Our latest angel chat was with an incredible startup investor - Allison Byers. As many angel investors, she's been on both sides of the table, as a founder and now as an investor, which is what makes angel investors so valuable. They have a unique viewpoint and understanding, and their own way of connecting with founders.
I'm the founder of a company called Scroobious, which I know is a funny name, but the way I got into angel investing has to do with how I started this company and why I'm doing what I do now.
So prior to Scroobious, the first time I got into entrepreneurship I helped launch and co-run a medical device startup with a team of scientific founders.
I did all the business things, including leading our fundraising. So we raised about $10 million over the course of five years for that med device startup. And what really stuck with me about the whole experience of building and leading that company was the gender bias that I encountered in fundraising specifically.
After that company was acquired, I did a lot of research into the space of fundraising, capital allocation, and the pitching process. I felt like I had failed our company by not being able to raise a Series B at the level that we needed, but I very quickly found out through reading all of the ridiculous statistics that I did not fail - the system failed me.
The system, in its extreme inequity of how venture capital is allocated to founders who identify as underrepresented, needs innovation and a different approach to try to help in the issue of parity.
That's why I started Scroobious. I'm extremely passionate and bullish about helping open up angel investors as a source of capital. They are incredibly powerful and I think we're (Scroobious and PIN) really aligned in our company missions here, approaching it from different angles, which is what's needed to create that capital source for early-stage founders in a way that venture just hasn't done and isn't structured to do as it stands today.
In order to understand my own beliefs and my own potential customer base at Scroobious, I knew I needed to get into angel investing too. I understand the founder experience, but I also needed to better understand the angel experience and I'm in the fortunate position to be able to do that. So I got into it with a bit of a kind of a meta lens, if you will, because I had different incentives for wanting to do it.
But fundamentally for me as a person, as an investor, I like the concept of voting with my dollars and being able to support the founders and the innovations that I want to see exist, and to take the bets that I think are worth taking at the early stage.
Honestly, the biggest challenge for me is that I want to invest in too many things. I think I'm again in a fortunate position. I'm very outspoken on social media and in the attention that my company gets, so people know that I invest and that I invest specifically in underrepresented founders who are often overlooked and don't get the funding that they need.
I have multiple methods by which I angel invest, and I can only invest in so many things. I get a lot of inbound and I also am part of an angel group and a few syndicates.
I think a lot of active angels run into this same issue where there are a lot of great founders and great opportunities that we have to pass on just because of our investing capacity.
Scroobious has been an interesting journey. I incorporated the company in January 2020, which was literally a month before the pandemic showed up in the world. So there's a whole group of founders who are COVID founders and who had a very different experience than if you were starting a company before that or even now.
We've built a marketplace and our mission is to help founders who identify as underrepresented connect with sources of capital, who are more likely to write them a check, and who are more intentional and have different needs out of their investing. So we focus on angel investors as well, rather than venture capital.
For founders - we help them with an online, scalable program that is combined with human reviews from pitch reviewers who we train to help them really affordably and really accessibly, so they can create pitch material that will be compelling and seen as investable.
We've been really intentional about partnering with dozens of diversity-focused organizations, accelerators, and universities.
So one of the great things about angel investors is that they are individual investors. Even if you're part of an angel group like I am, you don't exclusively invest through that group. You're making your own decisions, and every angel has their own green flags or signals that matter to them.
Even if one thinks this might not be a great investment opportunity, it doesn't preclude any of the millions of other angels, literally millions, who might see the potential in what you're doing.
I don't want to filter anybody. I don't want to tell anybody that I don't accept them, or I think it's not a viable idea, because I have no idea what the millions of other angels might think, and someone else might see it where I don't, which is why we’re building Scroobious.
My own investment thesis is pretty broad, but I invest in founders who identify as underrepresented and are working in a space that I understand. I need to fundamentally understand what the solution is that's being built and where I can offer some human or social capital outside of just my financial capital so I can be a really helpful angel investor.
Of course, I also need to see that the business plan has been thought through and that there is a team working on the business because one person can't do all the things. I also need to really relate to the founder and this is some of that intangible, more qualitative stuff.
You'll hear this again from almost every angel and even from fund managers. You need to feel a sense of synergy with that founder and be able personally to believe in their passion and their capability to run the company.
I really leave it up to the founder. And this is an interesting thing just for the statistic, it's estimated about 85% of active angel investors are entrepreneurs themselves. I think that is a huge benefit because I have my own angel investors, I'm on both sides of it and I know how I like to work.
