January 11, 2024 • 43 mins
We're talking about being the change - and moving the needle! Marcia Dawood is an Angel Investor with a Purpose. Marcia was recently appointed to serve on the advisory committee for the Small Business Capital Formation Committee of the Security and Exchange Commission. She is a venture partner with Mindshift Capital and a member of Golden Seeds, one of the largest angel groups in the US. She's also Chair Emeritus of the Angel Capital Association (ACA), the global professional society for angel investors.
Marcia is on a mission to empower and educate everyone to realize their potential to invest in positive change. She is passionate about bridging the gap from early-stage inception to building thriving, profitable companies.
Marcia is a TEDx speaker and podcast host - and she believes wholeheartedly that change starts with "different and unique perspectives".
Maricia's podcast - The Angel Next Door podcast is a show about how people got started investing in startup companies.
LEARN MORE ABOUT THE VOICES IN THIS EPISODE:
Marcia's Podcast - The Angel Next Door
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:06):
What does growth look like in your business in your life?
As a business owner,
executive or individual,
you can live and lead with intention to create the change you want to see in your community and the world.
Welcome to the Discerning Strategies podcast,
a place where we can see clearly and act wisely.
(00:31):
Hi,
everyone.
This is Michael Messer.
I'm your host here at the Discerning Strategies podcast.
Today,
I am joined by Marsha Dawood.
She is an angel investor with a purpose and she is on a mission to empower and educate everyone to realize their potential to invest in positive change.
Marsha was recently appointed to serve on the advisory committee for the Small Business Capital Formation Committee of the Security and Exchange Commission and she is a venture partner with mindshift Capital and a member of Golden Seeds,
(01:00):
one of the largest angel investing groups in the US.
She's the chair emeritus of the angel capital Association,
the AC A which is the Global Professional Society for angel Investors and a founding member of the AC A s growing women's capital group,
Marsha.
Thank you so much for joining us today.
Oh,
thank you for having me excited to be here.
Yeah.
(01:20):
So I'm really so angel investing people kind of maybe have a sense of what that is.
But just so we start off on the same page.
What is it?
That's such a great question.
Um In 2012,
my husband who works in financing,
came home to me and said,
(01:41):
um hey,
we were invited to an angel investing meeting and I said,
what's that?
And he's like,
well,
I'm not exactly sure.
And this is someone who works in finance.
And um he's like,
I think we need to go to the meeting and kind of figure it out.
And at the time,
and we were living in Pittsburgh,
Pennsylvania.
And I had no idea that there were entrepreneurs all over the place in every nook and cranny of the country.
(02:03):
And so we went to this meeting and I was watching some really fabulous entrepreneurs tell me all about their start up companies and the things that they building and working on.
And I was hooked.
I was fascinated,
I couldn't believe that in my own backyard,
there was so much cool stuff that was happening and we were invited then to uh join the group and potentially invest in the companies that we saw.
(02:29):
And uh so we started to do that little by little.
And as I moved around the country,
uh my husband's job took us several places including New York,
San Francisco Dallas over the last 10 years and I got to see a lot of the things that were happening in angel world all over the country.
And it's really,
really interesting the things that a lot of people think are happening just in New York and San Francisco are really happening everywhere.
(02:56):
There's amazing entrepreneurs in every part of the world.
So take us back to that,
that first meeting and you're seeing these companies,
these start ups pitching their business and you're having this wow moment.
Like what was exciting?
Like what were,
what were,
what were the things they were talking about or the change that they were envisioning?
Well,
they were really trying to solve some big problems,
(03:17):
you know,
things like health care issues and you know,
treatments and cures for various ailments,
diseases,
uh ways to make your life simpler ways to make mom's life simpler.
If you're a mother,
um you know,
ways that you can help your Children be more successful educational issues.
I mean,
some of the things that I was seeing,
I just thought,
wow,
(03:37):
I'd never even thought that that could be something that could be invented or created.
And so in at every turn,
I was always learning,
I'm always still learning so much from these entrepreneurs.
They're really amazing.
And that's like,
so it's basically like you walk into this room and it's full of a bunch of people who had an idea and basically said,
(03:57):
I'm gonna bring this vision into the world and I'm gonna have an impact.
Do you wanna come with me and help me do that?
That's exactly right.
Yeah.
So you said something very,
very subtle.
Which was,
well,
my husband was in finance and he got invited to this thing and we went,
does that kind of imply that you're not in finance?
(04:18):
I,
I was not in finance.
I was in sales marketing and operations.
I worked for an education company for about 17 years.
And while I'm very good with a spreadsheet,
I really do like numbers.
I certainly didn't work in it and uh to that level,
but it's not hard to learn.
Um And there's so the nice thing about Angels is we're very collaborative.
(04:42):
Uh Angels always work together.
Usually you would never see an angel investment company by themselves unless they were like some super billionaire maybe or something like that.
But,
you know,
we all work together so somebody might have an expertise in finance and that's uh the person we get to look at that part of the company and then maybe somebody else has an and whatever their,
(05:05):
you know,
science or technology is and that person looks at that and then,
you know,
the work gets divvied up amongst um all of the people who are interested in potentially investing in the deal.
And then when we decide if,
if it's worth the risk because everything is always risky.
Um then you,
that's like kind of how you make the decision.
(05:27):
So it's interesting because so,
so what I'm hearing you say is like,
uh,
you,
you took kind of your background and you're like,
here's what I'm bringing to this conversation and other people are kind of filling in the gaps as you're thinking about this developing nascent company that's trying to create some change out there.
(05:48):
Um,
you know,
I feel like so many people when you describe this,
they're thinking,
well,
I've watched Shark Tank.
Exactly.
And they're like,
ho like,
who,
who am I to be a shark?
Like that's gotta be the first thing that comes up.
Did you feel that way at all?
Maybe even a little bit?
Oh,
definitely.
I mean,
I thought there's no way I could participate in this.
(06:11):
I'm,
you know,
I'm not a billionaire.
I don't fly in a private plane.
You know,
there's,
that was my perception and I,
so many people I've talked to in the last 12 years have told me the same thing.
They,
they say,
well,
you know,
we like Shark Tank.
It's really fun to watch and we like the sharks and they're great.
And,
um,
but their perception is that you have to be rich and you have to be very well connected in order to be able to invest and maybe 3040 years ago that had some level of credibility because,
(06:43):
you know,
it was harder to find the entrepreneurs who were raising money.
Um,
now,
it's quite easy to find and you did have to have a significant amount of money when I say significant,
I'm talking,
you know,
maybe a couple $1000 that you would invest.
But nowadays,
um the Securities and Exchange Commission changed the rules based on the Jobs Act of 2012.
(07:05):
And in 2016,
they announced that people could invest through what's called equity crowdfunding,
which means that an entrepreneur can go on to a site.
Uh There's a couple of them out there.
The big guys are,
we fund a Republican and Start Engine.
Uh And you could go on to the one of those sites and you could raise money and people could invest for as little as $50.
(07:27):
And so that isn't something that very many people know about only because it hasn't been around that long.
I mean,
sure,
2016 till now,
it's like,
you know,
78 years.
But um but that's not a long time to be building up,
you know,
the platforms and having everybody understand it and,
and really get a sense of what's going on.
It's just been in the last two or three years that I've started to see it get more traction.
(07:52):
No,
that's really exciting.
And because when you start bringing the ability to enter into the investing space down to 50 bucks or 100 bucks,
what you're really talking about is democratizing a whole engine of commerce within the economy,
potentially Absolutely.
And what started to happen was I was talking to so many different entrepreneurs and,
(08:16):
you know,
they're all,
they all have such passion and heart to what they're doing and you almost as an investor,
you start to kind of fall in love with them and their whole idea.
And it got to a point where I personally just did not have any more money to write a check to an entrepreneur.
Um You know,
at the Angel Association,
we always say,
listen,
you know,
(08:36):
5% maybe 7% of your net worth at most is what you would ever want to invest in an asset class like this because it is a little bit risky,
risky as they say.
But um you know,
I,
I got to a point where I couldn't write any more checks and I'm looking for other people who would potentially be able to do that,
(08:57):
but they,
they really didn't know that they were able to back to what we were saying before.
They just thought it wasn't something that was accessible to them.
And now we can not only make it accessible to more people,
but we can let them kind of dip their toe in the water with very small amounts of money so that they can learn and kind of get started without putting,
(09:19):
you know,
1020 you know,
$50,000 at risk.
So help me understand like,
what is that really like?
So let's say I'm coming with $500.
Ok?
This is,
this is what I feel like and if you really think about it,
right?
It's not that different than telling,
you know,
picking a riskier mutual fund,
(09:40):
right?
