Tuesday, October 29, 2019

Startup-People of Seattle: Edward Un (Business Angel)

The blog-series “Startup People of Seattle” introduces some of the key personas in the ecosystem to learn more about what they are doing, to share their thoughts and ideas, and to promote networking.

In our thirteenth interview, meet Edward Un:
“The one thing that is key to understand early on is the portfolio approach. You cannot expect a return if you only invest in few companies, because they could all fail. So, you must invest in enough companies to minimize the risk of all of them failing.”
Edward Un is working as Senior Program Manager, Cloud + AI Speech & Language, at Microsoft. In his free time, he is involved in Angel Investing.
https://www.linkedin.com/in/edwardun/



Q: Could you shortly introduce yourself and talk about your background when it comes to startups?
A: I studied computer engineering and I have been in software all my professional career. Following a job in a larger company in Silicon Valley I joined my first startup, a less-than-ten-person-company. After spending three years in this startup, I met someone in the Valley, and we decided to co-found a company with one more person. We started growing organically, bootstrapping our company by doing consulting work while figuring out what kind of product we want to build. By the time we had figured out a problem and had created a solution, we were already 30 people. We then raised a few series of Venture Capital to continue growing with our new business model. We managed to grow this company to 150 people at its peak. Eventually, I left the company to work at another startup in Hong Kong, which was about to go public at the time. Today, I work at Microsoft as a Program Manager. On the side I am involved in Angel Investing.
Q: You have experienced working for one of the largest companies in the world, but you also worked for startups. What would you say are some of the differences?
A: Because there are so few people involved in a startup, a difference is that in startups you wear a variety of hats. At Microsoft, I focus on one area. Another difference is that in startups you reach out to people outside the company a lot more than in big companies. Working for a big company, you interact mostly with people within the company or with customers. One more aspect is that money and resources are omnipresent worries in startups. In large companies, resources are less of a concern in the daily operations. Because startups are in a constant race with running out of resources, startups also need to move at a faster pace and be more agile.
Q: You mentioned having been involved in the execution of startups, but how did you get involved in angel investing?
A: Like you say, for a long time I was much more interested in the execution of startups. I thought of investing in startups as boring, and I did not want to constantly hear pitches and be in meetings, etc. But about two years ago, I picked up a book by Jason Calacanis called “Angel” and also started listening to his podcast called “This Week In Startup”. After reading his book I became much more interested in angel investing. Therefore, I read more books, like “Angel Investing” by Davide S. Rose for example. I also started going to meetups, etc. About one year ago, I started going to the Seattle Angel Conference workshops and I then participated in SAC 14. The Seattle Angel Conference introduced me to Keiretsu Forum, a network of angel investors, which I am actively involved in today.
I have met many people being part of Keiretsu and SAC and I learn a lot from that. One thing I learned is that, especially in the beginning, you must resist the urge to invest in companies. A lot of founders are very talented in presenting their companies, but you should develop your investment thesis and learn more about angel investing before spending a lot of money without understanding yet what due diligence is etc. You need to remind yourself that investment opportunities will keep coming and that there is no rush to invest in everything right away that looks interesting. In my first year being involved in Keiretsu I have invested in two companies.
Keiretsu has a screening process that startups must go through. If they are chosen, they get the opportunity to present to the membership. The members ask questions and in the end each investor decides individually whether he/she wants to invest or not. 
Q: You mentioned patience being important for a beginner in angel investing. What are some other key things you have learned as an investor?
A: Listening to a variety of pitches from companies in different industries naturally has taught me a lot. But in terms of investments, the one thing that is key to understand early on is the portfolio approach. You cannot expect a return if you only invest in few companies, because they could all fail. So, you must invest in enough companies to minimize the risk of all of them failing. 
The importance of due diligence and that you should try to become aware of your biases are other things I learned as investor. A bias could lead you to convince yourself why to invest in a certain company overlooking arguments not to invest. To overcome biases, I always look at a company asking myself: “Why shouldn’t I invest in this company?”
