Angel Investing – Projections?????

Firework of dollarsThere is much debate as to whether investors in early stage companies benefit from reviewing  financial projections and business plans. The earlier the stage of the company, the harder it is to “predict” what the future pathway will look like. Without a having an opportunity to review a business plan however,  it is difficult for investors to understand how the company intends to spend the funds raised and what it hopes to accomplish with those funds.

In reviewing plans/projections from early stage companies, I like to be able to answer the following three questions:

  • What will be the monthly net spend? – the BURN
  • How long will this funding last? – the RUNWAY
  • What will this raise enable the company to accomplish? – the METRICS

Understanding the components of the monthly BURN provides insight as to how the CEO plans to grow the team, allocate any marketing dollars, build out a tech team, etc. This projection should include the efficacy of the funds to be spent – will it result in an increase in user growth or engagement, a completed pilot or other measure critical to the industry vertical represented. If the company is generating or anticipating generating revenue near term, the “go to market” strategy can be evaluated based on the underlying assumptions in the model. Understanding whether these revenue assumptions are based on a pilot that the company has run, industry metrics or just a best guess will help the investor determine the confidence level they want to assign to any projections. As a company matures, so should the financial sophistication of the projections. Understanding the RUNWAY and the METRICS will help the investor evaluate whether the proposed funding will enable the company to reach an inflection point to either attract additional funding or become cash flow positive. Unfortunately many startups run out of money before achieving the necessary metrics. 

I once had a CEO tell me that they were not going to “waste their time” putting together a financial model for investors. I could not agree more – if the CEO is creating a business model simply for investors, it is pretty useless. I want the CEO to share with me the model they are actually using to run their business. Reminds me of the famous words of Yogi Berra – “If you don’t know where you are going, you’ll end up someplace else”.  Another red flag for me is the CEO who outsources the financial model and never really owns their numbers. I’ll trade a multi-color picture perfect chart for a somewhat messy but real excel spreadsheet any day. 

For investors and founders looking to increase their comfort level in understanding financial statements and projections, I recommend:

Financial Literacy – by Richard A. Lambert, Professor of Accounting at the Wharton School of the University of Pennsylvania

Financial Intelligence – by Karen Berman and Joe Knight

Although both of these books are targeted primarily at understanding the financial statements of public companies, many of the concepts apply to startups as well. As early stage companies mature and begin to become more financially sophisticated, this information will prove even more useful.

Becoming an Angel Investor

One of the first topics I covered on WomenInvest was “Are you ready to become an Angel Investor?” I thought I would dust off this prior post and update it given all the changes in the startup ecosystem over the past decade.

The term “angel investor” is used to describe a wide variety of investors in early stage companies. From the reality-show world of Shark Tank where entrepreneurs are grilled in front of a prime-time audience to established professional networks of angel investors, including Golden Seeds and New York Angels (both of which I am a member), it is clear that there is more than one type of angel investor. The passage of The Jumpstart Our Business Startups (“JOBs”) Act in April of 2012 was meant to broaden the number of investors able to participate in this sector and at the same time loosen some regulations on early stage companies raising funds.  

The origin of the term “Angel Investor” can be traced back to Broadway, when wealthy patrons invested their own money to help launch Broadway shows. Today’s angel investors are typically high net worth individuals (“accredited investors”) who invest either solo, as part of an angel group or online via platforms such as Angel List. In most case Angel Investors provide both investment capital and guidance to early stage companies. With the passage of the JOBs Act, even investors who do not meet the “accredited investor” test are able to participate through online portals such as Republic. (Note: There are many other online platforms – these are just two that I have come across while reviewing potential investments)

Whichever path you chose to begin investing in this sector, it is important to keep in mind that:

Angel Investing Involves….

