7 Questions for an Angel Investor

7 Questions for an Angel Investor

You don't need wings to be an angel investor.

"I  got involved with angel investing accidentally," says Angela Lee, founder of 37 Angels, a New York City–based angel investing network for women. "That's how most people get involved—if they tell you otherwise, it's not true!"

Angel investing is simply the name for investments—usually of about $25,000 to $100,000—in early-stage start-ups made by individuals with their own money. When her good friend needed money to film a movie, Lee invested in the project, which went on to become a finalist at the Sundance Film Festival.

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"I liked doing something unique with my capital, and I loved helping early-stage entrepreneurs," Lee recalls. "I've started several companies, and it’s nice to be on the other side, able to help." After realizing her interest in angel investing, she started 37 Angels in September 2012.

We spoke with Lee about angel investing, her one-of-a-kind training program and the importance of involving more women in investing.

First of all, why 37 Angels? Why not 26?

Angela Lee: Currently, only about 13% of angel investors are women. We want to bring that number up to 50%, and 37% is that ground we need to make up.

How is 37 Angels different from other organizations?

We are the only organization I know of that’s all women, but invests in both male and female ventures. Many organizations focus on women entrepreneurs, which I obviously support, but I really want to empower the female investor while investing in male and female ventures.

We’re also very transparent, in all dimensions. For example, the angel investing process usually takes three to five months from pitch to decision, but we promise the entrepreneurs that it will be five weeks or less until they hear a decision. Because of this, we’ve been able to get great deal flow for an organization of our size. Many of us have been on the other side of this kind of experience as entrepreneurs, so we know what it takes to be truly "founder friendly," as they say. We're all about efficiency.

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What is your training program like? What do 'angels in training' learn?

We’re very much about education. We have a four-month boot camp to instruct "angels in training," and at the end they invest in their first company. It's a nice way to enter into the space, which can really be a Wild West.

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During the boot camp, each angel-in-training is paired with a mentor from our extensive network. They learn to select and filter entrepreneurs, to conduct due diligence (our version of research), how to value a company, how to create a term sheet and how to be a board member after you’ve invested. Our whole model is learn, do, learn, do. Once you've gone through the boot camp, you can become an angel—or if you've been investing on your own, you can join through a membership fee and come to our events.

We’ve been very mindful that a third of our network is women, and we want to give value beyond money.

So how do you find the companies in which you invest?

We get requests for capital all the time, but we’ve done very purposeful networking within the New York community. We partner with accelerators and incubators in New York who groom and select entrepreneurs and send them our way, and we syndicate—that's investor-speak for share—deals with pretty much every angel network in the city. The system is very collaborative. We’ve really gotten out there, and as a result, people send us great deals.

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What happens when you're interested in a company? What next?

We have a pitch forum five times a year, where we take 400 applications and filter them down to eight companies, who present a five-minute pitch to a room of about 60 investors and answer a short Q&A. Then the companies leave the room, and we figure out who among the investors has expertise in that field. Next, we set the entrepreneurs up in booths, where they have the opportunity to do a more one-on-one networking and question session. If the entrepreneurs have a website or a product, this is the investors' chance to interact with it. At the end of the session, the investors determine how, if at all, they would like to be involved with that company, and we create teams who conduct extensive research on the company to present to investors who are interested.

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What’s the significance of an organization just for women? Do you think it affects the companies you choose?

I don’t think it affects our decisions as much as it affects our process. Women are much less likely to speak up and say, "I have expertise in this field!" if the room is full of men. I teach at Columbia Business School, where women are generally about one third of my class, and they make so many fewer comments than the men. It's hard for a woman to get her voice heard, but 37 Angels is a place where their opinion matters.

Plus, we want to give value beyond money. In the past six or so months, we’ve found six people jobs—two of our angels in training have even gone into venture capital firms! I’m proud of that, because above and beyond the dollars, we’re genuinely adding value to the ecosystem. If you think the gender gap is bad for angel investing, the percentage of women in venture capital firms is like 4%. It's really cool that we're training women to take that on.

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What's your next big project?

Due to popular demand, we've taken our four-month angel investing boot camp and compressed it into a three-day weekend from July 12 to 14. Since so many people can't commit four months to the full boot camp experience because of work, this three-day boot camp will teach the angels in training how to angel invest and let them apply their learnings to real 37 Angels deal flow, as well as be introduced to our mentor network of experienced investors.

You can apply through our website. The application deadline is Friday, June 21.

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