I also built a habit of writing down my thoughts on every company no matter whether I decide to invest or not – an investment memo. In a few years’ time, I hope I will be able to see which companies became successful and which ones not. I then will be comparing this with my notes to draw conclusions and learn from that. I think just seeing a lot of companies and then following whether they become successful or not is a great way of learning about patterns, and I hope this will eventually help me become a more successful investor.
Q: You brought up the term investment thesis. What is your investment thesis?
A: I would say that I am still developing my investment thesis. At this point, I like to invest in companies that take advantage of an emerging trend. The company must also do something in an area that I understand. Therefore, most of my investments are in technology companies, because that is my area of expertise. Another thing I pay attention to a lot is the team. I must feel like this is the right team to invest in to solve a certain problem.
Q: You said you like to invest in areas you understand. What do you think about the trade-off between investing in your areas of expertise and diversifying your portfolio as much as possible?
A: I think that portfolio diversification is more important, but I do try to find a middle ground. I enjoy educating myself about different areas, so I have relatively broad knowledge. As a result of that there are enough areas that I feel comfortable investing in from a knowledge-perspective, that I am still able to create a diverse portfolio while limiting myself to those areas.
Q: How closely do you work with startups that you invest in?
A: This depends. Companies I invested in through SAC, I don’t really interact with at all. It’s the fund manager who does that. Companies I invest in individually through Keiretsu, I can be more involved with. I am in touch with both the founders I invested in directly. One of the companies I support through my expertise a lot, while the other company is more interested in my network. Either way, I try to be a resource for them and support them, however, I think at this point I can contribute most if a company needs my expertise simply because I am new to angel investing and my network is still relatively small.
Q: How difficult is it as an angel investor to see many startups fail early while waiting for the 10x-return investment? How do you convince yourself to keep putting more money into more companies in the face of failures?
A: You must have the right mindset. This is why many people who legally are accredited investors practically are not suited to be angel investors. They cannot deal with the risk involved in angel investing.
Personally, I view angel investing as a way to diversify my overall investment portfolio. Angel investing is the portion I put into high risk, high reward opportunities. This portion should not be too big. I should be okay with losing all that money. In fact, my mindset when writing a check is that the money is gone. At the same time, by building my portfolio I decrease the chance of loosing all my money put into angel investing opportunities. Chances are that if I invest in enough companies, eventually I will be cashing out on at least one investment that makes up for the many failed investments. This is why successful angel investors have been investors for a long time. It simply takes time to build a portfolio, so you need to be committed to that. In the end, I trust the portfolio theory, and the companies that are still running give me hope.
What also helps me is thinking of angel investing as an investment in my education. I have learned so much through being part of this community. Doing angel investing is almost like getting an MBA. You do a lot of case studies, look at different companies, listen to their pitches, talk to CEO’s and learn how they run their company, think about different business models and different markets and you analyze financials.
What I also like about angel investing is that you can do this no matter the age. By learning how to do angel investing today, I can be a full-time investor after I retire from Microsoft. So, angel investing to me is an alternative after-retirement occupation to teaching or writing a book, which are things many other people consider doing after they retire. 
Q: What are some of the challenges you faced as an investor?
A: I think the biggest challenge for me is time, especially with balancing angel investing with my day job at Microsoft. Another challenge is deal-flow. I am trying to figure out whether I should limit myself to local companies or not.
Q: When you face challenges, what are some resources that you seek advice from?
A: I use books and podcasts to build my knowledge. Podcasts allow me to listen and learn from the top-experts. Other than “This week in startup,” I listen to “a16z” by Marc Andreessen and Ben Horowitz, and I listen to “Masters of Scale” by Reid Hoffman. 
To get advice on a specific issue, I reach out to communities like SAC or Keiretsu. John Sechrest is someone who has answers to everything related to angel investing, so I often reach out to him. I also ask questions at workshops on things I need advice on.
Q: What advice would you give someone new to angel investment?
A: Only do this if you are willing to commit long-term. If that is the case, I would refer him/her to the Seattle Angel Conference as a starting point, and to David Rose’s book “Angel Investing.”  I find this book to be an easy read and easy to understand.