  • A high degree of risk:
  • A need for portfolio diversification:
  • Patient capital:
  • More than just the money:

Risk: Investing in early stage companies involves a high degree of risk. The statistics are quite sobering and data on angel investor performance indicates that 5-10% of portfolio investments provide the majority of investor returns. One source of information that I follow is Seraf Compass that published a great post on Angel Investing Returns.  Most angels are “Accredited Investors “ who must meet certain net worth and income requirements or financial sophistication tests as defined by the SEC. As mentioned above, there are now opportunities for “Non-Accredited” investors to participate in this market. Given the stage of these companies, there is certainly more “art” than “science” in making an investment decision.

Diversification: With the high-risk profile of these early stage investments, it is important to have a portfolio of investments to increase the probability that there will be some “winners” in your portfolio. In an earlier post this year, I indicated that my goal was to include more “ I am so excited to be a part of this great company” and hopefully limit the “What was I thinking” investments. Each angel investor needs to determine how much capital they are prepared to invest in this sector and whether they can construct a portfolio of individual investments or should perhaps consider investing via a fund to provide that diversification.

Patient Capital: Early stage investments are highly illiquid. Although there have been more opportunities in the secondary market for “pre-IPO” private company investments, you should be prepared to be investor for several years and also to be open to participating in subsequent rounds of financing for your portfolio companies.

More than the Money: For many angel investors, the opportunity to get involved in exciting new ventures and mentor entrepreneurs is an important ingredient in the desire to act as an angel.

Angel Investing can be rewarding both financially and emotionally due to the real impact you can have on early stage companies. Before you get measured for your wings, make sure you understand your personal risk tolerance, your ability to make a sufficient capital investment to this sector to provide diversification and your willingness to truly invest for the long term.

If you decide that an angel investing makes sense for you, the next step is to identify what type of angel fits you and your investment style. Should you decide to participate in an Angel Group, you can find a comprehensive list of Angel Groups in the directory of the Angel Capital Association. Groups come in all shapes and flavors. Some are very focused on a specific sector in the market, some regional and others focused on female founders, alumni affiliations, etc. Angel Groups may require that you become an “active” member of the group and require a minimum commitment of both your dollars and your time. Before you commit to a group, see if you can participate as a guest at one of their screening or investment sessions to get a better sense if this group makes sense for you.

Over the past 20 or so years that I have been investing in this space, I have acted solo, invested through funds and also invested as a member of angel groups. All three methods have advantages and disadvantages. Solo investing is great if you really have expertise in the space and want to be able to make quick decisions. It also helps to have a “significant” amount of capital to invest. Funds can provide great diversification to your portfolio or provide opportunities for you to participate in sectors where you do not have real domain expertise. One such group of funds that I participate in is the Portfolia Group of Funds, which have enabled me to invest indirectly in FemTech and other specific verticals. Angel Groups can bring many different perspectives and expertise not only to the investment decision itself but also to supporting the entrepreneur post funding.

Whichever method you chose as you don your angel wings, best of luck in the journey. There is nothing more rewarding in the investment world than helping to launch a new company

Angel Investing – Happy New Year 2021

January is always a great month to reflect back on investment decisions made in the prior year, and hopefully gain some intelligence to aide the process of investment selection moving forward. This past year, the combination of a worldwide pandemic and national political upheaval, provided unique challenges to the startup community, founders and funders alike. Stressful times tend to magnify both the strengths and unfortunately the weaknesses of leaders. Whether it was the ability to quickly shift to a remote working environment, understand and respond to changes needed in the business model, or to communicate honestly with both team members and investors regarding the strategy moving forward, the environment of 2020 was challenging for all.

