I recently chatted with 2x founder, 3x Ironman, and 4x mom, Cheryl Kellond. She built her early career in Silicon Valley as a concept-to-launch expert and has nearly $1B in revenue from Version 1 products under her belt.
In her own words, she is a “Web 1.0 OG”. She sold her first online side hustle to AOL when she was at MIT in the late 90s. She made enough money to pay off her grad school debt and was hooked on starting up.
She’s certainly been around the block a few times, so we chatted about her angel investing perspective as both a founder and a funder.
I sold my 2nd startup - a healthcare fintech two years ago. While figuring out what I wanted to do next, I took a role as Mentor in Residence for Techstars’ new pre-accelerator program, and I joined Hustle Fund’s Angel Squad.
I joined Angel Squad not initially to write checks but to learn to think like an investor. It’s helped me become a better founder and, most importantly, a better mentor for the founders I work with.
My first angel investment was in my own startup - Bia Sport. We were a consumer fitness wearable in the early days of Kickstarter, Pebble, and Fitbit. I had just entered the significant earning years of my career and quit my corporate job to start my own company. It was pretty insane.
I always knew I was going to be an entrepreneur. I finally found the right problem; it was time to take the leap. But I had four kids, the oldest entering college, so it wasn’t the smartest financial move I’ve ever made.
We feel before we think. That “feeling” is informed by a million lived data points - which is way more data points than an early-stage startup has. So my investment style is to follow my gut.
But I am also aware that as a founder myself, I don’t suffer from the overwhelming excitement of wanting to invest in every founder I meet. This makes it easier to trust my gut. When I do diligence, much of it is because I am excited to learn more vs. looking for “data” to help me decide yes or no.
I am glad you asked. Because this is the 2nd part of my investment strategy and why I am so comfortable trusting my gut.
When I started investing, I had so many people share with me, “I angel invested for a while, but then ran out of money.” And my favorite: “Yes, I angel invest, but I expect to lose all my money.”. Both of these things made absolutely no sense to me. So I dug into the numbers and portfolio strategy.
The TLDR: If you are running out of money or actually expect to lose it all, you are doing it wrong.
Angels are NOT small VCs. I don’t need to gamble on hitting the top 5% of returns. Investing is not my full-time job. I don’t have a fund to return with a single investment, and I am not trying to impress my next LP with the size of my markups. A small portfolio of highly concentrated bets is not the right strategy for most angels. This isn’t my opinion. It’s the math.
I am playing a different game. I am not a lottery ticket gal. I love infinite games - and Angel is a game I want to play indefinitely. I love the portfolio math that shows that at about 30 bets, early-stage investing transforms into a more stable, predictable, over-performing, regenerative asset class for an angel investor. If I align my investing budget to make 15-20 bets a year and stick with it every year across cycles, the hand-wringing over each individual investment disappears.
The thing is, making that many investments can be a financial and time commitment that most folks just can’t make. My new company - Clutch Money - is solving this.
I actually invest my time and capital separately.
I spend my time - which I think of as my belief capital - with founders who aren’t ready for my check.
The best founders are going to be successful - maybe not with their first venture or even their second, but eventually. I want to invest my belief capital in those founders, helping them move through the learning curve faster to get to that success. I get to do a lot of this in my role as EIR with Techstars' pre-accelerator program. I’ve worked 1:1 with nearly 200 super early founders over the past two years. And I take more cold intro meetings on Twitter than I should admit.
On the flip, I hear so many angels “wanting to be helpful” to founders. And I hear founders afraid to take on angels because all that “help” can become distracting.
What I found most helpful from my angels - that ANY angel can do, regardless of your background - is simply reply to the monthly updates your founder sends out. Knowing someone was listening and cheering me on, and showing me some humanity, has a value I can’t even describe.
I am a generalist and more focused on the type of founder - typically women and BIPOC founders and on the problems I think are worth solving based on my lived experience. I am a sucker for a counterintuitive earned insight. And I don’t shy away from businesses with a physical component. I love women’s health, and I love fintech.
Right now, I am most excited about my investment in Hera Biotech. I actually broke all my rules on this one and wrote my biggest check ever to this founder. Plus, I brought it to one of my angel groups, and it was such a thrill to lead the founder deep dive and have others invest alongside me.
An absolutely amazing founder. So scrappy and strategic at the same time. And she has super strong science on a novel diagnostic for endometriosis.
I also just wrote my first LP check. She’s a new fund manager with a strong angel portfolio, an investing thesis I believe in, and a diligence style I have learned a lot from.
I love angel investors that trust their gut. They know when something about a problem or founder resonates with them. They can decide quickly and don't want to waste anyone’s time. And they want to be part of the journey, not just sit back and wait for the return.
I have been an Indie.VC Bleed Black fan girl since Day 1 and am thrilled to see Bryce bringing it back. Indie is rethinking what early-stage capital needs to do to best serve founders. Bryce is innovating on the asset class; we are overdue for some of that. Indie doesn’t presume that the only way for early investors to make money is for you as a founder to keep raising subsequent VC.
It starts with the proposition that building a company takes less capital now. You can build a massively scalable company without sucking down $100 million and becoming extractive to customers and communities because your only path out is a multibillion-dollar exit.
Again, this is a math question, and the times have changed, and what it takes to build an early-stage company has changed. Yet the best folks to fund early-stage companies, whether small funds or angels, are somehow still tied to the rules of big-fund institutional VC, which makes no sense. Another impetus for my new startup!
When founders pitch to me, I tell them, “Stop pitching with your deck.” have a conversation with me about your business. Give me the elevator pitch, and then let’s dig in. And since most investors are going to say “no” on investing, make sure you learn something from them during the pitch.
Trust your gut. Don't wring your hands too much with analysis paralysis. See a lot of deals, start by writing a few small checks, and see how it feels. Just get going with it. Don't overthink it.
I would love to see more folks like Bryce at Indie.vc and Tyler Tringas at Calm Fund and the guys at Tiny Seed, and hopefully, with what we're doing at my new platform, to set up the early-stage asset class to work with founders and funders in a new way. It's time for some disruption in this early-stage space.