Here are some things I learned from this interview:
  • You must be committed to becoming an angel investor for a long-enough time to build a portfolio.
  • As an investor you should question whether there are any reasons not to invest in a startup.
  • Only invest a small portion of your wealth into startups. You must be okay with losing all that money.
  • Angel Investing doesn’t only offer financial returns, but also educational returns.
  • Angel Investing requires time, so doing it on the side can be challenging.


In the interview Edward mentioned some resources and organizations, find out more about them here:
“Angel” by Jason Calacanis:
“This Week In Startup” by Jason Calacanis: https://thisweekinstartups.com/
“Angel Investing” by David S. Rose:
Seattle Angel Conference: https://www.seattleangelconference.com/
“a16c” by Marc Andreessen and Ben Horowitz: https://a16z.com/podcasts/
“Masters of Scale” by Reid Hoffman: https://mastersofscale.com/


About Seattle Angel:
A strong ecosystem creates an environment that allows startups to thrive. Seattle Angel’s goal is to strengthen Seattle’s startup ecosystem by increasing the access to funding for entrepreneurs to push their ideas further.


About the author: Sven Goepfrich

Sven Goepfrich is currently finishing his MBA in Syracuse. His studies focus on technology, innovation and entrepreneurship. At his school, he is working for the department of finance. Sven was actively interning with the Seattle Angel Conference in summer 2019. He is currently looking for full-time career opportunities in this field.

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Thursday, October 24, 2019

Leslie Feinzaig is the Keynote speaker for SAC XVI


Leslie Feinzaig
We are pleased to announce that our Keynote Speaker for Seattle Angel Conference XVI will be Leslie Feinzaig. She is a tech executive and entrepreneur on a mission to democratize entrepreneurship. Leslie is Founder & CEO of the Female Founders Alliance, a network of founders, investors, partners, and champions that collaborate to help women and non-binary startup leaders succeed. FFA offers programming, community, incubation, deal flow and investment opportunities, with a mission to increase the number of successful member founders 20 times over in 10 years or less. 

In 2016, when her daughter was 6 months old, Leslie launched Venture Kits - games that develop leadership skills through play. Her one-of-a-kind, inspirational concept quickly garnered critical acclaim and customer love. The experience of raising capital for this concept - coupled with the realization that only 2% of venture capital is invested in female-founded companies in the US - propelled Leslie to start the Female Founders Alliance in early 2017.

Prior to Venture Kits and FFA, Leslie held product leadership roles in prominent tech companies including Julep (an Andreessen Horowitz portfolio company), Big Fish Games ($1B exit), and Microsoft (Kinect 4 Windows and Bing).  Previously she was a strategy consultant at Innosight, serving under "Innovator's Dilemma" author and Harvard Business School professor Clayton Christensen.

Leslie was named one of Forbes Magazine’s Most Powerful Women from Central America & the Caribbean, Seattle Magazine’s Most Influential People, and Puget Sound Business Journal’s 40 Under 40. She’s a frequent speaker at events like Tech Inclusion, SXSW Interactive, Geekwire Summit, NW Angel Capital Conference, Seattle Magazine’s Daring Women, and more. Her writing has been featured in publications like Forbes, Entrepreneur, and AllthingsD. She has a BSc from the London School of Economics and an MBA from Harvard Business School with a full scholarship. She lives in Seattle, Wash. with her husband and daughters.

We look forward to seeing you at the SAC XVI Final event on November 13th,2019.
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Wednesday, October 23, 2019

Startup-People of Seattle: Gary R. Ritner (President – PSVC & Investment Banking)

The blog-series “Startup People of Seattle” introduces some of the key personas in the ecosystem to learn more about what they are doing, to share their thoughts and ideas, and to promote networking.