Continue reading

Angel Investing – Ringing in a New Decade

2020 in sparkling gold numbers celebrating the New Year or Christmas with glittering ornaments and decorationsThe New Year is great time for reflection, especially when entering a new decade. Looking back over the past ten years, the ecosystem of Angel Investing has experienced a number of innovations, seen new players enter the market and even added some new terms to the lexicon. A few highlights include:

  • Angel List – created in 2010 by Naval Ravikant and Babak Nivi as a deal sharing platform, Angel List now serves as a source of talent for the startup community and provides syndication opportunities within the VC community.
  • The Unicorn Club” – coined by Venture Capitalist Aileen Lee in 2013, the term unicorn refers to a privately held startup company with a value of over $1 billion. According to CB Insights, as of the end of 2019 there were more than 400 unicorns and two new categories; a decacorn (valued over $10 billion) and a hectocorn (valued over $100 billion) added to the list.
  • The Jobs Act – Signed into law in April 2012 by President Obama, The Jumpstart Our Business Startups (JOBS) Act impacted capital formation, disclosure and registration requirements and introduced Equity Crowdfunding.
  • The FPO or Final Private Offering – Investors hoping to be able to participate in the final private financing round of a company prior to an Initial Public Offering were able to pool their funds into special purpose vehicles established to enable them to participate alongside VC firms and other early backers.
  • A significant increase over the past ten years in the number of Accelerators providing mentorship, capital, introductions to investors, co-working spaces and other operational services to startups. A great resource of Accelerators and their focus in the NYC area can be found in a  list put together by 37 Angels.
  • The Rise of the Female Investor – Over the past decade, we have seen a number of new VC Funds and Investment Platforms started by women and focused on investing in women. The list includes Halogen Ventures, SoGal Ventures, Female Founders Fund, BBG Ventures, Portfolia, Golden Seeds Ventures, and Plum Alley among others.

Now it’s time to consult your crystal ball to see what this next decade will bring!


Angel Investing – Becoming an angel investor

Angel investor word cloudOver the past few months, I have had several people reach out to me to ask my advice as to how to become an angel investor. So I thought it timely to put pen to paper to provide my take as to how to consider investing in this asset class. There are obviously many approaches to exploring this question; this is just one woman’s view!

When considering becoming an angel investor, consider the following three questions:

  • How much money do you plan to allocate to this asset class?
  • How much time do you want to spend in sourcing and reviewing possible investments, mentoring entrepreneurs and getting involved in the startup eco-system?
  • What are your goals and objectives in addition to seeking a financial return?

In considering angel investing, it is important to take a portfolio approach. Failure rates for startups are quite sobering. While a bit dated, a 2007 report published by the Kauffman Foundation provides some insights into the performance of early stage companies and the importance of constructing a diversified portfolio. The amount of money you have to allocate to this sector will influence the type of angel investor you choose to become. Where you fit on the spectrum of super angel writing significant checks to individual companies to participating in a fund structure with more reasonable financial entry points will again depend on the total dollar amount you are comfortable committing. In investing in individual companies, it is important to keep in mind that follow-on investments need to be factored into the financial picture.

Investors considering investing in individual companies will often choose to join an established angel group, either in their geographic region or one that focuses on a specific sector or investment theme. A great source of angel groups is the Angel Capital Association. Once you have identified groups that may be of interest to you, check out their websites to see  their criteria for membership. What are the expectations as to the  amount of capital you are expected to invest, minimum investment per transaction, expectations regarding participating in the due diligence process, etc. Try and find a member of the angel group through network connections and reach out to them to get a better sense as to the culture of the group. Most angel groups will invite prospective members to attend a screening or review session to get a better sense as to what it might feel like to be a member.

If you plan to allocate a smaller dollar amount to this sector, you may want to think about participating in a fund structure rather than making individual investments.  Some funds will enable their investors to participate in the due diligence process or co-invest alongside the fund. Once you have determined how much of your financial resources you are willing to allocate, it is important to determine how much time you wish to allocate to angel investing. Part of answering this questions, really depends on where you are in life – if you are working full-time in a profession that requires travel, etc. it might be difficult to dedicate a significant amount of time to both sourcing and vetting early stage opportunities. Personally, I have found it very helpful to participate in Demo Days, Pitch Competitions and other activities to get a broader sense of what is happening in the startup ecosystem.

