Angel Investing with Jeff Seltzer of the NY Angels & Founder of Pierce Yates Ventures
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So you want to be an angel investor? You’ve heard all about it, seen the tweets, read the books, heard the stories. The Bezos $250k angel check to Google, the many accolades of Chris Sacca and Jason Calacanis in Uber, that guy you know who happened to squeeze into X company’s F&F round, and more.
But what is it really like, what are the risks, what do you need to think about?
In today’s episode, I sit down with Jeff Seltzer, Managing Partner of Pierce Yates Ventures and member of the New York Angels. NYA is one of the longest-running active angel groups in NYC and has invested over $100 million in entrepreneurial ventures. The group is an independent consortium of over 135 individually accredited angel investors. Pierce Yates is a firm focused on fintech and sports-tech investing.
Jeff is a longtime Wall Street veteran, having held senior roles at Lehman Brothers, Adirondack, CIBC, and more. He is also a proud Wharton alum, and received the 2019 Alumni Award of Merit in recognition of his lifelong commitment and service to Penn.
This episode is packed with great information, but let’s grab a couple of great quotes below to get you started.
His Must-Have Resources for Any Angel
Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups (David Rose). “David is a wonderful writer. He sets out all of these things…when you go into every deal, you need to think that you’re going to be getting a 10x, which is why valuation matters, particularly because most of these deals are not going to go IPO. They’re going to be lucky if they’re acquired! I think the statistics change over time, but the vast bulk of acquisitions are under $40 million. So if you’re coming in at $4M, you’re hoping for a 10x, then you’re there. But if you’re now at a $15 million valuation, where are you going to be? All of those economics matter, and David does a much better job than I will in explaining it.”
The Startup Checklist (David Rose). “That’s good for angels, so they can see what the founders should be worried about. And good for founders, because they can go through and check each box.”
Angel Capital Association — “The ACA is the trade association for Angel groups. Under the membership directory will be a list of every member of angel groups all across the country. So that’s helpful if you’re in let’s say, Boca Raton. Is there an Angel group there?”
Empire Startups — All things NYC fintech…
The Resources Page from Sapna Shah of Red Giraffe Ventures — I personally love this page. Had not known about it before this episode…immediately added to the bookmarks.
The Biggest Mistake Early Angels Make
“It’s a hard thing when you’re an early-stage investor, to know if you’re good at. It’s such a long time to hold — the feedback loop is almost a decade!
And what happens in these angel groups is that you have all these people who come in, and they’re all enthusiastic, and they want to start writing checks. And we caution against that. You should write the checks when you’re comfortable with the company. You shouldn’t feel that you have to catch up. You’ll get there! So you’ll find that it’s the newbies who are writing the checks the quickest!”
The Biggest Mistake Early Founders Make
“People make this kind of mistake — Directors serve a very particular function, right? It’s corporate governance. And it’s nice to have directors who also understand your business and industry, but those folks really should be on your advisory board. So what I see is founders want people to come on their board of directors. And if they’re on the board of directors, they’re going to be determining budgets, compensation, things like that…for someone who has industry expertise, you can make that person an advisor, and put them on an advisory board and still get that what you need them for: the network, the contacts, and the expertise without having them determining your budgets and compensation.”
New York Angels 101
“It started with kind of the pillars of the New York City tech ecosystem at the time. It was David Rose, who is the founder, Esther Dyson, Gideon Gardner, Scott Kurnit, Alan Patricof, and Howard Morgan…(yes, that is as impressive of a list as you can find. There are more founding members as well, all who are iconic titans of industry.) New York Angels is a consortium of professional early-stage investors. We have about 125 members and for most members, this is their full-time job.”
“On average over the last three years we’ve done about $12M dollars of investments a year…the equivalent of about a $60 million VC fund. We’ve done 17 new investments and 18 follow-ons on average per year. 40% of our deals have been in med-tech, health and bio. We don’t do pharma, it’s too complicated. Enterprise software was about 20%, D2C products about 15%, fintech 10%, and then media and marketing around 5%.
37% of the companies that we find, have a female and minority founders and that’s very important to us. We encourage everyone to apply to New York Angels.”
We also cover:
- A fun dive through his background, from DC politics to tough 80’s wall street
- Different types of venture agreements
- The value of doing a stint in DC politics
- The entire New York Angels investment process
- Pierce Yates Ventures
- How you can get involved (as a founder or investor) with New York Angels
- & much more
Listen on Apple | Spotify | Soundcloud
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About Jeff Seltzer
Jeff is the Managing Partner of Pierce Yates Ventures which provides early-stage funding and advice to emerging companies with a focus on the fintech and sportstech verticals.
He is on the boards of numerous startups and is a mentor at six accelerators around the world. He is a member of NY Angels where he served on the board for many years.
Jeff was Managing Director and one of the founders of the Derivative Products Group at Lehman Brothers and then moved to CIBC World Markets where he became Deputy Chairman of its U.S. investment bank. He then joined as COO of Adirondack Trading Partners which was the corporate founder of the International Securities Exchange that went on to an IPO.
He served as chairman of two governmental economic development agencies and as a director of a sports commission, all in the New York area. He was an advisor for many years to the Federal government on both small business and trade.
Jeff has a law degree from Georgetown. He graduated from Wharton undergraduate and is on the boards of Penn’s Libraries, the Huntsman Program in International Studies and Business, and the Wharton Sports Business Initiative. He received the 2019 Alumni Award of Merit in recognition of his lifelong commitment and service to Penn.
*Some quotes have been lightly edited for clarity or conciseness.
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Ryan Zauk
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Ryan Zauk is a recent MBA graduate of The Wharton School, where he ran the Wharton FinTech Podcast. He currently works with the US International Development Finance Corp looking at technology impact investments in developing markets. He will be joining Morgan Stanley’s Fintech & Technology team in Menlo Park after graduation. He has a passion for music, media, and all things FinTech.
You can reach him at rzauk@wharton.upenn.edu or on Twitter.