In our 12th interview, meet Gary R. Ritner:

“Here is one portfolio theory: Rob Wiltbank studied angel returns for years. The results have been approximately the same. If you invest in ten start-ups, five go broke in the first two years, three will return something, but you make all your money on one or two deals. Overall the return on investment in angel investing is high, IRR +20%, but you must have a portfolio to minimize risks. I suggest investing in at least 15 companies.”
Gary R. Ritner is co-founder and president of the Puget Sound Venture Club, PSVC.
https://www.linkedin.com/in/gritner/



Q: Could you talk some about your background?
A: After college I worked in both big and small stock brokerage companies. At one point I realized that what I enjoyed doing most was raising money for startups, so I did that for about 30 years. In 1985 venture clubs started to form around the country and a local attorney, John Steel, said that we needed one in Seattle as well. This is how the Puget Sound Venture Club came into existence.
Q: Could you talk some about the Puget Sound Venture Club?
A: Compared to Keiretsu, Alliance of Angels and E8 we are small. We have a membership cap of 35. As an angel club, the Puget Sound Venture Club does not have a fund, so every angel makes individual investment decisions. The purpose of the club is to be a place for investors to see deal-flow and to network. We are looking for technology startups that are raising go-to-market money, meaning the product should be done. Sometimes, we also invest in medical and medical device startups prior to FDA approval. We focus on northwest startups. Present and past members have made over 1000 investments since we started.
Q: How does the process look like for founders who want to present their startup to the Puget Sound Venture Club?
A: Founders often contact me first and I will schedule a 30-45min call with them. After that, if both parties agree, the companies send an executive summary. The Puget Sound Venture Club charges them $150 to do that. Out of all the companies sending in an executive summary, we choose approximately six companies each month to present to our screening committee, and two or three of those companies get the opportunity to present to our membership. Typically, no formal due diligence happens after that, so it is up to each member to decide whether to invest in either of the startups or not.
Q: What criteria do you look at when deciding whether to invest in a startup or not?
A: Most important is the team. I also look at go-to-market strategy, being realistic about competition, and deal-terms of the offering, meaning whether the pre-money evaluation is too high. A lot of evaluations are too high as founders are often over-optimistic. We also want to see the potential of a 10x return within five years. Aside from these items and since we get our money returned through an IPO or an acquisition, founders and investors must agree with those exit scenarios. I like entrepreneurs who have the ability to recognize their mistakes early and who can adapt if something is not working. I suspect Jeff Bezos has that unique ability to recognize his mistakes early. I want entrepreneurs to be aware of what they don’t know and to listen to advice. Many refer to this as the coachability aspect, and in my experience, female entrepreneurs are much better at this. Intuition, or “gut feel”, is another important trait for a CEO, and I think female entrepreneurs generally have that trait more than men as well. Startups also shouldn’t be naïve when it comes to sales. Many founders believe that great products sell itself, but that is not how the business works. “Nothing happens in the world until somebody sells something.”
Q: What are things founders often do that investors don’t like?
A: The number one complaint I hear from investors is that founders do not keep them informed about what is going on. Founders should always keep investors in the loop through monthly or quarterly updates. 
Q: What advice would you give a new angel investor?
Here is one portfolio theory: Rob Wiltbank studied angel returns for years. The results have been approximately the same. If you invest in ten start-ups, five go broke in the first two years, three will return something, but you make all your money on one or two deals. Overall the return on investment in angel investing is high, IRR +20%, but you must have a portfolio to minimize risks. I suggest investing in at least 15 companies. 
Angels must be aware that it can become difficult to see many startups fail early on while waiting on first returns. A lot of people, who are wealthy enough to angel invest, are not cut out for angel investing because of that. They cannot live with losing half their money in two years. It takes a certain personality.
Another aspect I’d advice to consider is whether an angel wants to be investing individually or as part of a fund. Most companies only accept a minimum investment of $50K. So, to be an individual investor you must be willing to invest around $750.000 – 15 deals. If you want to invest less while having a diversified portfolio, venture funds are the way to go.


Here are some things I learned from this interview:
  • Gary gave a lot of insight into what he looks at when deciding whether to invest in a startup or not. As many other interviewees have, he emphasized the importance of the team.
  • In the relationship with angel investors, Gary emphasized that the number one mistake founders make is to not keep investors informed.
  • From an investor perspective, understanding the portfolio theory is key.