Like it's like putting it in a vehicle,
it's gonna yield a return.
The tricky thing about it is I think the perception is that the due diligence,
the questions,
the knowledge that you need to be successful in the space is a higher hurdle.
So if I'm coming in with my $500 and I'm in one of these platforms,
(10:00):
gosh,
where do I start?
Yeah,
I can give you $500.
But how do I know I'm making a good decision?
Very good question.
Um In the,
at the end,
the answer is you really don't um any,
I mean,
and do you really know if you're making an investment in mutual fund?
It,
I mean,
(10:20):
any investment is risky,
a risky investment,
um a private investment,
it doesn't have the same level of reporting that is required by the sec as a public company does.
So that is where,
you know,
the more risk comes in.
In some cases,
you may find private companies who are giving more information than what you would find in public disclosures.
(10:43):
But in a lot of cases,
that's,
that's not true.
So it's really up to the investor to make the decision.
And like I always say,
you can always find a reason to say no to,
especially to a start up the start ups have a lot of challenges ahead of them.
Building a company is very hard work.
So I,
(11:03):
I tend to recommend to people look,
if it isn't something that you really care about and,
and you're not trying to just put your money to work for good,
you're just trying to put your money to work for a financial return,
then this probably isn't for you.
But if you're looking for a way that you can potentially make a financial return and you can do good,
(11:24):
then you will probably be able to find something that you care about and you would be able to invest in that as well.
Because up until recently,
the only way that at least for me that I thought I could do good in the world would be to either volunteer or donate to nonprofits to charities and charities are fantastic except that they do not get even close to the amount of funding that is out in the for profit markets.
(11:53):
So if you look at the amount of funding that goes to charity $475 billion annually here in the US,
that's a lot of money,
but that's only equivalent to about 1% of the value of our US stock market.
So if we wanna help companies who are really trying to make change in the world,
climate change,
medical devices,
(12:14):
all of these things.
Then we have to help the for profit companies and invest in them when they're small and help them to grow.
Because what angels bring way more than money is we bring expertise.
We bring a network,
we bring some elbows grease and some,
you know,
I would say at times,
we even have to be therapists,
not for real therapist,
(12:36):
but at least the,
the shoulder to cry on kind of person who the cheerleader who's just gonna get say,
ok,
yes,
we had a little hurdle and now you just gotta dust yourself off and get back up and you'll be,
you'll be fine.
I,
I love this idea of making it easy to create change with small dollars.
(12:58):
Right?
I think that's so necessary.
And what,
what I heard you say is do something you love,
do something that's important to you.
Um,
do something maybe between the lines where you think that you might be able to add something to the company that you're looking to invest in.
Correct?
(13:18):
Yes.
Any time that you're looking at a,
a start up company or,
or really any,
any type of company that you're gonna help having that passion for what they're working on is just something that's gonna fuel you to help them even more to open your rolodex to,
um,
or in this case,
(13:39):
your,
your iphone contact app.
Um,
and you know,
allow them to,
to get the help that they really need and I'll give you an example.
So at one point,
uh we uh I was within a group and,
and we could talk about funds in a minute.
It was a fund and we were looking at a company that had to do with fishing.
(13:59):
Well,
I'm not a fishing person.
So,
you know,
I,
I wasn't gonna get super excited about it,
although I did learn a lot about fishing.
I'll tell you.
But um,
but so that may be for me wasn't the thing that I was gonna go,
hey,
I gotta help,
you know,
this company.
But then,
you know,
there was another company that was working on something for women's health and I got very involved with that company and helping them and was an advisor.
(14:22):
And so,
you know,
those are the types of things you,
you find the things that really resonate with you and,
you know,
for a while you might help them for,
you know,
a couple months,
a year or two years,
whatever.
And then,
you know,
maybe there's another,
they grow out of you and they,
they're on to bigger things and at least that's what you're hoping and then you can go on and help others and you've learned from the experience,
I,
(14:42):
I learned from every single start up that I ever talked to.
So when you're on these crowdsourcing platforms,
I'm still stuck on this because it's so fascinating to me.
I wanna like,
I'm super invested in what this company is doing.
It really speaks to my personal situation,
my worldview,
my ethos,
all of it,
here's my money,
(15:03):
presumably there's a bunch of other investors out there who are doing the same thing.
Uh Going back to my days,
my Wall Street days,
you know,
governance,
right?
Like how does,
how does the angel,
how does the angel community in that democratized con context?
Speak with a voice when you've got such varying degrees of investment?
(15:24):
What does that look like?
Well,
for the most part,
everything that's what's nice about these platforms is everything is kept on the platform as far as communication and there are regular communications that are required to go out to the investors.
Uh So,
and,
and that actually is the case even prior to making an investment.
So let's say that a company says,
(15:45):
hey,
I wanna go onto a crowd funding site and I want to fundraise they can,
you know,
set up the site and all that kind of stuff.
But let's say then that you wanted to invest in that company.
And so did I,
but I happen to know the founder,
I knew somebody who knew the founder.
So I go and ask the founder a question off the site that's not allowed.
(16:06):
So if you know that if everybody's playing by the rules,
then my question,
even though I know that person,
he says,
no,
no,
no,
no,
you have to go to the site,
ask me the question and then I'll answer it so that the entire forum can see because that way everybody is in the know about all the same information,
same thing happens like after the invest are done and the companies off to the races and they're growing and doing whatever they're doing,
(16:33):
those quarterly reports have to be given to the investors so that they're able to see and everybody's able to see the same thing.
And there's a very open uh communication section of the site that I really appreciate.
And I find that that's where you're gonna get the gold of,
of information.
You can look through all the marketing material and the pitch deck and the this all that's lovely.
(16:57):
And,
you know,
figure out how the company is operating,
what's their business plan,
all those good things or,
you know,
how they're gonna basically get to scale,
but you're really gonna find those nuggets of gold as you're reading through the questions other people are asking the questions that you've asked or,
you know,
just what the way that the CEO is responsive.
Are they responding within a couple of hours or are they responding within a week or if they're responding within a week and they're in the middle of an active fundraising campaign?
(17:24):
That's kind of scary.
I might not want to continue to look at that company as an investment because it doesn't seem like the founders find it to be,
you know,
that they're,
they're putting it its importance in place.
Yeah.
So it,
it almost sounds like uh there's this mega impactful Slack channel or like DM going in a data room that is constantly insured,
(17:49):
right?
Like,
OK,
so you're in the flow,
you're in the flow of information.
Um Well,
I'm gonna have to,
this is so intriguing to me,
I'm gonna have to rethink uh my own investment strategy and see,
see,
see what,
what is out there for me.
Um I wanna go back,
I'm still stuck and I'm so actually impressed that you went to this thing and you were like,
(18:11):
this is cool.
I don't have an investing background per se.
You've got a husband that's a finance guy and you've got some marketing and ops experience and I'm just gonna do it,
help me understand the mindset that you had to get into to be a successful angel investor at whatever scale.
(18:32):
Yeah,
I,
I really think it has to come down mindset is the perfect word for it.
Um If again,
if I was thinking,
hey,
I'm gonna put some money into a company and,
you know,
a couple months it's gonna exit and I'm gonna be,
you know,
sitting on Sand Hill Road and Silicon Valley,
uh you know,
with my mint of money,
(18:52):
um that's not gonna happen.
Um So let's,
let's put that to the side.
But,
you know,
again,
I think it came down to,
I can actually make a difference.
I can help to make some kind of a change in the world and I could potentially get a return.
Because,
you know,
(19:12):
me,
up until then I thought that it just meant,
well,
if I really want to make change in the world,
I have to find the place that is making said change.
And that to me usually was a nonprofit and then I would try to support them.
But sometimes I wasn't sure like where my money was going or how it was being used or things like that.
And also we can't put the burden that kind of burden on a nonprofit.
(19:37):
They don't have the infrastructure and they don't have the funding to be able to,
to do a lot of these things.
So,
you know,
being able to see,
hey,
there is a company and I actually talk about it in my TED X um talk that is was working or is working on a uh treatment for Alzheimer's disease.
And as soon as I saw that and I thought,
(19:58):
whoa,
I could potentially be a part of that and maybe even help to stop or potentially even reverse this horrible disease.
Like,
whoa,
I,
that to me was a game changer of being able to say,
you know what,
even if I lost all my money,
which I hope doesn't happen,
(20:19):
of course,
and the company is still in business.
But even if that happened,
if they were able to make enough advances that could help they,
that somebody else could pick up that ball and move it forward down the field.
Then I feel like I really made a difference and I was paying it forward to,
you know,
(20:39):
be able to make that kind of a change and I started to see that over and over again.
