00:00
If you are interested in Angel investing, knowing that these are just high risk, high return investments, make sure if you’re investing directly that you’re not just like following every shiny new toy that you really do believe in the entrepreneur and whatever they’re doing.

00:26
Hey there powderkeg bands, Nick here from the pattern tag team. And this is episode 93 of powderkeg igniting startups, the show for entrepreneurs, leaders and innovators building remarkable tech companies in areas outside of Silicon Valley. Today, we’re revisiting an old episode where Matt spoke with Alicia Surrett, founder and CEO of pentagram and capital, a seed and early stage angel investment firm in New York. However, you might know her better from her appearances on CNBC is Power Pitch, or MSNBC is your business. Now, this interviews from all the way back in April 2017. But we’re bringing this one back around because her advice for when, why and how to raise capital is as useful and relevant today as it was then, in fact, with capital leaving the coasts and looking to the middle of the country, it’s even more important to be able to stand out among the other entrepreneurs that are competing for that capital. In this episode, you’ll learn how Surrett began her career in private equity after working for years in financial analysis, recruiting and early stage startup investing. Plus, she’ll talk about how she advises her portfolio companies and helps them connect with the right people. So whether you’re looking to raise capital or invest it, this conversation paints a full picture of the angel investment and private equity space, we thought we’d bring this episode out of the archives to revisit a key need to continue the growth of tech between the coasts. So let’s get to the interview.

01:44
Alicia, thank you for being here.

01:46
Thanks for having me. I’m psyched.

01:47
Absolutely. I want to talk to you about so much. Because one, we’ve done this interview before. And this is Episode. This is episode number two, or interview number two for us. And I’ve actually gotten a lot more questions for you since meeting you. Okay. You know, we had that dinner. And one of the things I noticed about you at that dinner, it was a networking dinner right? At this company. Hooray. We’ve talked to David, in a previous episode of powderkeg. Yeah, who we love. David, he’s awesome. I noticed that you are really good at talking to people. Oh, thanks. As someone who used to be a chief analytics officer, that is a little bit different kind of skill set to have. Why do you think you got good at doing that?

02:34
So first of all, thank you for the compliment. I haven’t heard that before, I will take a crack at why I might be good at that. I think and we might have talked a little bit about this before. But you probably know, I spent, you know, five plus years in recruiting early on in my career. And just the nature of that role interviewing 1000s of people, I think it gives you a sense very quickly of like how to connect with someone in the first five minutes or so. And so for better or for worse, I feel like I have a very quick read on people. But I also as a side note, and maybe this is more like the emotional part of it is that I really do look for people at tables who aren’t part of the conversation and try to pull them in. Because I know how that feels when I don’t know people at a table or if it’s like an awkward neck networking event. And so I think maybe what you saw from the other end of the table was me kind of reaching out to my right or to my left, when I noticed someone wasn’t really being included. And, you know, trying to make sure that they felt comfortable because we all have a better conversation when that happens. So maybe that’s what you saw. How

03:33
do you do that? Like us? You see the room? You see someone is sitting in the corner? What how do you approach them?

03:40
Um, so usually I’m in a conversation with someone else. And I’ll just turn to another person and be like, Oh, by the way, did you want to join this? Or did you have something to say on this front? And I’ll just point like, ask them a question. And then usually, we all start talking about that topic. But yeah, it’s I think it’s like a radar looking out for people that just may seem like little disenfranchised and wanting to make them feel comfortable. It’s one of those things where it’s like, makes you feel good, too. Right.

04:04
So I noticed that you do pull people off the bench and bring people into the conversation. I mean, think about being able to talk to people, is that an entrepreneurial skill that you look for in the kinds of companies or entrepreneurs that you invest in?

04:17
Yeah, I mean, I think it depends, right? If you have someone who is highly technical founder, then maybe that doesn’t matter as much. But in general, I think no matter what your background is, having sales skills is a huge thing. Just being able to communicate clearly what your company does. And being able to market your product, whether it’s to a potential consumer, or whether it’s to a distribution partner, like that is key. And I feel like no matter what your background is just the ability to be succinct and to be very, you know, concise about what you say and clearly communicate things is huge, no matter what I mean. And also with respect to recruiting, like if you’re going to grow a firm and if you’re going to make it scalable, you’ve got to be able to communicate your vision and your dream and have other people buy into it too. So it’s huge.

05:00
That’s fascinating. I don’t think the last time we talked, I didn’t dive in enough. Okay, recruiting background. That’s a really interesting skill set to have. Yeah, obviously. So it’s so important for any founder that’s building a team. And it doesn’t have to be a founder, right? It can be a leader of the marketing department, or of the whole operation side of the business. What were some of the things that you saw are most effective in the companies that you help recruit recruit for?

05:26
Right? So you mean in terms of like, recruiting tactics? Or? Yeah,

05:31
I’m curious, because I think that those same sort of like recruiting tactics and skills, likely are some of the things that have helped you. But I wonder if some of those things have helped in recruiting the best entrepreneurs to invest in? Right, the best follow on capital or other investors to join? Yeah, so I’m trying to kind of hone in on some of those, I think I know