In the interview Gary mentioned some resources and organizations, find out more about them here:


About Seattle Angel:
A strong ecosystem creates an environment that allows startups to thrive. Seattle Angel’s goal is to strengthen Seattle’s startup ecosystem by increasing the access to funding for entrepreneurs to push their ideas further.

About the author: Sven Goepfrich


Sven Goepfrich is currently finishing his MBA in Syracuse. His studies focus on technology, innovation and entrepreneurship. At his school, he is working for the department of finance. Sven was actively interning with the Seattle Angel Conference in summer 2019. He is currently looking for full-time career opportunities in this field.

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Tuesday, October 15, 2019

Startup-People of Seattle: Rebecca Lovell (Executive Director at Create33)

The blog-series “Startup People of Seattle” introduces some of the key personas in the ecosystem to learn more about what they are doing, to share their thoughts and ideas, and to promote networking.
In our 11th interview, meet Rebecca Lovell:
“More needs to be done to enable access to resources for underrepresented entrepreneurs, especially women and people of color.”
Rebecca has been involved in several key organizations in Seattle’s startup ecosystem, such as Alliance of Angels, Northwest Entrepreneur Network, GeekWire and the University of Washington. Today, Rebecca is executive director of Create33, a resource center for technology entrepreneurs.
Q: Could you introduce yourself and Create 33?
A: I am the executive director of Create33. Create33 is a resource center for entrepreneurs providing access to customers, capital and talent through educational programming, mentorship and connections. We also provide workspace and a supportive community. However, we’re really in a new category and not a typical coworking space. We have as much in common with an incubator or accelerator.
Q: Having worked with a lot of startups, what do you regularly see entrepreneurs struggle with?
A: Our focus here at Create33 is on seed-funded entrepreneurs. The biggest challenges facing those entrepreneurs tend to be hiring a team, fine-tuning customer-acquisition, and seeking series A funding. Consequently, most of our educational programming focuses on team-building, culture, talent acquisition, customer discovery, understanding the investment landscape, etc. 
Culture is key and should be a high priority to startups very early on. Once a culture has formed it is very difficult to change. A benefit of a positive culture is that it attracts talent, which is important for startups competing with big, financially strong companies that can pay high salaries.
Q: Why does Create33 focus on seed-funded entrepreneurs?
A: In Seattle, many resources exist for entrepreneurs in the idea-phase all the way to raising seed funding. Examples for organizations focused on startups in those very early stages are: Seattle Angel Conference, Alliance of Angels, Techstars and “Ready, Set, Raise” by Female Founders Alliance. After entrepreneurs raise their first institutional funding, however, they fall off a resource cliff in Seattle. 
Q: On LinkedIn you say: “In the heart of Seattle's thriving innovation ecosystem, Create33 is a resource center for technology entrepreneurs.” Why would you describe the ecosystem as thriving and what do you think are its strength and areas of improvement?
A: In Seattle, not only do we have early-stage investors like SAC, AoA, and Madrona, that are located here, but three quarters of the money flowing into Seattle-based companies comes from outside-the-region investors. This demonstrates that Seattle is being perceived as a global hub for innovation and entrepreneurship. In addition to that, the startup community in Seattle is very collaborative offering a lot of mentorship opportunities to founders. Seattle is also the cloud capital of the world which is why a lot of startups in Seattle are enterprise-focused.
Regarding weaknesses of the ecosystem, more needs to be done to enable access to resources for underrepresented entrepreneurs, especially women and people of color. Data shows that nationwide in the last 13 years only 16 percent of first-round venture funding went into women-led startups, “women-led” meaning that at least one woman is on the founding team. In this respect Seattle placed below the national average. One potential reason this is, which the study revealed, is that women-led companies tend to over-index in consumer products and retail. Seattle’s startup ecosystem on the other hand has a strong enterprise-focus. Not only equal opportunities for women should be part of the discussion, but the same applies to people of color or the LGBTQ+ community for example. Some great organizations, like Female Founders Alliance and Future For Us, support under-represented groups in Seattle, and we need much more of that, not just as stand-alone organizations but for all of us to commit to inclusion and belonging in the workplace.
Q: What do you think makes a successful entrepreneur?
A: Founders that I love working with are the ones who have a magical combination of confidence and humility. Those founders have the conviction and passion to pursue a dream, that is just a little short of crazy, but at the same time they are listening to their market and customers. This is the coachability-aspect that many mentors and investors are looking for in a founder. 
Q: What advise do you often give to founders?
A: A classic mistake founders have made in investor pitches is to say that they have no competition. I advise companies to think about alternative ways customers currently solve a problem. If there truly is no competition, there is no market opportunity as there is no problem worth solving.
I also coach founders on the lean startup methodology with respect to customer discovery. Founders start with a hypothesis about what customers need, but before they go to work on the product or write a line of code, they should test the hypothesis by talking to 100-200 potential customers.
Here are some things I learned from this interview:
  • Building a team and creating a positive company culture are crucial to startup success and require a lot of attention from the founders.
  • Strength of Seattle’s startup ecosystem are: Availability of pre-seed resources and collaboration/mentorship-opportunities.
  • Regarding weaknesses of the ecosystem, a lot more could be done to support under-represented entrepreneurs.
  • Every startup has competition.
  • Talking to customers is key.
In the interview Rebecca mentioned some resources and organizations, find out more about them here:
Seattle Angel Conference: https://www.seattleangelconference.com/
“Ready, Set, Raise”: https://femalefounders.org/accelerator/
Female Founders Alliance: https://femalefounders.org/
Madrona Venture Group: https://www.madrona.com/
Future For Us: https://futureforus.co/
About Seattle Angel:
A strong ecosystem creates an environment that allows startups to thrive. Seattle Angel’s goal is to strengthen Seattle’s startup ecosystem by increasing the access to funding for entrepreneurs to push their ideas further.
About the author: Sven Goepfrich