And then,
you know,
curing Alzheimer's is probably like one of the biggest things that,
you know,
we could do in our current society.
But um you know,
there are little things,
too little things that could help improve,
you know,
time efficiency and everything from,
(21:00):
you know,
climate your house,
your work style,
all of those things.
And I just thought,
wow,
this is just so fascinating to me if,
if I could be that change that I want to see in the world and I want as one person could actually just move that ahead just a little bit.
Then to me that's,
that's a big deal.
(21:21):
You know,
it reminds me of a conversation we had with another guest,
uh Maya Philippson of a social capital and,
and,
and they do equality investing in,
in social impact.
And she,
she drew this great analogy.
She said it's the philanthropy to Crime Spectrum,
right?
So where you give money to,
you know,
your your return from investing in philanthropy is zero financially,
(21:43):
whereas your return in crime is like,
you know,
there's no investment but you get this incredible return but it's like all socially bad and then what impact investing really is,
is in the middle,
which is like,
is there a middle way?
Yeah,
you're not guaranteed to get a return,
that's where the risk comes in,
right?
But you could,
and so imagine getting a financial return while investing in a philanthropy type organization or impact,
(22:08):
that's what you're talking about.
Yeah.
So one of the things that is so interesting about that because the social impact is kind of front and center doing,
you know,
you,
you talk a lot about doing good while doing well and I just love that.
Um so often the way our financial system is set up is we don't value social returns that the traditional investors only look at the dollars and cents.
(22:36):
How do you think about social returns in your context as a as a multiyear successful angel investor?
So it's interesting,
the word impact has a lot of heavy uh connotations to it.
Um In a lot of cases when somebody says,
well,
that's an impact investment.
(22:57):
It tends to let people believe that that's like charity,
even though it's not,
it's not nonprofit.
We're not talking about a charitable donation,
we're talking about an actual investment becau but because it's impact investing and that has actually been described for investing in women and people of color as well,
(23:19):
which just drives me absolutely crazy.
So,
you know,
impact investing is not about investing and expecting no return,
impact investing is about doing something that you believe is good for the world and good for humanity and also expecting a financial return and being able to have both.
(23:43):
So,
uh in 2016,
a group of us worked with Alicia Rob,
um who started the next wave Impact Fund and we actually put the word impact in the name of the fund,
which I was a little worried about because again,
I thought people might not want to invest in it because they're gonna think that we just,
(24:05):
you know,
are gonna invest in things,
never get a return.
But the uh the fund has done very well.
Um And we invested in 15 companies and we have had three exits already and we still have 11 operating companies.
So we've returned the majority of the money to the investors.
(24:25):
And now the money that we get back on any of those 11 will be,
you know,
profit.
So we were trying to prove,
can we get people to realize that the word impact does not necessarily have to come from the um the idea of you're gonna lose all your money if you invest in this.
(24:47):
Do you see that shift happening now in the market?
Is the discourse changing or is there are people using different words now to try to get around that problem?
I don't think people are using different words.
I think it is slowly starting to change.
And that is because we are seeing some of these things like I just mentioned uh happen and we're starting to get some data around it and some proof.
(25:11):
And so,
for example,
with,
uh I'll just use women for,
for an example.
First round capital did a study a couple of years ago showing how much more their diverse L teams did as far as revenues and returns for investors as opposed to all male L teams.
(25:32):
And so that type of data is just continuing to come out over and over again.
Uh diverse teams.
And when I say diverse,
I mean,
every kind of diversity,
we're not just talking about gender and race,
we're talking about location education.
Um All types of things help people to make better decisions if there's more diversity in the room.
(25:53):
And so I believe that those are the types of teams that we should be putting together to help these start ups,
younger,
older,
all of those things matter and the more diversity we can get in the room,
the better the start ups will do,
which means that people will become more encouraged to invest in people that look like all different walks of life.
(26:17):
100%.
I mean,
there's so much data that's coming out as people are turning their attention.
You know,
my,
one of the,
the underlying thesis of my entire business is that consumers,
people,
society want to align behind businesses that share their values and those businesses that share their values,
outperform because they create customers that are able to engage on a deeper level,
(26:43):
they are loyal,
they are willing to pay a premium to see an impact in the world um or to support a company that is um exemplifying the values that they hold important,
whether that's diversity,
whatever that is.
So for me,
I always want to say like this is just good business,
(27:03):
like you can be totally machiavellian about it.
But if you want to outperform your peers and you wanna create a sustainable competitive advantage,
think about your people,
think about your diversity,
think about how you're engaging with the community,
it's all connected.
Yes,
absolutely.
So I think I know the answer to this now,
what I'm hearing is that there's this always this tension between the social return and the financial return and what you're,
(27:28):
what I'm hearing you say is the expected financial return needs to be positive.
And the way you value the social return that this,
that this start up is bringing is gonna be a lot more a specific to you and what,
how you want to engage with them and you can value that,
(27:48):
how you will but just make sure it's resonant,
make sure it's something that makes sense and make sure that there's a reasonable expectation for a a non negative return on your investment,
right?
Is that a fair summation or is there a more simple way to put it?
Well,
I would just say,
you know,
every check I've ever written to a start up,
(28:09):
uh,
I don't expect to get back or maybe that's the wrong way to put it.
I don't expect to get it back so that I can use it to pay for my kids',
college education or something that's very important in my life.
Ok.
That's not the right way to think about it.
Uh,
of course,
I do not make an investment unless I can see there's a potential for a return.
(28:33):
Um So of course,
there's always that,
but here's this idea that I can do good.
I can help to be able to make a change in the world and there's a chance I could get a financial return as well as opposed to,
I could write a check to a charity and I know 100%.
I'm not getting a financial return from that.
(28:55):
Absolutely.
So I'm gonna restate what I more simply this is a way to,
to potentially amplify your impact and get chance at a financial return on top of it.
That's exactly right.
Oh,
so you've done this now,
you said 12 years.
(29:15):
Mhm.
What's the hardest lesson you've learned here in this space?
Oh,
gosh.
Ok.
So there's so many.
Um,
and actually I,
I,
I've just finished,
it's in production now,
writing a book and it was the book.
It's the book.
I wish I had 12 years.
Um,
to tell me all,
all the things I probably shouldn't have done.
(29:37):
Um First of all,
there's this thing I call it shiny halo syndrome.
It's like shiny object syndrome.
Um,
where I would be like,
oh,
that's so cool.
That's really great,
blah,
blah,
blah.
And I would like,
kind of get too enamored with what the company was doing,
like,
you know,
uh uh treating Alzheimer's is a good example.
Of course,
I was very enamored by that.
(29:58):
Um So,
you know,
that type of thing,
you know,
making sure to do the diligence,
making sure you're surrounding yourself with people who have more experience if you're new.
Um Although I will say that newer angels tend to ask amazing questions.
They're,
they're way,
way,
way,
way,
way smarter than they give themselves credit for because they're coming at it with fresh eyes.
So they're looking at something and saying,
(30:19):
well,
wait a minute,
this doesn't make any sense and then you sit there and you're like,
yeah,
you're right,
it doesn't make any sense.
Uh So,
you know,
those the types of things you have to watch out for.
Um One of the very first investments I made was in a company that happened to be winning a lot of pitch competitions,
uh different contests because their company was cool and people liked the technology and they like the founders.
(30:42):
And anyway,
um so I,
everybody,
I shouldn't say everybody,
a bunch of investors kind of jumped on the bandwagon and I was brand new.
So I'm like,
hey,
this looks like a fun bandwagon.
So here we go.
And then it turned out very quickly that the company was really not very well capitalized,
didn't have enough money to do what they wanted to do.
And the founder literally just said,
(31:03):
you know what,
I need to go get another job and support my family,
which I totally understand,
but essentially left all the investors high and dry.
So learned a good lesson there like,
hey,
uh just because something looks really great on the surface,
you gotta really look under the hood.
I'm sensing that for those new angels community is important here,
(31:25):
community is very,
very important and that's why angels are,
they're so good about forming groups and being involved in groups because none of us have,
I mean,
maybe some people are like billionaires or whatever,
but you know,
none of us have the money to be able to just keep funding companies and we have to band together so that we can pool our money together so that we can then help the companies.
And then as the companies are growing,
(31:47):
we're bringing in more and more angels or we start to syndicate with other angel groups across the country.
We,
you know,
slowly start to bring in any other institutional money that we can.
And you know,
that's really how we help companies grow.
So that's cool.
So given where angel investing is right now,
like what,
what one thing is just holding you back from getting where you wanna be in the space.
(32:13):
Is there,
is there something out there?
So I would say the number one thing is there's not enough people who know about it if we could get more people who knew about angel investing and then just little bits,
we would start to get more and more funding around the companies that are making these bigger changes.
