Welcome to Inside the Mind of a NYC Angel Investor, a new series at AlleyWatch in which we speak with New York City-based Angel Investors. Up first in the hot seat is Alicia Syrett, Founder and CEO of Pantegrion Capital. She serves on the Board of Directors of New York Angels, is a regular panelist on CNBC Power Pitch, and is an instructor for Steve Blank‘s Lean Launchpad Course at Columbia University. Alicia sat down with AlleyWatch to talk about how she started in angel investing, some tips for entrepreneurs on pitching, and her thoughts on the New York ecosystem .
If you are a NYC-based Angel interested in participating in this series, please send us an email. We’d love to chat. If you are interested in sponsoring this series that showcases the leading minds in angel investing in NYC, we’d also love to chat. Send us a note.
Inside the Mind of a New York Angel Investor: Alicia Syrett
Bart Clareman, AlleyWatch: Tell us about your journey into the angel business and how you came to found Pantegrion?
Alicia Syrett: I spent my career in the financial industry, mostly at large hedge funds and private equity firms. My last role had been as the first employee and CAO of what we grew into a multi-billion dollar asset management firm. I mention that because, although it sounds like a larger undertaking, it really was a startup from day one. It was a small group of us sitting in an office, launching the company. I basically had to do anything and everything to get the company up and running.
I hadn’t been part of a startup before so it was learning everything that entrepreneurs are familiar with: what’s D&O insurance and how do we get it, how do we set up benefits plans, how do we raise money to start company, how do we set up compliance and legal documentation – all of those questions and everything in between. We launched simultaneously in New York, London, Hong Kong, and Mumbai. We had 60-plus employees in the first six months. So everything that I decided to do was really with the intent of scaling from the start and figuring out policies not just for one jurisdiction but for four global jurisdictions.
The experience was like drinking from a fire hose, and I was exhausted. But what I found was that when the firm became steady state, and I had my title and I was sitting in my office with a great view, I missed the startup days. I missed when things were crazy and I was always learning. I started thinking that it was time for a new challenge in my career.
Somewhat by happenstance, I went to a panel on angel investing. As I listened to the panelists, some of whom are relatively big names in the market here in New York, everything they said resonated with me. Specifically, what they said was, if you’re an angel investor and you follow the rules of the asset class (e.g. diversification, diligence, etc.), you can make money; if you’ve been an entrepreneur in the past you could be really helpful to founders; and, there’s always a growth industry in the startup world no matter what’s going on in the broader markets.
Then I thought – that’s it, that’s what I want to do. I would like to help people who are going on similar journeys to what I once went on. I think I’d like to focus on angel investing full time and see if I can do it well.
So I left my past company, spent about six months travelling, and when I came back I started my company, Pantegrion. The word Pantegrion is the combination of the words “passion” and “integrity,” and it’s what I believe are the two most important traits in any entrepreneur and what ultimately determines the success of any startup. Soon after founding Pantegrion, I threw myself into the startup community and joined Golden Seeds and New York Angels. Once I joined the Board of New York Angels, I decided to focus my time on that network in particular.
What one thing should someone reading this article know about you and your work at Pantegrion?
I really like staying involved with the entrepreneurs in the early stages. I’m quite comfortable being the first check in. I’m happy to lead the round and take a board seat. I feel like my job is to help companies get from the seed stage to the Series A.
Do you give any thought to leaving the angel business behind to go into VC?
I do think about that from time to time. I have a number of investors who piggy-back on my investments who have been encouraging me to launch a fund (which would make it easier for them logistically). I came from the fund world though, and that decision is not something I take lightly. I know how much time is involved in raising a fund and the fiduciary responsibility that comes along with managing other people’s money.
For the time being, I really enjoy doing a lot of different activities, whether it’s teaching or writing or going on TV or investing. I enjoy setting that balance in my life now. That may change in the future, but for right now I’m focused on maximizing my learning, and I’m having a lot of fun.
What can an entrepreneur do to make themselves interesting to you?
It’s really nice if I have the opportunity to meet them through some of my activities – whether it’s them applying to New York Angels for screening, or if I’m speaking at an event or mentoring at a women’s group and they’re in the audience and I have a chance to chat with them 1×1 briefly. I love hearing about the entrepreneurs themselves, what their background is, what their motivations are, and the traction in the business to date, assuming they’ve been at it for six months or so.
Is there a particular type of background that you look for in an entrepreneur?
What I look for is someone who’s incredibly smart, who’s just not going to give up. I look for someone whom I think is a genuinely good person that I would enjoy working with and coaching.
In my previous career I spent a number of years in a recruiting role, and in that role I must have conducted thousands of interviews – at a minimum, thousands. I think it gave me, for better or worse, a very strong sense of somebody that I click with. So usually in the first few minutes of meeting someone or seeing them pitch, I can tell if it’s someone I would enjoy working with.