Sven Goepfrich is currently finishing his MBA in Syracuse. His studies focus on technology, innovation and entrepreneurship. At his school, he is working for the department of finance. Sven was actively interning with the Seattle Angel Conference in summer 2019. He is currently looking for full-time career opportunities in this field.

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Tuesday, October 8, 2019

Startup-People of Seattle: Geoff Harris (Venture Capital)

The blog-series “Startup People of Seattle” introduces some of the key personas in the ecosystem to learn more about what they are doing, to share their thoughts and ideas, and to promote networking.


In our tenth interview, meet Geoff Harris:
“What I discovered during my years as business angel was that there is enough angel money in Seattle. Startups don’t struggle in their angel rounds. There is also enough Series A and B money. However, the first institutional round, called the seed round, is very underfunded.”
Geoff has many years of experience as an angel investor. He has been involved in many angel groups. Today he is partner of Flying Fish Ventures, a seed-focused VC-fund.
https://www.linkedin.com/in/geoffhar/



Q: Could you please shortly introduce yourself and, coming from Microsoft, your background in the entrepreneurship scene?
A: I got into entrepreneurship via angel investing. Specifically, my first exposure to that was the Seattle Angel Conference, which a colleague of mine motivated me to participate in. After that experience, I became deeply involved in angel investing for about five years doing angel investing basically as a full-time job after retiring from Microsoft. I was involved in about half the angel-related groups in town.
What I discovered during my years as business angel was that there is enough angel money in Seattle. Startups don’t struggle in their angel rounds. There is also enough Series A and B money. However, the first institutional round, called the seed round, is very underfunded. As a result, many companies fail or relocate to Silicon Valley. Flying Fish Ventures is a consequence of realizing this gap in funding.
Q: Could you explain the terms “Seed” and “Series A”?
A: A seed investment is the first investment of institutional capital. It tends to be a raise around two to three million dollars, and its goal is to get a product from the point where it is ready to launch to the point where it achieves Series A metrics. 
Series A tends to be growth capital. By the time you get to series A the business should be pretty much dialed in and the founding team should have found a repeatable business process. At this point, inputs and outputs should be predictable, meaning an investor can calculate that if he/she invests x-amount of dollars, this will allow the business to achieve y-amount of growth resulting in a return of z dollars.
Q: You said you started your startup journey as angel investor. What all groups have you been involved in?
A: I was a member of the Alliance of Angels and I still sit on their screening committee. I was also an angel investor in Techstars and SeaChange and I am a mentor in the Alexa Accelerator. About half of my investing, however, I have done individually. Being member of all the angel groups allowed me to have good deal flow.
Q: What was your biggest surprise about angel investing when you started?
A: Coming from a big company, like Microsoft, the biggest surprise initially was the efficiency of startups, meaning how much they can do with very little resources.
I was also surprised by the lack of discipline and structure in an angel-only round vs. an institutional round. 
Q: What are some of the things you have learned as an angel investor?