That would be amazing because now we would start to see that the tide would literally lift all the boats because there would be enough funding out there to help these companies.
(32:42):
I've watched too many companies just go out of business simply because they ran out money only because they just didn't have the right connections to the right people who could get them the capital that they needed.
And then,
you know,
the people who were already investing,
you know,
they were kind of tapped out.
I got to a point where I was totally tapped out.
I was like,
I can't invest any more of my own money.
(33:02):
Um So how am I gonna get this message out that,
hey,
guess what?
You can participate too.
But we all need to be,
we all need to know more about it,
be more educated about it and,
and start to just talk more about it.
People don't talk about this and also the number one thing.
Well,
the single thing that drives companies into bankruptcy is is lack of liquidity.
(33:25):
And essentially what you're saying is the angel sector uh has its own liquidity problems because the more liquidity that you bring into the system,
the more risk that you can diversify across portfolios,
the more expertise you can bring in,
the more uh cushion that you can provide the company that just needs six more months to get to proof of concept.
For example,
(33:46):
like this is really what it's about.
Exactly.
Ah OK.
Awesome.
So there's a call out there for anyone listening to this about uh one way that you can move the needle on impact is to uh make a smart uh limited investment,
5 to 7% of your net worth into,
(34:07):
into an angel vehicle.
Um Let me ask you this,
if you were to give advice on the other side,
you worked with so many companies you've seen so many pitches.
I work with a lot of small,
medium sized businesses and start ups.
What piece of advice would you give that social entrepreneur that wants to solve that important problem?
(34:28):
Let's see,
there's so many things I could say.
Um I think when it comes to fundraising,
sometimes I hear entrepreneurs say,
well,
I just,
I have to get some money so that I can,
you know,
get this company going.
But the best entrepreneurs that I've seen are the ones who are really super scrappy at the beginning and they wait and they wait until it is.
(34:53):
Absolutely.
There is no other choice but they have to raise money in order to scale the business.
And those are the times that you see the entrepreneur that you really wanna back because you know,
that they have gotten their technology or whatever it is to whatever point they need to in order to actually scale the business.
(35:16):
And I've seen too many entrepreneurs who just said,
well,
yeah,
if I could just get money,
then I'll get the company off the ground.
And in a lot of cases,
some of those companies aren't even scalable.
So you have to look at,
not just,
you know,
is this a fundable company,
but is it a fundable scalable company?
And are,
does it have the team to be able to take it,
(35:37):
you know,
to the level that's needed?
So,
you know,
those are a lot of,
you know,
you're kind of like you keep kind of putting the,
uh,
the company like into a smaller and smaller,
smaller area in order to figure out like,
is this the company I really wanna fund?
And that's where I think you're,
you're gonna start to see the entrepreneurs who are the scrapper ones who've really bootstrapped.
(36:01):
They're the ones who are gonna get to the end line.
I,
I see this with small business owners all the time like they think,
oh,
I need to hire more people or to your point,
throw more money or invest but what they fail to do is they're scaling is they haven't actually set up a,
a scalable process.
(36:21):
It's,
it's a process constraint and they think,
oh,
well,
what got me to this point is what's going to continue to get me forward and they become the constraint,
they become the bottleneck.
And really what you need to do is you need to figure out like,
what is your,
how do you create a pipeline that's maybe size larger than your business so that you can get more flow and you can actually scale and not be the impediment holding you back.
(36:44):
That's right.
Awesome.
So all of you small business owners out there looking to scale very wise words.
Um Last question I asked this of all of my guests,
which is what rules have you had to break to create the impact that you wanted to see in your business?
(37:08):
Well,
that'll go back to everything we just talked about.
So,
you know,
you have this like 5 to 7% of your net worth rule.
OK?
Well,
I've broken that rule a couple times and also I've broken the rule of OK.
Well,
I'm not going to invest in and then you can kind of fill in the blank and I tried to create my own personal,
(37:28):
you know,
but at the end of the day,
I would break that rule too because again,
I'd find these entrepreneurs and I'd be like,
oh,
they're so great.
And I love what they're doing.
Um So,
you know,
that was kind of early in the earlier days that I was breaking those rules,
but then I discovered funds and I,
we didn't get to talk about that too much,
but just real quickly,
that's the best way for angels to diversify.
(37:48):
And once I started to um work on funds,
work with some different angel groups on funds and also um invest in other people's funds.
I,
I started to see like,
hey,
I could put,
take a little bit of money and now I can get that money spread over,
you know,
8,
1012 companies even 15,
like I was using the next week impact Fund as an example.
(38:11):
And that way now you're getting exposure and you're really starting to decrease your risk.
Um,
you know,
people who start an angel investing and they're writing,
you know,
thousands of dollars worth of checks,
but only into one or two or five companies that can be very dicey because if those companies don't make it,
(38:31):
then the angel is gonna be very disgruntled and,
and they're kind of gonna take their ball and go home and so that I don't ever want to see that.
So I always encourage new angels to look for funds.
And,
you know,
back in the day,
like I'm talking like,
you know,
probably 1015 years ago,
you did need to have a lot of money to invest in a venture capital fund,
you probably needed a quarter of a million dollars minimum.
(38:54):
And,
you know,
that's just not accessible.
So nowadays though,
there are a lot of angel groups and much more,
you know,
much smaller funds we call Micro V CS.
And in a lot of cases you can invest,
you know,
uh 10,000 15,000 $25,000 and it could,
that could even be spread over time.
(39:14):
Um,
you know,
you,
you could say,
well,
I'm gonna commit $25,000 and it'll get called over two years or something like that.
And,
but that $25,000 could end up being spread over multiple companies,
1015 companies and all of a sudden,
instead of making one investment for $25,000 you've just made 15.
(39:35):
And that to me is a big way to,
um,
to really help,
get more people in the game,
get more money to the entrepreneurs and also get people to see returns.
So there's a couple different ways.
I think that I,
I've heard you've got,
you've got your crowdfunding platforms that we talked about,
(39:55):
that's 50 100 small dollar amounts to get in and,
and be seen there is the ability to go to an impact fund where just like your mutual funds,
you can put your,
your dollars or whatever your investable amounts in and get them diversified over a number of portfolio companies that reduces your risk.
Uh,
and there's kind of the more traditional way of going about it,
(40:18):
right.
Which is getting in with an angel group,
finding that community coming in as a baby angel,
so to speak and learning from your peers and taking the ride if that's of interest.
That's right.
So,
got it.
You have lots to say on angels.
You've got a podcast and you've got a book coming out,
uh tell us about those two things and where people can find out more.
(40:42):
Sure,
I have a podcast.
It's called The Angel Next Door because again,
I'm just trying to make sure everybody knows it can be anybody.
It can be the person next door to you that,
uh,
who lives right next door to you,
that could be an angel investor so that you can find on any,
um,
any of the places that you listen to podcasts.
And also you could,
of course go to my website,
which is just www.marshall.wood.com and you can find the podcast there.
(41:06):
You can find my TED X,
I spoke at TED X Charlotte in October of 2022 on this very topic of doing good while doing well.
And then in,
uh,
later this year,
I'm gonna have my book come out,
which is basically because people said to me,
after they heard the TED talk,
they said,
hey,
uh,
we're inspired.
But now what do we do?
And as we just spent,
you know,
(41:27):
45 minutes talking about,
it's not that simple.
You can't just say,
hey,
go do the XYZ.
And you know,
because everybody has a different amount of money that they're willing to.
Everybody has different things.
They care about different amount of time they could possibly invest because it does,
it's not always about money either.
You can invest your time,
your expertise.
So there's lots and lots of things to do.
So I uh I wrote a book on all the things I kind of wished I had.
(41:50):
And then also in the book are some little exercises about all the things that we talked about.
And at the end you can fill out a little worksheet and you'll have a plan on what to go do that you care about.
I love that.
Ok.
So I'm gonna go sign up and get on the,
the early,
the early release,
the,
it's out list.
Right.
Right.
That's exactly right.
Yeah.
And actually if you go to my website,
(42:11):
I,
uh,
we didn't even get to cover this.
So we'll have to have another podcast episode on this.
But,
um,
you know,
women get about 3% or even less of venture capital funding and there's a lot of reasons for that.
But if you go to my website and,
uh,
sign up for the email list so that you can find out about the books,
I don't really email that often.
Um,
you can get a PDF that explains the reasons why I would love to have you back to talk about women investing,
(42:37):
uh,
fun fact for everybody here.
Uh,
when Marsha and I first met,
we started talking.
It turns out that,
um,
we have a mutual acquaintance in common from way back in the day.
Uh,
and that they've devoted their,
their careers to,
to lifting up a female entrepreneurs around the world.