Sometimes I really would like my angels to be involved and help me, and sometimes I just need to focus on the business and it takes my time to try and be really active with them. So I follow the founder's lead.
I always offer and let them know I am there for whatever they may need me for. If they need a connection, if they want to see if I'll make an introduction, if they want my thought leadership or my insight or promotion, I’ll be there for them.
I don't ask for status updates or forward emails from potential competition and then expect them to answer me. Those are kinds of things that angels might do that are not as helpful, because I know that's not helpful for me from my angel investors.
That's my general approach; I'm available when someone wants me to be, but otherwise, I let them run their business.
I purposely don't keep a shadow portfolio where I look at what could have been for me. I invest in underrepresented founders and I'm trying to stick to it.
There are some opportunities that have come my way that I think they're going to do great and it's a really hard decision. I ask myself “Should I invest because it might make me a good return and then I can put more money to work?”
But then I'm not holding true to why I got into angel investing to begin with, in terms of who I stated I'm putting my money behind. So I have passed on opportunities that I really felt would be profitable for investors because I wouldn't be holding myself accountable.
I’m more of a generalist. Again, it has to be an area where I feel I can understand it and I can help contribute. I have had a very nonlinear career path myself and I've worked in many different industries, so I don't have a particular vertical expertise like others might.
This is why I love angels as a capital class, we don't need to return a whole fund in one investment, so we don't need it to be able to generate a 100x return.
The majority of angels fall into the camp of once I invest, I consider that money gone. You have to because it's a risky place to put your money with the potential for a big return at the end.
If I don't lose money, I think it's a win. I put my money into founders and companies that I want to see succeed and I get to help them be part of that because I'm in a position in life where I'm able to financially and that's fortunate for me.
I've also contributed to a person and to society in a way that is fulfilling for me. If I get any return, that's a great win.
Today there are a ton of companies that are viable companies that can generate an investment return that are not venture-backable because they don't have the venture scale required. Those should still be invested in and supported and the returns are really helpful to the angels at their level.
I wouldn't say I have a very strict one. I do like to see materials. Some angels want to go deep and have you walk through a financial projection model and go into your data room and all of that. I'm somewhere in the middle.
I do like to see that you have a deck that is well thought out and comprehensive, that you have made financial projections, and that you have material that you can send to me, but I don't need to go into it super deep. I'm not a huge check writer. It's not a big line on someone's cap table, and I want my diligence to be in proportion to the investment that I'm making.
So I don't want to put an undue burden, but I also need to do enough diligence that I feel confident that I'm making an informed decision and I'm not just acting off of my gut.
There are a couple of things that I like to talk about with newer angels or people who are considering getting into angel investing.
One is small checks are meaningful, they matter. I think a lot of angels are hesitant because they think, well, I can only write a $1,000 check or a $5,000 check and does that really mean anything? I’m here to tell you - it's totally worth it. Founders are still wanting that capital.
Small check writers often bring the most human and social capital and they are beyond helpful. You should not hesitate to get into angel investing even if you think your check size isn't big enough.
I write $5k checks across the board. That's my investment. It's part of my own process of building a portfolio and it lets me invest in more companies. I can do a greater number of companies and I'm very upfront.
When I get a bunch of direct deal flow, my first reply is always “I'm a $5k check writer.” I give a lot of human and social capital along with that. If it's below your desired check size, just let me know before we can move forward, so we're both appreciative of each other's time.
I've only ever had one person say that is below their check size. Sometimes they'll ask you “Would you mind then being part of an SPV or would you mind doing it through my private crowdfund campaign?” I'm totally fine with that.
You still get to be part of their investor base and that's great.
My most recent one was in a company called Fourplay Social. The co-founder, Julie Griggs, first found out about me because she followed me on Twitter and then I ended up teaching a pitch workshop for an accelerator that she was participating in.
I met her virtually there and she reached out to me when she was raising. She sent a really personalized note and they've had very impressive traction. I appreciated her approach and her candor in the way that she went about her fundraising process. She's done an amazing job raising from angel investors, following exactly the advice that I give to our whole community of founders about reaching angel investors, and it worked for her with me.
Another amazing founder, Anj Fayemi, whose company is called Rivet, is in an industry that I don't have experience in. But I do understand the technology and the social factors that they're using to help empower creatives, to better understand their following, and better connect with them.