What Angel Investors Can Bring to the Table
It’s much more than cash
When I stepped into the world of angel investing five years ago, I was immediately taken by the process of helping female entrepreneurs build successful businesses. My financial investments have helped enable the founders I support to build out new technology, bring on new hires, and expand to new markets. But I have a hunch that if you ask these women what they value most about my involvement, their answers won’t have anything to do with money.
My greatest value as an angel investor is something I’ve spent years building and nurturing through countless tweets, phone calls, coffees, and conferences. It’s what has propelled my career to places I never thought possible. Ask the women I invest in what they value most about my involvement, and here’s what they’ll tell you: my network.
“One of my favorite definitions of angel investing is “smart money,” which includes financial (money), social (contacts, relationships, networks), and human (skills, experience, background) capital,” says Natalia Oberti Noguera, founder and CEO of The Pipeline Fellowship, a network which recruits and trains new ranks of female angel investors.
“Smart money” means you’re not just cutting a check, you’re providing additional, continuous value to the company and the entrepreneur. This is smart for everyone: supporting your entrepreneurs means supporting your investment, hopefully through to an exit.
Angel investors can and should look for ways beyond money to add value to the companies in their portfolio. For women especially, who tend to excel at relationship building and collaboration, having and leveraging a strong network is one of the most powerful ways to maximize financial returns. Connections bring intangible value — the sort of support, visibility, and opportunities that far exceed the dollar value of my typical investment (a case in point, I charge for such service when I consult, but provide gratis to the businesses in which I invest).
As an angel investor, here are just a few examples of how a strong network can buoy the success of your portfolio:
Visibility
New entrepreneurs sometimes assume that if they have a brilliant or revolutionary product, requests for media interviews and event appearances will come rolling in. Once in a blue moon it works out that way, but more often than not, startups have to work hard to cut through the noise and get in front of the right journalists and audiences.
That’s where I come in. After years of building relationships in the industry, I frequently get asked if I can recommend sources for feature stories or speakers for upcoming events. Every entrepreneur I support has benefitted from my media relationships in one way or another, whether it’s helping The Muse’s founders appear in an article in the Wall Street Journal or securing Zady’s Maxine Bédat a speaking gig at the BSR Conference, the de facto annual conference for those working in corporate sustainability.
Similarly, whenever I come across editors looking for wedding experts, I immediately put them in touch with Kellee Khalil, founder and CEO of the wedding planning platform, Lover.ly.
Forbes, Fast Company, The Guardian, Upworthy, and More magazine are just a few of the outlets where I’ve scored placements. People often believe that this is possible by just having good relationships with editors. Actually, it’s more about understanding the editors’ specific needs and connecting them with the most appropriate sources as well as actionable information. Clearly, those I’ve invested in are at the top of their game.
“Having great angel investors is about more than capital. It’s also about support, about network and connections, and about getting to the right answer — or the right person — as quickly as possible when building your company. Susan’s helped us with all of these.” Kathryn Minshew, co-founder and CEO of The Muse.
Talent
One of the biggest challenges any startup faces is identifying strong talent early on. With the chaos and craziness that comes with growing a business, most entrepreneurs don’t have the time to recruit high-quality candidates, even when they’re desperately in need. This is another area where having a strong network can be a game-changer. When one of the founders I work with needs a stellar content marketer, for example, I send an email to the right people and can reliably emerge with several peer-approved candidates 24 hours later. This helps them reduce the risk of hiring the wrong person.
We all know the power of networks, but the best ones are those that are “super” connected, meaning they overlap into other connected networks. When you send out a request to one, it can often spill over into others and therefore increase your rate of return.
I am an investor in TheLi.st, a professional network for women in media, technology and culture and I frequently refer potential members to for consideration. “Susan has introduced us to so many incredible Listers,” says List co-founder, Rachel Sklar.
“Elizabeth Plank, Nancy Spector and Ruthie Ackerman, to name a few —These are some of our favorite people and hugely valuable to our community and they all came through Susan. Quality networks beget quality networks.”
Connections to additional investors and funders
When I decided to explore angel investing, the first thing I did was meet as many investors as possible. Not only did this provide me with the background and context I needed to get started, but it also introduced me to a community of investors who shared my passion for supporting women entrepreneurs and spurring a more diverse workforce. Now, when one of the founders I work with embarks on a new round of funding, I can quickly connect her with the right investors in my network. Just ask Jane Barratt, the founder of Vested Interest, a business I’ve committed to invest in, and whom I introduced to a slew of potential investors from well-aligned organizations. This matchmaking between funder and investors helps entrepreneurs strategically expand their portfolios while enabling the entrepreneurs to expand their businesses. It’s win-win — the recipe for any successful connection.
