whether the founder is trying to build a company in a "too crowded market," which Reina often tries to avoid.

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"If too many venture capitalists are eyeing that market because it's attractive, I'm not interested because then valuations skyrocket and you end up in a pricing war where everyone tries to give them term sheets and so on," he said.

According to Reina, when too many venture capitalists want to invest in a company, it increases its valuation, putting unnecessary pressure on the founders to show rapid growth and maintain or increase that valuation.

Other reasons could be that the founder is in an industry that doesn't interest them and doesn't fit their investment profile.

“If someone sends me a proposal, or I’m introduced to someone who doesn’t really grab my attention right away, I’ll tell them right away that ‘I’d be happy to help you with whatever you need [but] from an angel perspective or from an investment perspective, that’s not one of my things.’”