Angels in the Pipeline Getting Up Close and Personal


Future Angel Investors

Susan Preston was natural and confident in her delivery as she welcomed the small gathering of 30 to 40 women for a full day of events on angel investing. She wore red-the color of ambition, fire, determination and passion. It’s appropriate: she’s a Lead Instructor for the Angel Resource Institute, a general partner for a clean energy fund and has occupied senior management positions for most of her career.

This is the Pipeline Fellowship Conference, the beginning of the six-month boot camp for the women angel investors. It’s an intimate setting where phrases like J Curve (it follows profitability of a company) and the difference between how much yield a single company should have as opposed to the whole portfolio were explained.

It’s a conference that’s sorely needed. As revealed in Ms. Preston’s introductory speech, out of the top 100 investors, only two are women.

Organized by Pipeline Fellowship founder Natalia Oberti Noguera, this years’ conference is the fifth of its kind in New York. “Entrepreneurs are everywhere.Capital isn’t” said Ms.ObertiNoguerain her opening remarks.

Presentation – Angel Investing in Action

Ms. Preston led this presentation, discussing the very mechanics of angel investing: where an angel investor is looking for a 20x return on her investment, a lot of companies are not appropriate for angel investing.

“We need to be able to calculate in five years….the money I put in is now worth 15 or 20 times what I put in” said Ms. Preston. “I’m going to have a lot of failures.”

In order to mitigate this, an angel should seek 3x (300) on her money invested in a 7-8 year period of time in a blended portfolio. You don’t build a portfolio nor expect revenue in just one year.

“You don’t make money on the first products out the door. You make profit on volume.This is a passion but I do want to make money too.”

Startup needs to have a sizable market, growth trajectory. When investing in industries that are ‘capital light,’ an angel investor can have more impact.

Future entrepreneurs would be wise to not put anything confidential or proprietary in pitches or executive summaries. It’s too difficult and time consuming for an angel to sign an NDA for every company. More times than not, the issue at hand is more emotional than legal for the entrepreneurs.

“What does your emotional makeup need to be?” one future angel investor asked.

Ms Preston responded in two words: controlled chaos. “If you can’t handle risk, you have to make sure this is something you want to do.”

Panel #1 Angel Investing in Action 

Denmark West spent nine years as an angel investor, and has invested in 39 companies

Christina Bechhold has invested $2 million dollars so far, had one exit last year

Peggy Kelly owns Spectrum, a Herman Miller company

“I’ve done individual investing – they make for good stories, not so much for good returns” said Mr. West.

Finding companies to invest in becomes less of an issue as “investing into companies puts you into the referral business.” No one will come to you in beginning of your career; you’ll be looking for them.

Presentation Due Diligence

Talk about exit from Day One. IPO or acquisition? Only 10% of companies go public. Ask the entrepreneur the industries they’ll be bought by, why would they be interesting to those companies.

When it comes to assessing an opportunity, team and market are more important than technology.

“If you don’t have a coachable entrepreneur….it’s going to be a disaster,” Ms. Preston advised.

Have associates and interns to help out, or do it as a team. An angel cn never do enough reference calls, and not to just the people the entrepreneur provides. The ideal approach is to speak with is a professor who’s a researcher, and they’re often delighted to talk to you. You don’t have to pay experts. In all of her career, she’s done so only once.

Make sure you sit down and go over the basics of the term sheets before you deep dive in diligence, including getting information rights-the ability to interact with the company on financial terms.

Use your designated skeptics to asses opportunities, but don’t take 2-3 months to do due diligence. You’ll have to be prompt or you’ll miss the good deals, as they go very quickly.

Gust is a great place to start doing research on your entrepreneur.

“Any company that tells you they’ll have 50% of the market in five years is blowing smoke up your know what.”

3% in five years? That’s massive

Most companies don’t know how to go to market properly. There are not necessarily marketing experts on the team – the company will need to bring these people on as advisors.

Entrepreneurs don’t need to be paid high market rates, but they have to be paid something so that they’re not worried about keeping the heat on and the phone on.

Alley Fact: Syndication is more than one person or investment fund, investing in the same company

Make every entrepreneur write a business plan. It’s a good document to read to see how they’vedefine their company.

