09 May 2018 Angel Investor Panel: What does it take to get that Angel check?
By Jenna Fuentes
“We have to shift women’s mindsets. Angel investing is the new book club.” — Stacey
Gearing up for our annual Women Founders Network Fast Pitch Competition, we held our 2018 Angel Investor Panel Kick-off Event to offer practical and valuable insight for women entrepreneurs seeking Angel investors and funding.
The event featured an intimate discussion with five prominent angel investors who focus on early-stage branded consumer companies: Anna Barber, Managing Director of the Techstars LA Accelerator, Stacey Feinberg, Partner at Halogen VC, Kimberly Kovacs, Managing Director of strategic advisory firm, Arroyo Ventures, and Xandra Laskowski, Founder of Osea Angel Investors. Darya Allen-Attar, CEO, and Co-Founder of Women Founders Network moderated the panel.
Lessons Learned: Invest in People
“The first two people you bring in are so key. Grab people you know!” – Kimberly
Our panelists set the tone of the night by stressing the importance of investing in one’s team and ensuring that the culture is aligned with core values. There was an overall consensus that integrity drives investment decisions. A team’s combination of grit, resourcefulness, execution, passion, and synergy will optimize its chances of success.
Stacey Feinberg encouraged entrepreneurs to make people their first priority. Stacey commented that “people come first. With angel investing, the numbers are made up. I invest in people.” The quality of a team can be gauged by the relevance of the team’s backgrounds, chemistry, and complementary skills.
Kimberly also echoed the importance of hiring and investing in people. She strongly advised the audience that the first people who make up the company are highly influential in building the company culture, brand, and overall success. Most people she worked with in the past were people whom she knew personally.
Choosing Investors: Be Selective
Choosing an investor will have a huge impact on the overall vision and future of the company. The panelists advised founders to not be afraid to vet investors based on their track record and experience as well. Kimberly Kovacs advised women founders to “not be afraid to pick and choose investors”. She commented, “there’s a lot of capital out there. Hold off for the right investor. It hurts you more bringing in the wrong investor.”
The panelists evaluate the following factors before investing: competition, timing, business model, target customer acceptability, scalability, traction, space, market size, saturation, founder-problem fit, and potential for disruption. When considering companies, Stacey asks the following: “if you are going to change and disrupt the industry, why do we need it, and is it scalable? How large are the market and much of the market do you have? Otherwise, it’s just a hobby.” She adds, “There also has to be an exit. Prepare for a larger entity to pursue you.” Stacey often starts to feel wary if an entrepreneur is “married to the company until it dies.”
Similarly, Xandra shared the following advice with the audience: “I have to get it. I look at the CEO and team. I also look at strategic alignment and typically invest in later stage companies. They have to be radically open-minded. If the team is not coachable and doesn’t get along, it will fail […] I am also interested in entrepreneurs who made mistakes, started companies that failed, and then tried again, learning the second time around.”
“Founder-Problem fit” is a match between the founder and the problem they are going after. Anna Barber suggested to not get seduced by traction from prior fundraising success. She stressed that each founder must continue to invest and trust in your team, evaluate the market, improve your product, and traction will come. She often pays attention to bootstrapped companies who have a deep domain knowledge and authentic connection with their product or service, which is often discovered through personal life experiences and research.
Collaboration between Women Founders and Women Investors
“Men are competitive. Women are collaborative. Men are an “or,” women are an “and.” – Stacey
When asked about working with women investors, Stacey explained that “women want to help each other. Women are open to ideas, criticism, respect, and sisterhood. Men are competitive. No one leaves empty handed in the ‘broadroom‘.” Stacey fully supports the comradery amongst women entrepreneurs and reassured founders that “although you might not receive capital, women investors will help other women founders with advice, resources, assistance, referrals, social media, connections, and/or, possibly, discounts.”
Share the Bad News and Ask for Help
“I want to be your first call when things go wrong. I can be your 10th call for good news, but I want to know when you need help.” — Anna
In regards to the investor-founder relationship, the panelists prefer a “reality update of recent challenges” versus celebrating every success. Xandra has found that most founders love sharing wins, but when there’s bad news there tends to be no communication.
Anna pointed out the value of being humble and “coachable.” She is not so keen on “bro-swagger” and hearing the news of “crushing it all the time.” A successful investor-founder relationship fosters an atmosphere of vulnerability and honesty as well as creates a transparent environment. Anna also advised founders to consult with multiple investors, then “make your own decision about what is best for you.”