And,
um,
there's so much great stuff there.
So,
(42:57):
um,
Marsha conversation for another day,
but hopefully you'll join us again because you've got so much to share and um we really appreciate everything you've shared with us today.
Oh,
thank you.
It's great being here.
Thanks for having me.
You can find Michael Messer at discerning strategies.com.
Set up a free 20 minute consultation.
(43:18):
Clarify your goals,
scale your business,
amplify your impact,
discerning strategies.com.
What does growth look like in your business in your life?
As a business owner,
executive or individual,
you can live and lead with intention to create the change you want to see in your community and the world.
Welcome to the Discerning Strategies podcast,
a place where we can see clearly and act wisely.
(00:31):
Hi,
everyone.
This is Michael Messer.
I'm your host here at the Discerning Strategies podcast.
Today,
I am joined by Marsha Dawood.
She is an angel investor with a purpose and she is on a mission to empower and educate everyone to realize their potential to invest in positive change.
Marsha was recently appointed to serve on the advisory committee for the Small Business Capital Formation Committee of the Security and Exchange Commission and she is a venture partner with mindshift Capital and a member of Golden Seeds,
(01:00):
one of the largest angel investing groups in the US.
She's the chair emeritus of the angel capital Association,
the AC A which is the Global Professional Society for angel Investors and a founding member of the AC A s growing women's capital group,
Marsha.
Thank you so much for joining us today.
Oh,
thank you for having me excited to be here.
Yeah.
(01:20):
So I'm really so angel investing people kind of maybe have a sense of what that is.
But just so we start off on the same page.
What is it?
That's such a great question.
Um In 2012,
my husband who works in financing,
came home to me and said,
(01:41):
um hey,
we were invited to an angel investing meeting and I said,
what's that?
And he's like,
well,
I'm not exactly sure.
And this is someone who works in finance.
And um he's like,
I think we need to go to the meeting and kind of figure it out.
And at the time,
and we were living in Pittsburgh,
Pennsylvania.
And I had no idea that there were entrepreneurs all over the place in every nook and cranny of the country.
(02:03):
And so we went to this meeting and I was watching some really fabulous entrepreneurs tell me all about their start up companies and the things that they building and working on.
And I was hooked.
I was fascinated,
I couldn't believe that in my own backyard,
there was so much cool stuff that was happening and we were invited then to uh join the group and potentially invest in the companies that we saw.
(02:29):
And uh so we started to do that little by little.
And as I moved around the country,
uh my husband's job took us several places including New York,
San Francisco Dallas over the last 10 years and I got to see a lot of the things that were happening in angel world all over the country.
And it's really,
really interesting the things that a lot of people think are happening just in New York and San Francisco are really happening everywhere.
(02:56):
There's amazing entrepreneurs in every part of the world.
So take us back to that,
that first meeting and you're seeing these companies,
these start ups pitching their business and you're having this wow moment.
Like what was exciting?
Like what were,
what were,
what were the things they were talking about or the change that they were envisioning?
Well,
they were really trying to solve some big problems,
(03:17):
you know,
things like health care issues and you know,
treatments and cures for various ailments,
diseases,
uh ways to make your life simpler ways to make mom's life simpler.
If you're a mother,
um you know,
ways that you can help your Children be more successful educational issues.
I mean,
some of the things that I was seeing,
I just thought,
wow,
(03:37):
I'd never even thought that that could be something that could be invented or created.
And so in at every turn,
I was always learning,
I'm always still learning so much from these entrepreneurs.
They're really amazing.
And that's like,
so it's basically like you walk into this room and it's full of a bunch of people who had an idea and basically said,
(03:57):
I'm gonna bring this vision into the world and I'm gonna have an impact.
Do you wanna come with me and help me do that?
That's exactly right.
Yeah.
So you said something very,
very subtle.
Which was,
well,
my husband was in finance and he got invited to this thing and we went,
does that kind of imply that you're not in finance?
(04:18):
I,
I was not in finance.
I was in sales marketing and operations.
I worked for an education company for about 17 years.
And while I'm very good with a spreadsheet,
I really do like numbers.
I certainly didn't work in it and uh to that level,
but it's not hard to learn.
Um And there's so the nice thing about Angels is we're very collaborative.
(04:42):
Uh Angels always work together.
Usually you would never see an angel investment company by themselves unless they were like some super billionaire maybe or something like that.
But,
you know,
we all work together so somebody might have an expertise in finance and that's uh the person we get to look at that part of the company and then maybe somebody else has an and whatever their,
(05:05):
you know,
science or technology is and that person looks at that and then,
you know,
the work gets divvied up amongst um all of the people who are interested in potentially investing in the deal.
And then when we decide if,
if it's worth the risk because everything is always risky.
Um then you,
that's like kind of how you make the decision.
(05:27):
So it's interesting because so,
so what I'm hearing you say is like,
uh,
you,
you took kind of your background and you're like,
here's what I'm bringing to this conversation and other people are kind of filling in the gaps as you're thinking about this developing nascent company that's trying to create some change out there.
(05:48):
Um,
you know,
I feel like so many people when you describe this,
they're thinking,
well,
I've watched Shark Tank.
Exactly.
And they're like,
ho like,
who,
who am I to be a shark?
Like that's gotta be the first thing that comes up.
Did you feel that way at all?
Maybe even a little bit?
Oh,
definitely.
I mean,
I thought there's no way I could participate in this.
(06:11):
I'm,
you know,
I'm not a billionaire.
I don't fly in a private plane.
You know,
there's,
that was my perception and I,
so many people I've talked to in the last 12 years have told me the same thing.
They,
they say,
well,
you know,
we like Shark Tank.
It's really fun to watch and we like the sharks and they're great.
And,
um,
but their perception is that you have to be rich and you have to be very well connected in order to be able to invest and maybe 3040 years ago that had some level of credibility because,
(06:43):
you know,
it was harder to find the entrepreneurs who were raising money.
Um,
now,
it's quite easy to find and you did have to have a significant amount of money when I say significant,
I'm talking,
you know,
maybe a couple $1000 that you would invest.
But nowadays,
um the Securities and Exchange Commission changed the rules based on the Jobs Act of 2012.
(07:05):
And in 2016,
they announced that people could invest through what's called equity crowdfunding,
which means that an entrepreneur can go on to a site.
Uh There's a couple of them out there.
The big guys are,
we fund a Republican and Start Engine.
Uh And you could go on to the one of those sites and you could raise money and people could invest for as little as $50.
(07:27):
And so that isn't something that very many people know about only because it hasn't been around that long.
I mean,
sure,
2016 till now,
it's like,
you know,
78 years.
But um but that's not a long time to be building up,
you know,
the platforms and having everybody understand it and,
and really get a sense of what's going on.
It's just been in the last two or three years that I've started to see it get more traction.
(07:52):
No,
that's really exciting.
And because when you start bringing the ability to enter into the investing space down to 50 bucks or 100 bucks,
what you're really talking about is democratizing a whole engine of commerce within the economy,
potentially Absolutely.
And what started to happen was I was talking to so many different entrepreneurs and,
(08:16):
you know,
they're all,
they all have such passion and heart to what they're doing and you almost as an investor,
you start to kind of fall in love with them and their whole idea.
And it got to a point where I personally just did not have any more money to write a check to an entrepreneur.
Um You know,
at the Angel Association,
we always say,
listen,
you know,
(08:36):
5% maybe 7% of your net worth at most is what you would ever want to invest in an asset class like this because it is a little bit risky,
risky as they say.
But um you know,
I,
I got to a point where I couldn't write any more checks and I'm looking for other people who would potentially be able to do that,
(08:57):
but they,
they really didn't know that they were able to back to what we were saying before.
They just thought it wasn't something that was accessible to them.
And now we can not only make it accessible to more people,
but we can let them kind of dip their toe in the water with very small amounts of money so that they can learn and kind of get started without putting,
(09:19):
you know,
1020 you know,
$50,000 at risk.
So help me understand like,
what is that really like?
So let's say I'm coming with $500.
Ok?
This is,
this is what I feel like and if you really think about it,
right?
It's not that different than telling,
you know,
picking a riskier mutual fund,
(09:40):
right?
Like it's like putting it in a vehicle,
it's gonna yield a return.
The tricky thing about it is I think the perception is that the due diligence,
the questions,
the knowledge that you need to be successful in the space is a higher hurdle.
So if I'm coming in with my $500 and I'm in one of these platforms,
(10:00):
gosh,
where do I start?
Yeah,
I can give you $500.
But how do I know I'm making a good decision?
Very good question.
Um In the,
at the end,
the answer is you really don't um any,
I mean,
and do you really know if you're making an investment in mutual fund?