The final question I pose to prospective angels is very important – what are your goals and objectives in addition to seeking financial returns. Is there a vertical you are passionate about, be that healthcare, education… Are you looking to invest in companies having social impact or changing the gender gap that exists in early stage funding? One of the great perks of being an angel investor is that you get to decide on your own investment thesis. Therefore, it is important that you align your personal goals and objectives with those of any angel group or fund family you chose.

I have chosen to construct my early stage portfolio with a combination of individual investments and funds. Through participation in both Golden Seeds and New York Angels, I have access to many opportunities to invest directly in early stage companies while taking advantage of the vast expertise of my fellow members. I use funds as a means to both participate in sectors where I do not feel I have either significant access or expertise – two examples would be Future/Perfect Ventures ( enabling me participation in the Blockchain space) and Blossom Capital ( focused on Series A financings in the European market) as well as to focus on women founders/funders through investments in SoGal Ventures, Portfolia, and the AVG Women’s Fund. In addition, through my investments in Chestnut Street Ventures, I have the opportunity to co-invest with other Penn alums supporting Penn entrepreneurs.

Whatever path you chose to becoming an angel investor, enjoy the ride!


Angel Investing – Books, Blogs & Bootcamps

IMG_0376Although long past are the days of racing up and down the aisles of Staples, kids in tow, to acquire all the school supplies on the “list” (probably these days best achieved with a one-click of Amazon Prime), the imminent arrival of the crisp weather of fall always turns my attention to “back to school” thoughts. These days, back to school means reviewing resources to help educate angel investors. Having had the privilege over the past six years to provide leadership to the Golden Seeds Knowledge Institute, I am always on the hunt for training resources to assist both new and seasoned angel investors under the assumption that learning is a lifelong process no matter the discipline. I like to segment investor training into three categories:



Although these are many great sources of information on angel investing, a few of the favorites on my bookshelf include:

Feld & Mendelson’s Venture Deals.  Filled with rich content covering topics such as term sheets and how to raise money, this is a fabulous resource for both investors and entrepreneurs.

David Rose’s Angel Investing – The Gust Guide to Making Money & Having Fun Investing in Startups. This book is one of the most comprehensive guides to angel investing I have read incorporating a wealth of knowledge from David’s incredible history of investing in this space.

Brian Cohen’s What Every Angel Investor Wants You To Know. This is a fun read filled with both advice and anecdotes from the Chair of New York Angels for both the investor and the entrepreneur seeking early stage funding.

Alex Wilmerding’s Term Sheets and Valuations. For those of you who want to understand the intricacies of Term Sheets, this a resource and that I recommend to all investors who take my courses at Golden Seeds.

Basil Peter’s Early Exits. This book covers many topics relevant to the exit process such as exit strategy and investor/entrepreneur alignment.

Richard Lambert’s Financial Literacy for Managers. Although geared more towards public company financial analysis, this resource from Wharton Professor Richard Lambert discusses many of the concepts such as benchmarking, DCF analysis and cost analysis which are important to a startup’s financial health.

Clearly, there are many other great publications out there, these are some of my picks.


Subscribing to Blogs from experts in the field is a great way to keep yourself informed as an angel investor. Here is my list of VCs whose blogs I follow and find informative:

Mark Suster’s Both Sides of the Table.

Fred Wilson’s Daily AVC Blog

The First Round Review

Jalak Jobanputra’s The Barefoot VC

Golden Seeds Blog

Ed Zimmerman, Chair of the Tech Group at Lowenstein Sandler, provides great insight into may topics including his recent post in the WSJ regarding SAFEs – LINK


I am often asked for a recommendation for courses, either online or in-person, that address angel investing topics. Here is my current list:

Golden Seeds Knowledge Institute:  Golden Seeds developed a series of investor training modules to help our members understand the basics of angel investing. Several of these modules are open to guests.

Angel Capital Association: through it’s Knowledge Center provides a variety of seminars and workshops on various topics.

First Round Capital runs a program Angel Track – a Masterclass for Emerging Angels.

Y Combinator  and Stanford also have courses for angel investors

In addition, for women investors  37 Angels Bootcamp and Pipeline Angels  have angel investor training programs.