Panel #2 Due Diligence

Both Ms. Preston and ObertiNoguera made speaking in front of an audience look easy. Something I would realize when moderating the panel on Due Diligence. Panelists included SumeetShahof Brand Foundry Ventures, Kanyi Maqubela of Collaborative Fund and Vanessa Alexandra Pestritto from the New York Angels.

If you need to pay an expert to understand the product or the market, then maybe you shouldn’t be investing in that industry.

You should be in love with the problem, not with the solution.

Structuring the Deal

Geri Stengel President Ventureneer (moderator)

Erica Duignan Minnihan Managing Director,Dreamit Ventures

Jennifer Fang Associate Goodwin Proctor

Sarah Kunst Partner. Fortis Ventures

Talk to a startup lawyer. While a term sheet is not legally binding, it’s a good faith document as to what both parties are agreeing on. What you see on the term sheet should translate on when you do sign- in good faith. Good luck finding deals if you work on the term sheet, and then do something different, advised one investor.

Don’t rely on TechCrunch to get an idea on valuations -it sets bad expectations. What commonly makes a valuation newsworthy is it’s unusually high valuation.


The women split up into six groups. Three acted as investors and the others the entrepreneur. The task: to negotiate what they believed the company’s valuation should be. The company they were to come to a valuation was based on an actual one.

“At the end of the valuation, everyone should be mildly unhappy,” advised Ms. Preston.

It was apparent that both groups were extremely unhappy, as one of the groups split up and renegotiated the valuation.

One sponsor, Peggy Kelly, was right in the midst of an investor group. “I have a company, and I’m investing in companies” said Ms. Kelly of Spectrum. No stranger to social issues, having previously worked on drives for various organizations, she’s planning on sponsoring the event again.

ALLEY FACT “The perfect approach for the entrepreneur is to set it up as a deal” said Preston.

The women learned much in just that one exercise. In one group, they realized how the start really is key in setting the stage for the rest of negotiations. The investors began with their concerns and the company immediately went on the defensive. Post Investment Relationship

After an angel has invested, that’s far from being the end of it. To give the women an idea of how to navigate the post investment relationship, four panelists gave their feedback:

Murat Aktihanoglu, founder of Entrepreneur’s Roundtable Accelerator

Jennifer Fang, Associate at Goodwin Proctor

Anu Duggal, Founder of Female Founders Fund

Ellie Wheeler, Principal at Greycroft Partners

It would be wise to have a board as soon as you have the company.

A question angel investors should ask themselves is, “Can I really be helpful to this company?” according to Aktihanoglu. It wouldn’t be the last time the sentiment was repeated. Angels spoke of reaching out to the companies in which they had invested for several reasons, especially after not having heard from them for a long time.

How often should your company keep their investors updated? According to Ms. Duggall, quarterly, while Murat said monthly. Either way, Jennifer Fang warned against micro-managing.

There are no legal or formal information rights for angel investors, which is why it’s so important that these points be negotiated in the term sheets.

Sponsors absorbed the presentations and panels alongside the future investors. One such woman was Hannah Jang of Merrill Lynch Global Wealth Management. “The clients I want to work with are women,” said Ms. Jang. “At Merrill Lynch, we really are looking into the women’s space and millennials.”

There are three components to the six-week boot camp- education, practical, and mentoring. The first conference gives the women a firm education in what it means to be an angel investor.

Women in general don’t have the friends and family necessary for the friends and family round, according to Ms. ObertiNoguera. For those women, that’s what Pipeline is for. She has grown Pipeline from six to 1200 women in two years.The angels have invested $500,000 since the program’s inception. For this year’s investors, funding will commence with the Pitch Summit in April, for which applications are still being accepted, and where the entrepreneurs will do their best to procure interest in their startup.

To end the conference Ms. Oberti Noguera handed out chocolates from a company who were funded by Pipeline alums.

“The term sheet is just the beginning.”

And sometimes, nothing’s quite as sweet as the finished product.

About the author: Fikriyyah George

Fikriyyah George is a freelance writer with a BA in Journalism from SUNY New Paltz. She covers events and startups for local blogs. She’s especially enamored with the convergence of new technology spurring innovation in well-established industries.

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