Tag Archives: Women

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 – 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.

Break-even:

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

Angel Investing – Invest in Women

Investment Strategy

The election is finally behind us and I have personally moved through my four stages of grief:

  • Disbelief
  • Sadness
  • Anger
  • ACTION

I have been an Angel Investor since the late 90’s with a mission to find and fund high growth investment opportunities in companies run by women entrepreneurs. There is a great deal of dialogue bemoaning the gender gap in funding for women. I have approached this issue with both my voice and my checkbook and operate under the following action plan:

  1. Invest in Women Entrepreneurs
  2. Help train women to become Angel Investors
  3. Invest in women starting VC Funds

Invest in Women Entrepreneurs:

There are many ways to “put your money where your mouth is” and make a change in the funding gap by investing in women entrepreneurs. Whether or not you are an accredited investor, you can participate in non-equity funding opportunities through platforms such as Kickstarter. I have used this platform to fund some incredible women such as the DreamGirl Team who recently produced a documentary film on women entrepreneurs and the VidCode Team teaching girls to code.

As an angel investor, I am active member of both Golden Seeds and New York Angels, early stage investment groups where members share their expertise to evaluate and co-invest in exciting young companies. There are many Angel Groups across the country – a great resource for finding angel investment groups is the Angel Capital Association.

Help train women to become Angel Investors:

For the past four years, I have been the Lead Instructor of the Golden Seeds Knowledge Institute. Our mission is to empower our members though education. We focus on everything from a basic understanding of the investment process to best practices for serving on a start-up board. In addition, I have served as a mentor to Pipeline Angels, which is committed to helping more women become angel investors. For some additional educational resources, here is a LINK to a previous post on this topic.

Invest in women starting VC Funds:

There has been a lot of progress in women joining the partnership ranks of VC firms. Here is a LINK to a list of several of those firms. My current investment strategy includes investing directly in new funds started by women. One such recent investment is Lattice Ventures, a network-driven VC firm based in NYC, founded by two dynamic young women.

I plan to continue using the power of both prose and purse to try and effect change in the funding landscape for women. In order to change the ratio, we need the continuing support of our male colleagues in the investment community. There are many men in both the angel and VC community who have been strong supporters of women. I personally want to thank my colleagues at Golden Seeds, especially @robdelman, my office mate and fellow Knowledge Institute Instructor. Thank you also to @brianscohen and all of my male colleagues at New York Angels for making me feel welcome from day one. A big shout out to  Ed Zimmerman at Lowenstein Sandler for being a great advocate for women entrepreneurs and whose gender pledge has helped to increase female representation on tech panels. To Mark Suster, entrepreneur and VC, whose Blog helped keep me sane over the past year and whose voice has been such an incredible champion for women. I hope I have the chance to meet you some day. Thanks @adamquinton for your support of both women investors and entrepreneurs. This is in no way an exhaustive list, so please feel free to add #MenWhoInvestInWomen to the comment section below!

Finally, a very special thanks to my grandfather, Henry J. McCue, who encouraged me to dream big and whose financial support enabled me to attend Wellesley College, a bootcamp for female empowerment and leadership. I consider him my first Angel Investor and know that with each check I write to fund a female entrepreneur or invest in a female VC, he is leading a cheering section up in heaven complete with high fives and chants of “You Go Girl”!

Angel Investing -After the Check….

So you just wrote the check! Now what?

Image source: Fotalia.com

There is a perception out there that angel investors and venture capitalists are only focused on monetary gain and don’t work to support the success of their companies post-investment. Angels are making investments with the hope of a successful exit and unfortunately the statistics on the failure of startups are quite sobering. According to Shikhar Ghosh, a senior lecturer at Harvard Business School, the failure rate of startups is 30-40%. ( Source: HBS Working Knowledge Article by Carmen Nobel). But in addition to the potential investment returns, angel investing provides a unique platform for engaging with the companies in your portfolio, which is not the case when  investing in the public markets.

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Angel Investing – Flying Solo or Joining an Angel Group

Once you have made the decision to become an angel investor, you need to decide if you want to fly solo or join forces with an angel group to make your investment decisions.

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