It,
I mean,
(10:20):
any investment is risky,
a risky investment,
um a private investment,
it doesn't have the same level of reporting that is required by the sec as a public company does.
So that is where,
you know,
the more risk comes in.
In some cases,
you may find private companies who are giving more information than what you would find in public disclosures.
(10:43):
But in a lot of cases,
that's,
that's not true.
So it's really up to the investor to make the decision.
And like I always say,
you can always find a reason to say no to,
especially to a start up the start ups have a lot of challenges ahead of them.
Building a company is very hard work.
So I,
(11:03):
I tend to recommend to people look,
if it isn't something that you really care about and,
and you're not trying to just put your money to work for good,
you're just trying to put your money to work for a financial return,
then this probably isn't for you.
But if you're looking for a way that you can potentially make a financial return and you can do good,
(11:24):
then you will probably be able to find something that you care about and you would be able to invest in that as well.
Because up until recently,
the only way that at least for me that I thought I could do good in the world would be to either volunteer or donate to nonprofits to charities and charities are fantastic except that they do not get even close to the amount of funding that is out in the for profit markets.
(11:53):
So if you look at the amount of funding that goes to charity $475 billion annually here in the US,
that's a lot of money,
but that's only equivalent to about 1% of the value of our US stock market.
So if we wanna help companies who are really trying to make change in the world,
climate change,
medical devices,
(12:14):
all of these things.
Then we have to help the for profit companies and invest in them when they're small and help them to grow.
Because what angels bring way more than money is we bring expertise.
We bring a network,
we bring some elbows grease and some,
you know,
I would say at times,
we even have to be therapists,
not for real therapist,
(12:36):
but at least the,
the shoulder to cry on kind of person who the cheerleader who's just gonna get say,
ok,
yes,
we had a little hurdle and now you just gotta dust yourself off and get back up and you'll be,
you'll be fine.
I,
I love this idea of making it easy to create change with small dollars.
(12:58):
Right?
I think that's so necessary.
And what,
what I heard you say is do something you love,
do something that's important to you.
Um,
do something maybe between the lines where you think that you might be able to add something to the company that you're looking to invest in.
Correct?
(13:18):
Yes.
Any time that you're looking at a,
a start up company or,
or really any,
any type of company that you're gonna help having that passion for what they're working on is just something that's gonna fuel you to help them even more to open your rolodex to,
um,
or in this case,
(13:39):
your,
your iphone contact app.
Um,
and you know,
allow them to,
to get the help that they really need and I'll give you an example.
So at one point,
uh we uh I was within a group and,
and we could talk about funds in a minute.
It was a fund and we were looking at a company that had to do with fishing.
(13:59):
Well,
I'm not a fishing person.
So,
you know,
I,
I wasn't gonna get super excited about it,
although I did learn a lot about fishing.
I'll tell you.
But um,
but so that may be for me wasn't the thing that I was gonna go,
hey,
I gotta help,
you know,
this company.
But then,
you know,
there was another company that was working on something for women's health and I got very involved with that company and helping them and was an advisor.
(14:22):
And so,
you know,
those are the types of things you,
you find the things that really resonate with you and,
you know,
for a while you might help them for,
you know,
a couple months,
a year or two years,
whatever.
And then,
you know,
maybe there's another,
they grow out of you and they,
they're on to bigger things and at least that's what you're hoping and then you can go on and help others and you've learned from the experience,
I,
(14:42):
I learned from every single start up that I ever talked to.
So when you're on these crowdsourcing platforms,
I'm still stuck on this because it's so fascinating to me.
I wanna like,
I'm super invested in what this company is doing.
It really speaks to my personal situation,
my worldview,
my ethos,
all of it,
here's my money,
(15:03):
presumably there's a bunch of other investors out there who are doing the same thing.
Uh Going back to my days,
my Wall Street days,
you know,
governance,
right?
Like how does,
how does the angel,
how does the angel community in that democratized con context?
Speak with a voice when you've got such varying degrees of investment?
(15:24):
What does that look like?
Well,
for the most part,
everything that's what's nice about these platforms is everything is kept on the platform as far as communication and there are regular communications that are required to go out to the investors.
Uh So,
and,
and that actually is the case even prior to making an investment.
So let's say that a company says,
(15:45):
hey,
I wanna go onto a crowd funding site and I want to fundraise they can,
you know,
set up the site and all that kind of stuff.
But let's say then that you wanted to invest in that company.
And so did I,
but I happen to know the founder,
I knew somebody who knew the founder.
So I go and ask the founder a question off the site that's not allowed.
(16:06):
So if you know that if everybody's playing by the rules,
then my question,
even though I know that person,
he says,
no,
no,
no,
no,
you have to go to the site,
ask me the question and then I'll answer it so that the entire forum can see because that way everybody is in the know about all the same information,
same thing happens like after the invest are done and the companies off to the races and they're growing and doing whatever they're doing,
(16:33):
those quarterly reports have to be given to the investors so that they're able to see and everybody's able to see the same thing.
And there's a very open uh communication section of the site that I really appreciate.
And I find that that's where you're gonna get the gold of,
of information.
You can look through all the marketing material and the pitch deck and the this all that's lovely.
(16:57):
And,
you know,
figure out how the company is operating,
what's their business plan,
all those good things or,
you know,
how they're gonna basically get to scale,
but you're really gonna find those nuggets of gold as you're reading through the questions other people are asking the questions that you've asked or,
you know,
just what the way that the CEO is responsive.
Are they responding within a couple of hours or are they responding within a week or if they're responding within a week and they're in the middle of an active fundraising campaign?
(17:24):
That's kind of scary.
I might not want to continue to look at that company as an investment because it doesn't seem like the founders find it to be,
you know,
that they're,
they're putting it its importance in place.
Yeah.
So it,
it almost sounds like uh there's this mega impactful Slack channel or like DM going in a data room that is constantly insured,
(17:49):
right?
Like,
OK,
so you're in the flow,
you're in the flow of information.
Um Well,
I'm gonna have to,
this is so intriguing to me,
I'm gonna have to rethink uh my own investment strategy and see,
see,
see what,
what is out there for me.
Um I wanna go back,
I'm still stuck and I'm so actually impressed that you went to this thing and you were like,
(18:11):
this is cool.
I don't have an investing background per se.
You've got a husband that's a finance guy and you've got some marketing and ops experience and I'm just gonna do it,
help me understand the mindset that you had to get into to be a successful angel investor at whatever scale.
(18:32):
Yeah,
I,
I really think it has to come down mindset is the perfect word for it.
Um If again,
if I was thinking,
hey,
I'm gonna put some money into a company and,
you know,
a couple months it's gonna exit and I'm gonna be,
you know,
sitting on Sand Hill Road and Silicon Valley,
uh you know,
with my mint of money,
(18:52):
um that's not gonna happen.
Um So let's,
let's put that to the side.
But,
you know,
again,
I think it came down to,
I can actually make a difference.
I can help to make some kind of a change in the world and I could potentially get a return.
Because,
you know,
(19:12):
me,
up until then I thought that it just meant,
well,
if I really want to make change in the world,
I have to find the place that is making said change.
And that to me usually was a nonprofit and then I would try to support them.
But sometimes I wasn't sure like where my money was going or how it was being used or things like that.
And also we can't put the burden that kind of burden on a nonprofit.
(19:37):
They don't have the infrastructure and they don't have the funding to be able to,
to do a lot of these things.
So,
you know,
being able to see,
hey,
there is a company and I actually talk about it in my TED X um talk that is was working or is working on a uh treatment for Alzheimer's disease.
And as soon as I saw that and I thought,
(19:58):
whoa,
I could potentially be a part of that and maybe even help to stop or potentially even reverse this horrible disease.
Like,
whoa,
I,
that to me was a game changer of being able to say,
you know what,
even if I lost all my money,
which I hope doesn't happen,
(20:19):
of course,
and the company is still in business.
But even if that happened,
if they were able to make enough advances that could help they,
that somebody else could pick up that ball and move it forward down the field.
Then I feel like I really made a difference and I was paying it forward to,
you know,
(20:39):
be able to make that kind of a change and I started to see that over and over again.
And then,
you know,
curing Alzheimer's is probably like one of the biggest things that,
you know,
we could do in our current society.
But um you know,
there are little things,
too little things that could help improve,
you know,
time efficiency and everything from,
(21:00):
you know,
climate your house,
your work style,
all of those things.
And I just thought,
wow,
this is just so fascinating to me if,
if I could be that change that I want to see in the world and I want as one person could actually just move that ahead just a little bit.
Then to me that's,
that's a big deal.