Please use the comment section to add Books, Blogs or Bootcamps to the list!

Angel Investing – Burn Rate & Cash Runways

Businesswoman presenting her business ideas

One of my favorite First Round Capital Holiday Videos is the the 2014 release – “It’s All About Burn Rate”  set to the tune of Meghan Trainor’s “All About That Bass”.  I sometimes find myself humming that tune when I am reviewing an investment opportunity from an entrepreneur who does not fully appreciate the importance of understanding how burn rate and cash runway can impact the success/failure of their venture. When analyzing the financial structure of an investment opportunity, I try to evaluate both the amount of time the funding will last as well as the milestones/traction that the funding will enable the company to achieve. Will the proposed funding result in:

  • Achieving cash flow “break-even” which allows the company to have some measure of control over their financial destiny?
  • An inflection point of milestones/traction that will position the company to raise another round of funding at more attractive valuation levels?
  • Landing in the “dead zone” – not enough traction to attract the next round of funding and without further funding in need of cutting expenses.


If the current raise enables the company to generate enough recurring revenue to operate on a break-even basis, then the company can continue as an operating entity without having to lay-off staff, reduce marketing outlays or frankly shut the doors and cease operation. The company needs to have a clear understanding of their variable versus fixed costs – what expenditures are mandatory to allow the company to survive versus those that can be reduced or even eliminated for a period of time. Growth may be slower than desired, but may at least provide the company the time to pivot their strategy or hold out for a more attractive funding environment.

Traction reached for next round:

For most of the companies in which I am investing, there will be multiple rounds of financing required before the company is in a position to exit. It is critical to understand what are the milestones/traction that the next investor will require and how does the company plan to achieve these milestones within the runway provided by the current raise? On the expense side, does the company have a strong grasp of the resources required to execute on the plan? Do the assumptions for revenue recognition take into account a realistic sales cycle for the product/service being offered?

The “dead-zone”:

Unfortunately, many companies end up in this position either because they do not raise sufficient capital or do not have the ability to actually execute on the plan that would position them to be attractive to the next investor. I find this oftentimes with companies that utilize convertible notes and end up within sight of the maturity date without enough demonstrated progress. As an investor, I am usually faced with the decision to extend my note, invest more in the company to provide some life support, or hope that there is at least some asset value to be distributed to note holders in the event of liquidation.

Remember as the music states – “It’s All About Burn Rate” 


Angel Investing – Twelve Days of Christmas 2017

12 days of christmas: 12 Snowflakes

On the first day of Christmas
St. Nick sent to me:
A Membership at The Wing! Continue reading

Angel Investing – A Seat at the Table

Hispanic Businesswoman Leading Meeting At Boardroom Table

A year ago, subsequent to the 2016 Presidential Election, I posted a Blog entitled “Invest in Women ” (that post is copied below). As I look back over the past twelve months, I remain convinced that the only way women will be able to change the sexist culture in our society is to “get a seat at the table”. It is difficult, if not impossible, to change a culture while on the outside looking in. The Venture Capital Community has had it’s own scandals this past year and while many firms have added female partners to their rosters, there is still a long way to go to add more female voices to the conversation. A major focus of my investment strategy over the past year has been to fund women starting their own VC Funds. Rather than waiting to be invited “to the table”, they have created their own tables. In addition to Lattice Ventures , a network-driven VC firm based in NYC,  I have added several new funds to my investment portfolio, all of which count women in the GP/ Founder ranks. Continue reading

Angel Investing – Ringing in the New Year 2017

2017 Capodanno Natale 1It’s that time once again to reflect on the prior year and make some resolutions for the next. In last year’s post, I suggested that you:

  • Take a critical look back at portfolio companies that didn’t make it and try to ascertain what really went wrong.
  • Expand your access to quality deal flow
  • Become a mentor to a young entrepreneur

Here are a few of my suggested resolutions for 2017: Continue reading