Angel investor: Mysty Rusk

September 6, 2023
Angel investors

We recently interviewed Mysty Rusk, a trailblazer in the San Diego angel investing scene. She is the Executive Director of the Free Enterprise Institute (FEI) at the University of San Diego and was part of the founding team of the Willamette Angel Conference in 2008, Central California AngelCon in 2017, SDAC in 2018, AngelNV in 2020 and the Fresno Area Hispanic Foundation Angel Conference in 2022.

We got a chance to chat to her about her angel investing journey and her most recent investments.

Full interview below!

How did you get into angel investing?

I had been doing angel investing without knowing I'd been doing angel investing. My family had made some investments in things that are good for what our family business does, which is agricultural in nature, and so I had exposure without knowing it at the time.

Anyway, when I relocated to Oregon there was angel network there, and I was so excited. A group of people would get together once a month and they would take a look at a couple of deals and then anybody who's interested would do whatever homework they wanted and then maybe make an investment.

So I started out super excited about that. After a year, we'd had a lot of nice dinners and seen a lot of interesting things, but nobody was actually making any investments.

Was the group scared to put down the money?

It turns out that they were a group of people who had built wealth over time, but they had built it from things that they knew really well. So we had a few people that had made money in software and a few people that had made money in forestry.

I was in the Willamette Valley in Oregon, and that's historically a huge lumber area, and so that group could invest in those things. But people who were coming to the meetings weren't promoting things in software, and those deals were happening outside of this little network.

We had this problem where we needed a way for people to understand the different industries and how different kinds of investments come together for different kinds of companies.

So we created an angel conference. There's a whole team led by John Sechrest from the Seattle Angel Conference. He and I had worked together in Oregon years and years ago, and it was kind of his brainchild to take a few investors who invest broadly and put them in a room with a bunch of other investors and start to build everybody's knowledge base and confidence around investing.

As soon as we did that, it changed things for us in pretty dramatic ways.

Tell us more about the San Diego conference for angel investors.

We just closed the fifth one that we've done in San Diego, so that's the one I'm working the most closely with right now.

I’m also helping to get one off the ground in Fresno which has a strong Hispanic community. The Fresno Area Hispanic Foundation got a big grant to try and develop the angel network there.

The way we run the conference for San Diego is we do three months of work with companies that are interested.

During those three months, we'll do a whole bunch of things to help people understand what it takes to be investment worthy. Not just how to put together a polished deck and say all the right things, but actually have all the infrastructure and other work underneath to be able to support all those fundamentals and really tie the story together and have a great plan for the future.

Then we have an application deadline, and we take all of those applications and use that as the teaching material for the investors who want to come in for the year.

We'll have somewhere between 60 and 75 investors who participate every year. When the applications come in, we don't put a lot of boundaries on it. Everything from software platforms to medical devices to biotechnology, to consumer packaged goods, we see a huge range and we see companies, most of them really early stage.

Our goal when we're doing those conferences for the investors is to give them as much exposure and to not put a ton of rules around our selection process because what we really want to have happen by the end of that process is that each of those investors walks away and they've got their own list of what a good deal is for them.

There's no perfect recipe. People invest for a lot of different reasons. Some people need they'll take a smaller return, but they want it back quicker. Or some people are willing to take a much bigger risk and wait a lot longer for a hopeful, much bigger return and they're not as concerned about how many of the companies might fail. So we really see a variety in our process, and that's by design.

Do you always write the same check size or does it depend on the startup?

I think I subscribe to the belief that you should have a lot of diversity in your portfolio and a lot of deals. I'm never playing with a huge amount of money.

I've never written a $50,000 check. For me, it feels like a lot of money. Personally, I'm always looking for opportunities to invest with other people that I know and trust who maybe have more industry or functional expertise to help evaluate.

I'm usually playing at very small dollars, so I try and play in a number of these kinds of conferences every year so that I can, for a very small amount of money, get invested in.

I try and do somewhere between 8 to 10 investments a year, and I try and do that for under $30,000 a year.

How involved are you with a startup after you write the check?

Personally, I’m more hands off, but if it’s through my organization which not only runs the conference but also an accelerator (called the Brink SBDC), we try to be as helpful as possible. The way our accelerator is designed is we'll stay with a company for a long period of time, even through their exit.

Any of the companies that come through our process, whether it's our accelerator or other resources in the community, we try and make sure that people get connected to additional support and resources.

How important is it for angel investors to have a good network when it comes to sourcing deals?

I think networks are really important and introductions make a huge difference. So every time someone else makes the introduction for you, it lends credibility. For the companies that I work with, I always tell them “hey, go through my LinkedIn, see who I'm connected with and if there's anybody there that's helpful to you, let me know and I'll make an introduction”.

A lot of times I'm connected with someone through LinkedIn that maybe we met at a conference or maybe they reached out because they were excited about something that I was doing. I may not have a really tight personal connection, but I'm still happy to make those introductions.

I think anytime you're making an introduction for somebody else, it's actually more helpful to them than a cold call. The DMs and that kind of thing can work too, especially for people who are persistent without being annoying.

What are some of the common red flags for you when it comes to investing in founders?

Somebody who says we don't have any competition. When I hear that, I always just tell people that if they don’t have any competition, it means it can only be a handful of things.

One, there's no need/demand. Two, if you have no competition and you're meeting a significant need, then we're going to IPO and you wouldn't be asking me for money. Three, which is the most common, you haven't done your homework.

If people aren't meeting this need in some way, you just haven't figured out who your competitors really are.

Which one for you is more important - the product or the founder?

I think it has to be a balance, so there has to be a novel way that something solves a real problem for people but you've also got to believe that the team can really execute.

Any advice for aspiring angel investors?

Just find an organization that is really trying to help build people up and get involved and read some books!

Don't hesitate to reach out. Look for people on LinkedIn who are doing it already and reach out and ask for coffee. They do a ton of coffee meetings with people who've never invested before.

(Side note: Article by Mysty Rusk on 7 mistakes to avoid as a new angel investor)

Two recent angel investments?

I recently invested in Relavo, a company from New York, and they are making a device that helps to prevent infection for home dialysis patients. That's super cool and very interesting. That one has a personal connection because I have a child who's impacted and so I'm super excited about that. It’s a really great team that's bringing that medical device to the market.

Then the second one is Limber Prosthetics. They have their own software, custom materials, a custom 3D printer, and they have a pathway to market share that makes a ton of sense, plus a really good financial forecast and team pushing that together. It’s very unique!

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