(21:21):
You know,
it reminds me of a conversation we had with another guest,
uh Maya Philippson of a social capital and,
and,
and they do equality investing in,
in social impact.
And she,
she drew this great analogy.
She said it's the philanthropy to Crime Spectrum,
right?
So where you give money to,
you know,
your your return from investing in philanthropy is zero financially,
(21:43):
whereas your return in crime is like,
you know,
there's no investment but you get this incredible return but it's like all socially bad and then what impact investing really is,
is in the middle,
which is like,
is there a middle way?
Yeah,
you're not guaranteed to get a return,
that's where the risk comes in,
right?
But you could,
and so imagine getting a financial return while investing in a philanthropy type organization or impact,
(22:08):
that's what you're talking about.
Yeah.
So one of the things that is so interesting about that because the social impact is kind of front and center doing,
you know,
you,
you talk a lot about doing good while doing well and I just love that.
Um so often the way our financial system is set up is we don't value social returns that the traditional investors only look at the dollars and cents.
(22:36):
How do you think about social returns in your context as a as a multiyear successful angel investor?
So it's interesting,
the word impact has a lot of heavy uh connotations to it.
Um In a lot of cases when somebody says,
well,
that's an impact investment.
(22:57):
It tends to let people believe that that's like charity,
even though it's not,
it's not nonprofit.
We're not talking about a charitable donation,
we're talking about an actual investment becau but because it's impact investing and that has actually been described for investing in women and people of color as well,
(23:19):
which just drives me absolutely crazy.
So,
you know,
impact investing is not about investing and expecting no return,
impact investing is about doing something that you believe is good for the world and good for humanity and also expecting a financial return and being able to have both.
(23:43):
So,
uh in 2016,
a group of us worked with Alicia Rob,
um who started the next wave Impact Fund and we actually put the word impact in the name of the fund,
which I was a little worried about because again,
I thought people might not want to invest in it because they're gonna think that we just,
(24:05):
you know,
are gonna invest in things,
never get a return.
But the uh the fund has done very well.
Um And we invested in 15 companies and we have had three exits already and we still have 11 operating companies.
So we've returned the majority of the money to the investors.
(24:25):
And now the money that we get back on any of those 11 will be,
you know,
profit.
So we were trying to prove,
can we get people to realize that the word impact does not necessarily have to come from the um the idea of you're gonna lose all your money if you invest in this.
(24:47):
Do you see that shift happening now in the market?
Is the discourse changing or is there are people using different words now to try to get around that problem?
I don't think people are using different words.
I think it is slowly starting to change.
And that is because we are seeing some of these things like I just mentioned uh happen and we're starting to get some data around it and some proof.
(25:11):
And so,
for example,
with,
uh I'll just use women for,
for an example.
First round capital did a study a couple of years ago showing how much more their diverse L teams did as far as revenues and returns for investors as opposed to all male L teams.
(25:32):
And so that type of data is just continuing to come out over and over again.
Uh diverse teams.
And when I say diverse,
I mean,
every kind of diversity,
we're not just talking about gender and race,
we're talking about location education.
Um All types of things help people to make better decisions if there's more diversity in the room.
(25:53):
And so I believe that those are the types of teams that we should be putting together to help these start ups,
younger,
older,
all of those things matter and the more diversity we can get in the room,
the better the start ups will do,
which means that people will become more encouraged to invest in people that look like all different walks of life.
(26:17):
100%.
I mean,
there's so much data that's coming out as people are turning their attention.
You know,
my,
one of the,
the underlying thesis of my entire business is that consumers,
people,
society want to align behind businesses that share their values and those businesses that share their values,
outperform because they create customers that are able to engage on a deeper level,
(26:43):
they are loyal,
they are willing to pay a premium to see an impact in the world um or to support a company that is um exemplifying the values that they hold important,
whether that's diversity,
whatever that is.
So for me,
I always want to say like this is just good business,
(27:03):
like you can be totally machiavellian about it.
But if you want to outperform your peers and you wanna create a sustainable competitive advantage,
think about your people,
think about your diversity,
think about how you're engaging with the community,
it's all connected.
Yes,
absolutely.
So I think I know the answer to this now,
what I'm hearing is that there's this always this tension between the social return and the financial return and what you're,
(27:28):
what I'm hearing you say is the expected financial return needs to be positive.
And the way you value the social return that this,
that this start up is bringing is gonna be a lot more a specific to you and what,
how you want to engage with them and you can value that,
(27:48):
how you will but just make sure it's resonant,
make sure it's something that makes sense and make sure that there's a reasonable expectation for a a non negative return on your investment,
right?
Is that a fair summation or is there a more simple way to put it?
Well,
I would just say,
you know,
every check I've ever written to a start up,
(28:09):
uh,
I don't expect to get back or maybe that's the wrong way to put it.
I don't expect to get it back so that I can use it to pay for my kids',
college education or something that's very important in my life.
Ok.
That's not the right way to think about it.
Uh,
of course,
I do not make an investment unless I can see there's a potential for a return.
(28:33):
Um So of course,
there's always that,
but here's this idea that I can do good.
I can help to be able to make a change in the world and there's a chance I could get a financial return as well as opposed to,
I could write a check to a charity and I know 100%.
I'm not getting a financial return from that.
(28:55):
Absolutely.
So I'm gonna restate what I more simply this is a way to,
to potentially amplify your impact and get chance at a financial return on top of it.
That's exactly right.
Oh,
so you've done this now,
you said 12 years.
(29:15):
Mhm.
What's the hardest lesson you've learned here in this space?
Oh,
gosh.
Ok.
So there's so many.
Um,
and actually I,
I,
I've just finished,
it's in production now,
writing a book and it was the book.
It's the book.
I wish I had 12 years.
Um,
to tell me all,
all the things I probably shouldn't have done.
(29:37):
Um First of all,
there's this thing I call it shiny halo syndrome.
It's like shiny object syndrome.
Um,
where I would be like,
oh,
that's so cool.
That's really great,
blah,
blah,
blah.
And I would like,
kind of get too enamored with what the company was doing,
like,
you know,
uh uh treating Alzheimer's is a good example.
Of course,
I was very enamored by that.
(29:58):
Um So,
you know,
that type of thing,
you know,
making sure to do the diligence,
making sure you're surrounding yourself with people who have more experience if you're new.
Um Although I will say that newer angels tend to ask amazing questions.
They're,
they're way,
way,
way,
way,
way smarter than they give themselves credit for because they're coming at it with fresh eyes.
So they're looking at something and saying,
(30:19):
well,
wait a minute,
this doesn't make any sense and then you sit there and you're like,
yeah,
you're right,
it doesn't make any sense.
Uh So,
you know,
those the types of things you have to watch out for.
Um One of the very first investments I made was in a company that happened to be winning a lot of pitch competitions,
uh different contests because their company was cool and people liked the technology and they like the founders.
(30:42):
And anyway,
um so I,
everybody,
I shouldn't say everybody,
a bunch of investors kind of jumped on the bandwagon and I was brand new.
So I'm like,
hey,
this looks like a fun bandwagon.
So here we go.
And then it turned out very quickly that the company was really not very well capitalized,
didn't have enough money to do what they wanted to do.
And the founder literally just said,
(31:03):
you know what,
I need to go get another job and support my family,
which I totally understand,
but essentially left all the investors high and dry.
So learned a good lesson there like,
hey,
uh just because something looks really great on the surface,
you gotta really look under the hood.
I'm sensing that for those new angels community is important here,
(31:25):
community is very,
very important and that's why angels are,
they're so good about forming groups and being involved in groups because none of us have,
I mean,
maybe some people are like billionaires or whatever,
but you know,
none of us have the money to be able to just keep funding companies and we have to band together so that we can pool our money together so that we can then help the companies.
And then as the companies are growing,
(31:47):
we're bringing in more and more angels or we start to syndicate with other angel groups across the country.
We,
you know,
slowly start to bring in any other institutional money that we can.
And you know,
that's really how we help companies grow.
So that's cool.
So given where angel investing is right now,
like what,
what one thing is just holding you back from getting where you wanna be in the space.
(32:13):
Is there,
is there something out there?
So I would say the number one thing is there's not enough people who know about it if we could get more people who knew about angel investing and then just little bits,
we would start to get more and more funding around the companies that are making these bigger changes.
That would be amazing because now we would start to see that the tide would literally lift all the boats because there would be enough funding out there to help these companies.
(32:42):
I've watched too many companies just go out of business simply because they ran out money only because they just didn't have the right connections to the right people who could get them the capital that they needed.
And then,
you know,
the people who were already investing,
you know,
they were kind of tapped out.
I got to a point where I was totally tapped out.
I was like,
I can't invest any more of my own money.