“Use your investors. Use your network.” — Xandra
It is a common stereotype that most women want to solve problems on their own and do not ask for help. Kim added, “investors do not want to hear about what is going on in personal life, sickness, family, or an emotional excuse. They are there to solve it together. If you have a problem, own it. And let’s sit down and fix it.”
Women founders must be confident while doing business and separate personal life from business. Kim explained that “the problem could be solved much quicker and could save you lots of time by asking questions and asking for help.” Kim stressed the importance of listening to feedback and then quoted the motivating Richard Branson’s saying, “to wear failure on your chest.”
“I think of fundraising as a strategy. I think who your investors are depending on who you want to be your last investors.” — Kimberly
Each panelist practices her own due-diligence before investing. They take their time, weighing a number of factors. Investors look for commitment and watch the multiple rounds of revenue ramping over the course of 4-6 months to see if the first investors are still covered.
Stacey takes note of the following: “Is the company bootstrapped? Is there ‘skin in the game’? Is the founder living on a ‘tightrope’ with maxed out credit cards and paying themselves later, and is everything ‘all in’ on this company.”
Anna and Xandra watch for the type of funding, overall funding strategy, and who else is investing.
Kimberly encouraged entrepreneurs to be #2 or #3 in your market, but not #10 in terms of competition.
Xandra acknowledged patience during the process, “Yes, I take a long time, but when I write a check, I bring my people. I bring my network.”
Another interesting trend was that the panelists typically don’t invest in consumer products.
“Think like a man and ask for double; then get it to happen. Endless fundraising will make the road long.”
“I pay attention when I meet people at these events, and think about how I can help, not just with a check.”
Panelists agreed that face-to-face networking and meeting for coffee are the most effective ways for networking. They all felt that it is great to “stay top of mind” and that, sometimes you may never know, an opportunity may arise to collaborate and help each other.
“Angel investing is a team sport. It’s something we need to do together.” — Kim
Since Techstars is a global network with valuable connections, Anna stated that “the easier you can make it for us to make connections, the better it is for you.” Likewise, Kimberly usually would ask her contacts first before making an introduction. She said that she values her connections’ time and privacy and respects their right to say “no”. She also mentioned to not just ask, but also, offer services and ways to help connect others.
The night ended on an inspiring note from Darya:
“There has never been a better time in history for women entrepreneurs. It’s a pivotal moment and the time is now.” – Darya Attar
Managing Director, Los Angeles
Anna Barber is the Managing Director of the Techstars LA Accelerator. Prior to Techstars, roles included: advisor and coach to startup founders; founder and CEO of Scribble Press; VP Product at Petstore.com; corporate lawyer; McKinsey consultant; and co-founder of the US Air Guitar Championships.
Kimberly Kovacs is the Managing Director of Arroyo Ventures, a strategic advisory firm that provides a place for high net-worth female investors and exceptional women entrepreneurs to connect and to empower women to invest and seek investment. She is also an active angel investor and advisor to emerging companies who are seeking growth capital.
Osea Angel Investors
Founder and CEO
Xandra Laskowski is a Startup consultant with over 25 years of entrepreneurial experience with large multinational tech companies as well as startups as a founder, investor, advisor and board member. She has held positions as Worldwide Commodity Manager and National Major Accounts Managerial roles before moving into the Angel Investment and startup worlds. She founded OSEA Angel Investors in 2017, women-focused angel investment group based out of The Cove at UCI Applied Innovation, Irvine, CA. OSEA Angel Investors is an investment partner with UCI Applied Innovation, Tech Coast Angels, and Angel Syndication Network.
After two decades in the hedge fund world, Stacey pivoted to seed-pre IPO Investing. Some of her early stage investments include Uber, Facebook, Alibaba, Redfin, Flipkart, Zico Water & Michael Kors. Investing with Halogen Ventures has shifted her focus to funding and empowering female entrepreneurs.
Women Founders Network
CEO and Co-Founder
Darya Allen-Attar is passionate about the advancement of women. In 2013, Darya recruited several colleagues to form Women Founders Network (WFN), a virtual accelerator whose focus and goal are to connect women founders building high-growth businesses not only with the required capital but also with the resources, connections, mentorship, and sponsorship they need to grow scalable, transformative, successful businesses. Subsequently, Darya founded the nonprofit Women Founders Foundation (WFF) in 2017, with a mission of educating women and girls about entrepreneurship.
A special thank you to Stubbs Alderton & Markiles, LLP, on Santa Monica Promenade who hosted our event. Stubbs Alderton & Markiles, LLP is on Built in LA’s annual “Top 50 Startups to Watch” list. This preaccelerator program offers companies access to startup lawyers, capital, and coworking spaces as well.