In the context of getting to know them, I’m the kind of person where if I go into a coffee meeting I’ve done my homework on the company. I come in armed with a lot of questions that may not be obvious to them. A lot of it is figuring out how that interaction feels when we’re going into territory that they’re not necessarily prepared for in a pre-rehearsed pitch. That feeling of going into uncharted territory and brainstorming, it’s hard to really quantify but whether we click through those conversations determines whether there’s a fit.
You see a lot of pitches, and you’ve even written an article about what makes for a good pitch. What are the classic mistakes that entrepreneurs make when pitching their businesses?
The big mistakes that entrepreneurs make are: saying there’s no competition, or being too sales-y, promising returns to investors, and overestimating how large the market is when they’re only attacking one part of it.
I would add on top of that, when entrepreneurs present as a team and they don’t seem to get along, when they seem to have conflicts, that’s a real red flag. If someone gets defensive in the Q&A that’s also a big red flag.
I also think that if someone isn’t coming across as authentic – maybe they’re going out of their way to work up the crowd or they’re using a lot of industry slang – sometimes it doesn’t really come across as true to who they are.
Those are the big things. I generally look for someone who is really prepared, very excited, has integrity, and seems extremely knowledgeable across a range of questions.
In the article you say that entrepreneurs should include a slide about exit strategy – I hear conflicting things about that. What concern should the entrepreneur have that the investor will ding them for focusing on exit from the get go?
It’s a good question. The onus is on entrepreneurs to do their diligence on individual investors before approaching them. If they’ve done that diligence, then they would know that I, for example, do like to see that, but there are other people out there who are very specific and adamant about saying they don’t want that.
I personally like to see it because I like to know that I’m not investing in a lifestyle business. If they’re going to work with me, a critical part of what we do will be making sure we think about those options from the very first day. If I know who might acquire them, I can help them forge those relationships long before a transaction takes place.
Sometimes there are no right or wrong answers, but there is a right or wrong answer for the particular investor you’re speaking to, and that’s why the entrepreneur has to do their homework.
It seems that the mentorship aspect of investing is important to you – why?
On an individual relationship basis I care deeply about the people I invest in. I really want to see them succeed. Having been an entrepreneur myself, my feeling is, if they’re not going to give up then I’m not going to give up.
I want them to feel like they can write me about anything anytime and that I’ll be super responsive. My network is their network, and they shouldn’t hesitate to ask for introductions. I want them to feel comfortable asking me to attend meetings with them if that’s helpful or serving as a reference. I try to help with recruiting, fundraising, and getting press. I like when the relationship is fluid so that we are sending articles of interest back and forth and engaging frequently on strategic issues.
I feel that if we have an open and constructive relationship, I will feel as though I’m playing my role well by being helpful, and the company will benefit from it.
What responsibility do you feel to the broader startup ecosystem in New York?
Well, I love New York City. I’ve lived in other parts of the world. I was born and raised in the South, went to school in Philly and London, lived in LA and San Francisco, but I just love New York with all of my heart. To the extent that I have time and I can give it back to the community here and help entrepreneurs on their journey broadly become savvier about fundraising or launching their company, it’s something I feel I have a vested interest in.
Talk about the state of women in tech / investing in New York City specifically – how are we doing against the mean?
I’m encouraged; I think there’s a lot of positive momentum. There are a number of amazing people and groups, whether it’s Springboard, Golden Seeds, Pipeline Angels, SheWorx, or Plum Alley that are helping mentor and support women entrepreneurs. There’s also a lot of people out there raising awareness of discrepancies and biases, so the momentum is there and we’re going in the right direction – but there’s still a lot of work to be done.
How do you assess the state of New York City entrepreneurship today vs. when you got started?
My perspective on the startup world from five or so years ago was that I was kind of surprised at what a small world it was. Meaning that, it sounds like it would be this enormous network of people in New York and thousands and thousands of people. The truth is I felt like I was able to meet a lot of amazing people in a short amount of time. I think that it was actually much more navigable than I imagined it would be at the start.
It continues to grow and there are so many things to be excited about, whether it’s these new initiatives like the Brooklyn Navy Yard or the development out on Roosevelt Island, or seeing a lot of these big tech companies investing more and moving more people. On a daily basis I feel like I see people coming in from all over the world to work specifically in tech here; I didn’t see that as much four or five years ago.
I feel like we’re in a nice “in between” place in that it still does feel like a very manageable system, where I know a lot of people who are influencing policy or really making an impact, but at the same time I feel there’s a tremendous amount of growth going forward and all of these amazing initiatives by the city government, by educational institutions, and by corporations that really portend for more growth in the future.
Will New York ever gain parity with Silicon Valley? Is that even a goal?
Quite honestly, I could care less. I have decided personally that I love New York City. This is where I want to be. I’ve lived in other parts of the country and I like New York City the best. So I’m going to spend my time investing here, and whether it’s larger or smaller than other places doesn’t really matter to me because I’ve made my decision to stick with it.