Kara Goldin, co-founder and CEO of Hint Water, touched on the fact that her early funders provided incredible connections (along with knowledge and guidance). One early funder, Sonja Perkins, a partner at Menlo Ventures, had a massive network that she mined to connect the healthy bottled water company with key investors from the start. She also helped them with their positioning so that they could successfully target larger VCs.
Both of these examples demonstrate how entrepreneurs can borrow credibility and “equity” from those who fund them.
Advice
When you’re an angel investor, you also become an advisor, especially when you’re helping a new entrepreneur grow her business. Being able to pull from your own experiences to help founders grapple with challenges and see the big picture is incredibly valuable and crucial as you work to gain high returns on your investments. One well-known angel investor, Joanne Wilson, is a tireless supporter of those she funds. Jen Bekman, founder and CEO of the art marketplace known as 20x200, shared the following:
“Joanne believed in the potential of my business, and did so long before she became an investor. She is a tireless advocate of the companies she backs, and she’s a convincing one because she is entirely authentic and it’s super obvious that she really cares about what these companies are doing and the impact their businesses can have on the world. If she was just pushing to help them make more money…Well, I can’t even imagine that!”
Amanda Steinberg, founder of Daily Worth, shared that “an intro from Joanne provides instant credibility and is equal if not worth more than a financial investment.”
But sometimes, you don’t always have the right experience to draw from or the best perspective from which to offer advice. That’s where one’s network comes in. If any of my founders has funding challenges, I frequently direct them to friends Jalak Jobanputra, managing partner at FuturePerfect Partners and a venture capitalist with over twenty years of experience raising capital, or Fran Hauser, partner at Rothenberg Ventures, who was a senior executive at TIME prior to turning her attention to the funding world. For issues related to human capital development, I would turn to Ruth Ann Harnisch, a woman who wears more hats that I can name in this article but is an incredible resource for coaching, employee development and goal-setting. Similarly, other angel investors often come to me if their founders need advice about communications, corporate social responsibility, partnerships, or social good.
Moral support
It’s not just straight-up business advice we’re talking about here either. A lot of founders need guidance when it comes to handling all of the stress that comes with building a business — someone to tell them it’s time to take a break, go work out, or hang out with their family. Sometimes it can be as easy as offering to meet over a mani-pedi, something Muse advisor Rachel Sklar told me she did once with founder Kathryn Minshew during a bad day. A simple boost in morale can make all the difference to a weary entrepreneur feeling the grind.
For me, this type of support comes in the form of giving my founders a willing ear and a safe space to vent, reminding them that it’s all part of the process and that entrepreneurship is all about the highs and lows. It also helps to introduce them to other founders that can help them work through those stressful days and laugh or commiserate together.
Let’s not forget, too, that investors and entrepreneurs are actual people with lives, families and hobbies. Connecting with them where they live can make all the difference, sometimes literally, as POPVOX founder, Marci Harris recounts.
“Tim O’Reilly was the first non-family investor in POPVOX, but the value he has brought to the company has been much greater than any amount next to a dollar sign. I quite literally pitched him on the company as he picked out tomato plants at a nursery in Sebastapol,” said Harris, who has built POPVOX into a civic engagement platform meshing real-time legislative data with users’ personal needs and stories.
“Later, I visited with him to provide an update and he was making homemade jam. So, I threw on an apron, started stirring, and proceeded to update him on our significant company transitions. I left with good advice, several amazing introductions, lots of encouragement…and fresh organic jam.”
The power of a vibrant network is its sustainability. As long as I continue to bring value to both sides when I facilitate connections, I’m confident that my network will continue to thrive and my portfolio companies will continue to reap the benefits. There’s no question that capital matters a whole lot, too — but if an angel investor focuses solely on capital, she is doing a disservice to the entrepreneurs she supports and to herself. The more an angel investor taps into her greatest assets — her network, her experience, or her expertise — the higher returns she will see.
Susan McPherson is a serial connector who believes business can be a force for good. She’s founder and CEO of McPherson Strategies, a social-good communications consultancy in New York City. She can be found often on Twitter at @susanmcp1.
