Twelve Takeaways from a Year Immersed in Angels

By Lucy Howell, ACA Director of Partnerships 

After a 20-year career in financial services, I joined the Angel Capital Association as director of partnerships exactly one year ago this month. Over the past year, I have met hundreds of angels, entrepreneurs, community development leaders, bankers, sponsors and policy makers interested in this critical niche. Angels are the biggest funders of high-growth new businesses, which created nearly all net new jobs in last 25 years. Yet, I am surprised by how little is known about this unique angel investing world. I thought it would be fun to recap my top 12 takeaways from the year to shed some light on this amazing group of people and the impacts angels have had, not only on me, but on their local ecosystems.  

  1. Angel investing welcomes women. Women are present and leaders at angel gatherings from coast to coast. After years of being the only woman in the room at work meetings, it was a pleasure to see women angels in significant numbers, and especially around the executive table, where decisions get made. I remember participating in my very first Summit planning meeting. I felt a ping of joy when one female voice spoke up and reminded everybody that speaker diversity at the upcoming Summit is key, and that if anybody needed any help finding women or minorities to speak on a panel, then to reach out and connect with her. She would help make it happen. That voice belonged to Trish Costello, founder of Portfolia. Never in my 20 plus year career had I witnessed that type of diversity support from someone other than me. It was at the point that I felt like I was “home.” In fact, The American Angel, a new study by ACA, shows that women make up 30 percent of those who have been investing for two years or less, and 22 percent of all angels. Listen to Trish Costello talk about women angels at the 2017 Women’s Investor Forum. 

  1. Investing in women makes good cents. Irene Ryabaya, with the Houston Angel Network, makes irrefutable points about returns to be made investing in women-led startups.

  1. Angel investing is a bit like philanthropy, but perhaps call it involuntary philanthropy. Of course, angels ― like all business investors ― are looking for returns on their investments. But the returns aren’t just financial. Angels Bob Goff and Kevin Learned put it well at the Western Regional Forum when they coined the phrase “involuntary philanthropy.” Most angels said they enjoyed angel investing because they like to roll up their sleeves and really coach entrepreneurs, since most of them had been in a similar spot and learned some valuable lessons along the way. In fact, sharing these failures and lessons with those who will listen is a big part of the value they like to deliver. They know that most of the time, success will be an out-of-reach reality. Once in a while, big wins make it all worthwhile financially. Angels gain from coaching, mentoring and giving back.

  1. It takes a village to build an ecosystem for entrepreneurs. I saw this in action at the Northwest Regional Meeting in Portland, OR, back in March. Angels, the private sector, other investors, universities and economic development professionals all participated as a cohesive community to show off for the visiting regional angels, to brag about Portland, and to continue to develop Portland as a successful hub of for entrepreneurs and startups. Angela Jackson, ACA Board Member, and founder of Portland Seed Fund, connected the dots there and helped make that happen.  

  1. Cannabis is legitimate opportunity. ACA hosted a panel discussion on growing investment opportunities with legalized marijuana. Raj Joshi, Canadian Security Exchange, talked about how this new commodity is traded on the public markets in Canada. As legalization grows in the coming years, still doused with both uncertainty and opportunities, I could see how ACA could become a very important resource for curious investors looking to possibly enter this newly forming industry.

  1. Angels have powerful voices and messages. You don’t need flashy slides to make a point. The angel investor world is filled with powerhouses who are sharing compelling stories at ACA events. Morton Grosser’s presentation on the history of Silicon Valley and the role of angels was amazing. He captivated the entire audience for his full 40-minute speech and didn’t use one single slide. His delivery of his first-hand experience through Silicon Valley and his unbelievable life accomplishments did the trick, leading to a five-minute standing ovation.  Christopher Mirabile, ACA Chair Emeritus, expands on the powerful content and other speakers from the 2017 Summit in this interview here.

  1. Persistence pays off, and power can come in pink. Cindy Whitehead, women’s health advocate and entrepreneur, delivered an incredible keynote covering how she raised $100 million from angels for Addyi, the medication coined the “female Viagra.” FDA approval was arduous. A day after approval, Whitehead sold Sprout Pharmaceuticals, maker of Addyi, for $1 billion! The product and returns have had some twists and turns since then, and it now looks like Whitehead will have another go at it with Sprout 2.0.

  1. Racial diversity, not so much. While women are making inroads as angel investors, there still appears to be less racial diversity among both angel investors and entrepreneurs. It’s changing, but slowly. My recommendation for minority entrepreneurs seeking capital…understand that is still a tough road. Be aware and focused and seek out those angels that have make it part of their mission to foster diversity.  

  1. Angels ― and deals ― are everywhere, not just in Silicon Valley, Boston and New York. The American Angel found that most angel investors (63 percent) don’t live in these traditional hubs of venture capital. I saw this in action at the Midwest Regional Meeting, where on the spot; angels came together to fund five exceptional startup companies that presented there. Hear from Dave Russick, Sherri Turner, Steve Baggott, and Sue Baggott.

  1. Women events are not just for women. Case in point, ACA held our second Women Investors Forum, hosted by Foley Hoag, in Boston in October. Sacha Levy, Board Member of the New York Angels, attended, along with a handful of other men, who were great to see. When I asked Sacha why he attended, he succinctly said, “I show up to learn about the things I can’t read about.” This type of engagement helps facilitate more syndication with all groups interested in impacting gender disparity issues with regards to funding and capital gaps. Check out his interview here

  1. Despite the incredible content and speakers, it’s still all about relationships. Network building is key and working with other angels opens up opportunities for syndication to support startups. This was the most common answer to my 40+ interviews that I conducted throughout the various events, when asked, “What brings you out to our ACA event?” Tony Shipley, Jim Connor, and Jorge Varela confirm these thoughts here, from the 2017 Leadership Workshop in Houston. 

  1. Angel investment ― it’s essential and still overlooked. I’ve been surprised that some policy makers and key community stakeholders I’ve met don’t fully understand the importance of angel investors to startups and job creation. Once family and friends are tapped out, 90 percent of startup funding comes from angel investors, not VC firms, and it’s already happening in all 50 states. Yes, it’s true that deep-pocketed VC firms, like the ones led by Steve Case, also leave their marks in the non-top tier innovation hubs. That’s what he’s highlighting in the “Rise the Rest” tour, but much is being done in those communities already. It’s my mission to make this “angel” role and their prolific impacts better understood and to help grow and recruit more angel investors to ACA. David Verrill and Claire England talk about the trends and many opportunities for angel investors at the 2017 Leadership Workshop.

In summary, I learned that the biggest reason why angels choose to work in the space is because it fun to coach and mentor hungry entrepreneurs. It’s their mission to help make them successful so that they can turn around and feel the same sense of giveback and become angel investors themselves. I’ve now changed my life mission. Sure, I’m an eager and hungry entrepreneur, but here is my new end game. I want to be an angel investor when I grow up. I am looking forward to the riding on some wings to get there.