A: One thing I have learned, that is very basic, is the portfolio theory. The portfolio theory says that doing a single angel investment, or just five angel investments, is not a good idea. You must build a portfolio of investments because, while every single company itself looks like a potentially good investment, you cannot predict which startups will succeed.
Q: Now let’s talk about Flying Fish Ventures. What is the fund’s investment thesis?
A: We are a regional fund. Like I said earlier, we believe that this market (Portland; Seattle and Vancouver, BC) is underserved, which we view as an investment opportunity. A lot of startups are looking for seed funding. Regarding specific industry, we focus on AI and machine learning. 
Q: What do you think of the trade-off between diversifying a portfolio vs. investing in one industry that you have expertise in?
A: I recommend doing the latter. However, most angels don’t have a thesis, they tend to invest in whatever looks good. Part of the reason for this is the intellectual satisfaction that comes from learning about new industries. 
Q: Since you believe investors should stick to what they know, how closely do you think they should work with companies that they invest in?
A: I think the involvement should be tailored to the needs of the business. It is, for example, a completely different level of involvement that is healthy depending on the experience of the founding team.
Also, in an institutional round being involved in the startup is much easier. In an angel round, often there are many angels (10 to 30) who invest in one round. If each of these angels feels like he or she now has a say in the company, things get messy and overwhelming for the founder very quickly. 
Q: What do you think are the biggest challenges in angel investing and VC-investing?
A: I think the biggest challenge is deal-flow, meaning the amount of quality deals that you get the opportunity to participate in. I think most investors are reasonably good at selecting which companies potentially could be a good investment. Coming along those companies, however, is not easy.
For VC, if you are a popular VC firm, this is not as much of a problem. Startups will most likely come to you. Therefore, I’d recommend angels to also become a limited partner (LP) in a popular fund to have more exposure to good deals.
I also think that when it comes to angel investing, Seattle needs more lead-investors. Lead investors, or “super” investors, are willing to be the first ones to invest in a company and to lead an investment round.


Here are some things I learned from this interview:
  • An angel round typically involves 10-30 angel investors. It is very rare that one single angel invests an amount that is big enough to cover the needs of a whole investment round. 
  • Deal-flow is key for investors. To increase deal flow, angel investors should be involved in angel groups, funds and networks and in VC funds. 


In the interview Geoff mentioned some resources and organizations he finds helpful, find out more about them here:
Seattle Angel Conference: https://www.seattleangelconference.com/
SeaChange Fund: https://seachange.fund/


About Seattle Angel:
A strong ecosystem creates an environment that allows startups to thrive. Seattle Angel’s goal is to strengthen Seattle’s startup ecosystem by increasing the access to funding for entrepreneurs to push their ideas further.

About the author: Sven Goepfrich

Sven Goepfrich is currently finishing his MBA in Syracuse. His studies focus on technology, innovation and entrepreneurship. At his school, he is working for the department of finance. Sven was actively interning with the Seattle Angel Conference in summer 2019. He is currently looking for full-time career opportunities in this field.

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