(33:02):
Um So how am I gonna get this message out that,
hey,
guess what?
You can participate too.
But we all need to be,
we all need to know more about it,
be more educated about it and,
and start to just talk more about it.
People don't talk about this and also the number one thing.
Well,
the single thing that drives companies into bankruptcy is is lack of liquidity.
(33:25):
And essentially what you're saying is the angel sector uh has its own liquidity problems because the more liquidity that you bring into the system,
the more risk that you can diversify across portfolios,
the more expertise you can bring in,
the more uh cushion that you can provide the company that just needs six more months to get to proof of concept.
For example,
(33:46):
like this is really what it's about.
Exactly.
Ah OK.
Awesome.
So there's a call out there for anyone listening to this about uh one way that you can move the needle on impact is to uh make a smart uh limited investment,
5 to 7% of your net worth into,
(34:07):
into an angel vehicle.
Um Let me ask you this,
if you were to give advice on the other side,
you worked with so many companies you've seen so many pitches.
I work with a lot of small,
medium sized businesses and start ups.
What piece of advice would you give that social entrepreneur that wants to solve that important problem?
(34:28):
Let's see,
there's so many things I could say.
Um I think when it comes to fundraising,
sometimes I hear entrepreneurs say,
well,
I just,
I have to get some money so that I can,
you know,
get this company going.
But the best entrepreneurs that I've seen are the ones who are really super scrappy at the beginning and they wait and they wait until it is.
(34:53):
Absolutely.
There is no other choice but they have to raise money in order to scale the business.
And those are the times that you see the entrepreneur that you really wanna back because you know,
that they have gotten their technology or whatever it is to whatever point they need to in order to actually scale the business.
(35:16):
And I've seen too many entrepreneurs who just said,
well,
yeah,
if I could just get money,
then I'll get the company off the ground.
And in a lot of cases,
some of those companies aren't even scalable.
So you have to look at,
not just,
you know,
is this a fundable company,
but is it a fundable scalable company?
And are,
does it have the team to be able to take it,
(35:37):
you know,
to the level that's needed?
So,
you know,
those are a lot of,
you know,
you're kind of like you keep kind of putting the,
uh,
the company like into a smaller and smaller,
smaller area in order to figure out like,
is this the company I really wanna fund?
And that's where I think you're,
you're gonna start to see the entrepreneurs who are the scrapper ones who've really bootstrapped.
(36:01):
They're the ones who are gonna get to the end line.
I,
I see this with small business owners all the time like they think,
oh,
I need to hire more people or to your point,
throw more money or invest but what they fail to do is they're scaling is they haven't actually set up a,
a scalable process.
(36:21):
It's,
it's a process constraint and they think,
oh,
well,
what got me to this point is what's going to continue to get me forward and they become the constraint,
they become the bottleneck.
And really what you need to do is you need to figure out like,
what is your,
how do you create a pipeline that's maybe size larger than your business so that you can get more flow and you can actually scale and not be the impediment holding you back.
(36:44):
That's right.
Awesome.
So all of you small business owners out there looking to scale very wise words.
Um Last question I asked this of all of my guests,
which is what rules have you had to break to create the impact that you wanted to see in your business?
(37:08):
Well,
that'll go back to everything we just talked about.
So,
you know,
you have this like 5 to 7% of your net worth rule.
OK?
Well,
I've broken that rule a couple times and also I've broken the rule of OK.
Well,
I'm not going to invest in and then you can kind of fill in the blank and I tried to create my own personal,
(37:28):
you know,
but at the end of the day,
I would break that rule too because again,
I'd find these entrepreneurs and I'd be like,
oh,
they're so great.
And I love what they're doing.
Um So,
you know,
that was kind of early in the earlier days that I was breaking those rules,
but then I discovered funds and I,
we didn't get to talk about that too much,
but just real quickly,
that's the best way for angels to diversify.
(37:48):
And once I started to um work on funds,
work with some different angel groups on funds and also um invest in other people's funds.
I,
I started to see like,
hey,
I could put,
take a little bit of money and now I can get that money spread over,
you know,
8,
1012 companies even 15,
like I was using the next week impact Fund as an example.
(38:11):
And that way now you're getting exposure and you're really starting to decrease your risk.
Um,
you know,
people who start an angel investing and they're writing,
you know,
thousands of dollars worth of checks,
but only into one or two or five companies that can be very dicey because if those companies don't make it,
(38:31):
then the angel is gonna be very disgruntled and,
and they're kind of gonna take their ball and go home and so that I don't ever want to see that.
So I always encourage new angels to look for funds.
And,
you know,
back in the day,
like I'm talking like,
you know,
probably 1015 years ago,
you did need to have a lot of money to invest in a venture capital fund,
you probably needed a quarter of a million dollars minimum.
(38:54):
And,
you know,
that's just not accessible.
So nowadays though,
there are a lot of angel groups and much more,
you know,
much smaller funds we call Micro V CS.
And in a lot of cases you can invest,
you know,
uh 10,000 15,000 $25,000 and it could,
that could even be spread over time.
(39:14):
Um,
you know,
you,
you could say,
well,
I'm gonna commit $25,000 and it'll get called over two years or something like that.
And,
but that $25,000 could end up being spread over multiple companies,
1015 companies and all of a sudden,
instead of making one investment for $25,000 you've just made 15.
(39:35):
And that to me is a big way to,
um,
to really help,
get more people in the game,
get more money to the entrepreneurs and also get people to see returns.
So there's a couple different ways.
I think that I,
I've heard you've got,
you've got your crowdfunding platforms that we talked about,
(39:55):
that's 50 100 small dollar amounts to get in and,
and be seen there is the ability to go to an impact fund where just like your mutual funds,
you can put your,
your dollars or whatever your investable amounts in and get them diversified over a number of portfolio companies that reduces your risk.
Uh,
and there's kind of the more traditional way of going about it,
(40:18):
right.
Which is getting in with an angel group,
finding that community coming in as a baby angel,
so to speak and learning from your peers and taking the ride if that's of interest.
That's right.
So,
got it.
You have lots to say on angels.
You've got a podcast and you've got a book coming out,
uh tell us about those two things and where people can find out more.
(40:42):
Sure,
I have a podcast.
It's called The Angel Next Door because again,
I'm just trying to make sure everybody knows it can be anybody.
It can be the person next door to you that,
uh,
who lives right next door to you,
that could be an angel investor so that you can find on any,
um,
any of the places that you listen to podcasts.
And also you could,
of course go to my website,
which is just www.marshall.wood.com and you can find the podcast there.
(41:06):
You can find my TED X,
I spoke at TED X Charlotte in October of 2022 on this very topic of doing good while doing well.
And then in,
uh,
later this year,
I'm gonna have my book come out,
which is basically because people said to me,
after they heard the TED talk,
they said,
hey,
uh,
we're inspired.
But now what do we do?
And as we just spent,
you know,
(41:27):
45 minutes talking about,
it's not that simple.
You can't just say,
hey,
go do the XYZ.
And you know,
because everybody has a different amount of money that they're willing to.
Everybody has different things.
They care about different amount of time they could possibly invest because it does,
it's not always about money either.
You can invest your time,
your expertise.
So there's lots and lots of things to do.
So I uh I wrote a book on all the things I kind of wished I had.
(41:50):
And then also in the book are some little exercises about all the things that we talked about.
And at the end you can fill out a little worksheet and you'll have a plan on what to go do that you care about.
I love that.
Ok.
So I'm gonna go sign up and get on the,
the early,
the early release,
the,
it's out list.
Right.
Right.
That's exactly right.
Yeah.
And actually if you go to my website,
(42:11):
I,
uh,
we didn't even get to cover this.
So we'll have to have another podcast episode on this.
But,
um,
you know,
women get about 3% or even less of venture capital funding and there's a lot of reasons for that.
But if you go to my website and,
uh,
sign up for the email list so that you can find out about the books,
I don't really email that often.
Um,
you can get a PDF that explains the reasons why I would love to have you back to talk about women investing,
(42:37):
uh,
fun fact for everybody here.
Uh,
when Marsha and I first met,
we started talking.
It turns out that,
um,
we have a mutual acquaintance in common from way back in the day.
Uh,
and that they've devoted their,
their careers to,
to lifting up a female entrepreneurs around the world.
And,
um,
there's so much great stuff there.
So,
(42:57):
um,
Marsha conversation for another day,
but hopefully you'll join us again because you've got so much to share and um we really appreciate everything you've shared with us today.
Oh,
thank you.
It's great being here.
Thanks for having me.
You can find Michael Messer at discerning strategies.com.
Set up a free 20 minute consultation.
(43:18):
Clarify your goals,
scale your business,
amplify your impact,
discerning strategies.com.
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