But to the extent that New York City feels competitive against any other area, then great – if that spurs it on to more success and growth, so be it.
You’re an Instructor with Steve Blank in his Lean LaunchPad course at Columbia University. What do students learn there?
We challenge students to “get out of the building” to interview customers and get feedback. It’s pretty intense but it’s also so fulfilling to see how much they learn.
It’s such a crucial lesson for them, because instead of wasting a lot of time and money trying to perfect an idea before seeing whether there’s commercial viability, it forces them to have those conversations with potential customers way before they ever spend a significant amount of time or money on it, and they get indoctrinated into that discipline.
By the end of the course they feel much more empowered. For people who were thinking about entrepreneurship, I think they have a clearer vision whether they’re for it or against it based upon the experience of that course.
Steve is such a luminary in the entrepreneurship space, what is it like to work with him?
Steve is a wealth of knowledge. He knows all the players. He has been a serial entrepreneur; he’s IPO’d multiple companies; and, he has a really great presence with the students. He’s very energetic.
I learn from him every year. He speaks very frankly about his successes and failures. He’s at a position in life where he’s been so tremendously successful that he’s able to be open about all of those things, and it’s really refreshing. It’s a great honor to be part of his team.
What do students learn in the program?
The biggest thing the students learn is to get the customer feedback firsthand, and to not spend hours and hours trying to perfect a minimum viable product. They also learn to have a sense for whether something is commercially viable right from the start by asking the question: “Would someone pay for this?” It sounds trite, but it’s all too often that an entrepreneur will spend so much time perfecting things only to have it debut in the market and have no one be receptive.
They also learn the importance of sales and marketing, which is one of the big areas that a lot of entrepreneurs overlook. It’s all about communication: how do you communicate with a potential customer, what works and what doesn’t? I think all too often an entrepreneur thinks if it’s a great product then it will go viral or people will just come to them. The course forces them to be really thoughtful about their value proposition and, more importantly, how they communicate it to their potential customers.
It’s still (sort of) the New Year period – what trends are you watching closely in 2017?
I personally don’t operate like that. That’s not to say it’s good or bad, I have colleagues who are really excited about frontier tech or AR or VR. For me though, I usually become excited about a particular industry after I meet the entrepreneur. If it sounds like they’re working on something really interesting, I’ll probably be drawn to it even more if I haven’t invested in that space in the past, because then there’s more for me to learn.
I’m happy to back somebody whom I think is a really great entrepreneur. I think – if you bet on really great people, really smart people – they’ll figure it out. I’m less interested in a particular industry, and besides, I invest at such an early stage that it’s highly likely they’ll pivot the business anyway, so I’m just going to trust as the first check in or one of the first checks in that I’m betting on someone really awesome, and they will adapt. A lot of the help I offer entrepreneurs at the very beginning stages in fundraising, introductions, or business advice can be relevant across various industries.
The financial returns in the angel business are such a lagging indicator – how do you assess your performance as an investor?
I assess it through the small victories on a daily basis. What I mean by that is, if I feel that I can move the needle in a company’s business at the early stage, then that to me is a victory. Hopefully, a number of small victories will transfer into a large victory over time and that will also be associated with a financial return.
I think it’s the introduction that you make to someone who becomes an advisory board member. It’s the introduction you make to someone who invests more money into the business. It’s the introduction you make to someone who then becomes a strategic business partner. It’s the media exposure you can help them get or the free ticket you can give them to a conference or the recommendation to get them into an accelerator.
All of those small victories make me incredibly happy. To the extent that I can see that affect the business in a positive way, all of those things are the data points that I strive for. Every day I’m constantly thinking: how can I help my companies, who do I know in my network that I can potentially introduce them to, what information can I share, how can I help them move the needle?
Do you ever feel tempted to take an operational role in one of your companies?
No, not at all. Because I’ve been there and I know I would have never wanted someone to micromanage any aspect of my operations. On principle alone I do not want to do that to other people.
And to be frank, I really like my lifestyle now. I don’t envy all of the crazy nights and that feeling of coming home from work on a Friday and being utterly exhausted at 8pm or having 6am and 6pm conference calls with Hong Kong – I don’t miss that.
One of my big principles is if you make the decision on operations in a business then you are also responsible for execution. I don’t want to be responsible for execution, so I’m not responsible for making the decisions. I can share information and my views, but I have to trust the founders to make the decisions and then execute.
So no, I don’t miss it one bit. I admire the companies and founders that I work with – we all have our own journeys to go on. I went on a pretty substantial one myself, and I respect the journey that they are driven to go on.
I like the variety of working with a lot of different companies and entrepreneurs now. I learn a lot from all of them, with the diversity of their networks and approaches and backgrounds. I would much rather that than focus on one company or be in an operating role again.