05:51
where you’re going with this, I’ll give you my best guess at the answer. So I think what I took from a lot of those roles, and what I learned that I kind of applied later in life now is, first, when you see so many different resumes, I think you have a knack for just by the sheer nature of how much you see spotting inconsistencies, right. And so I don’t mean that just in terms of typos, I mean, like what people do to kind of fit around real results, right. So instead of saying like an absolute dollar number, using like, Oh, our percentage growth was 600%, or whatever, when you know, the growth is really based on small numbers. And sometimes I would see people over the course of a number of years, right, and I would see like inconsistencies in their resume, maybe they said their SATs score was like x in one year. And then another year, it was like inflated. And so So I think it brought about this, like kind of skeptical nature, looking for any of those inconsistencies. And then in the actual interviews, I would always come super prepared to the interviews. And it’s probably similar to what I do with entrepreneurs now and that I have my own checklist, I’m looking for all the obvious information to check the boxes. But in the interview, I really am trying to get into the unknown territory, right like to get to the core of who they are to start talking about things that they’re not really prepared to answer. When I was in a recruiting role, I used to work for a large hedge fund, and I recruited for them globally. And I would give brain teasers in the recruiting sessions. And it’s a good example of one of those, oh, I can’t even go into that now. But they were they were, you know, significantly math oriented. And which was, which was my background. And and I think that like, yeah, you want someone to get the brain teaser, right, of course. And it’s very telling how quickly they get it right. Or, you know, when you hear people talk through the way they’re solved the problems numerous times. But I think what’s even more telling is when someone doesn’t get it, right, how they react, whether they become defensive, whether they push back whether they think you have the wrong answer, even though of course you don’t you’ve been giving the same brain teaser, like a million times, right. And so I often felt that again, once you get into that territory with someone that they’re not prepared for, or something that’s unexpected, that they haven’t, like, rehearse, like, that’s the most telling part of it, you know, and so so that would be like the worst if you gave someone a question like that, and they became defensive. Or other times I could tell if someone had heard the brain teaser in the past, and you can read it when they like, are pretending they’re really solving it. You’re like, I know you’re fibbing, right. So I just, I felt like that was that was fascinating I was I loved the whole psychological aspect of interacting with people. And just seeing like, what motivated them to make different career jumps throughout the course of, you know, their, their, their work history and getting references how telling that would be when you talk to someone, like, it’s not a scale of like, oh, this person was horrible, or this person was great. Nobody really talks. I mean, it’s rare. You hear someone say someone’s horrible, it’s usually like this person’s, okay, which translates into horrible, or I would hire this person again, which is translates into this person’s great. So like, all of those kind of like, unspoken cues were fascinating to me. And I think that you see similar things, obviously, in the entrepreneurial world, too. When someone’s pitching or the way that occur, an investor makes an introduction to you how much they rave about the entrepreneur, like, again, they’re not going to say something negative, but you kind of adjust that scale for like, well, what what are they really telling me? Like? What’s that cue?

09:17
That’s interesting. It’s interesting that you read so much into a lot of these qualitative and psychological. Oh, I love it. And you’re you clearly also very quantity driven. Yeah, I mean, given your background in private equity and your role as a chief analytics officer, what what were some of the things that you learned there that you feel like you have translated to your role today as an angel investor?

09:39
Well, I think the the big thing was probably taking away the entrepreneurial experience, right. So so even though I had worked in the hedge fund and private equity industry, and I think we talked about this a little bit is that my last role had been the first employee right and growing this company into a multibillion dollar asset management firm and we went through the whole process of like raising I need to start the firm raising money for the funds figuring out how to launch the company, not only in New York, but in London and Mumbai in Hong Kong and having 60 employees in the first six months. And so like that feeling of walking into something that was like, unlike any corporate environment I’d ever seen, and figuring out just by myself, I mean, not, you know, there was no book really to teach you about all of the things that are specific for your company, right. So figuring out the retirement plans, and figuring out how to hire people in different areas or figuring out DNO insurance and all of that, like, that’s probably the biggest thing that I take away from all of those years in the industry. I mean, maybe I’m discounting a bit the bird’s eye view I had of raising money, and the relationships with endowments, and foundations, and LPs, and all of that, because that is priceless knowledge. But I think that more so than anything else, just having been an entrepreneur and having that credibility, when I give advice to another entrepreneur or to kind of like be their sounding board. When I’m like, I hear you, it’s really tough. And I’ve been there myself, and like, I remember being that exhausted. And, and I think that’s, that’s probably the biggest thing, right? It’s like it, just having gone through that makes it so much easier to make that personal connection with someone when I invest in them, because it’s not just about the money. And I think I can give better advice if I’ve been in their shoes at one point.

11:22
So talk to me a little bit about that decision to start it because I know a lot of entrepreneurs or maybe wouldn’t be entrepreneurs struggle with that isn’t the right time to jump ship or to go full time. Right, start this thing? How did you know, when you went and decided the employee? Number one might be the, you know, in essence, co founder of this private equity firm? What? What was it that kind of pushed you over the edge? What drew you to it?

11:49
Well, it was interesting, because I looked back over my career up until that point, and I felt like all of the moves had been like some kind of move towards entrepreneurialism, right? Whether it was like starting a function within a firm and like building that out and crafting that. It was all kind of leading up to that, although that was unbeknownst to me at the time. But what really triggered it was, I was at a large firm, and this firm had been around for a long time. And a lot of the processes that they had from the start did not scale well with the firm, right? And so when I remember when I came in, I was like, gosh, you know, like a lot of these things, you would never make these decisions today. But they’re just they were kind of stuck with them. And they didn’t really want to change. And I’m hesitant, because I don’t want to describe that into, you know, negative way. I mean, the truth was, is I just was like, Wow, if I could do it all over. If I were starting a firm today of this nature, like I would think about all of these issues. And so I think it was really driven by the sense of the pain points of what happens when you don’t have the processes right from the start. And I was talking to one of my friends from the financial world who has his own multibillion dollar hedge fund. And I remember saying to him, like, you know, the way you did it was was right, like now I he was a little bit older than me. And I was like, I totally get why you wanted to launch your own company and like build your culture from the start and do all of these processes right the first time. And he was the one who was actually instrumental in making the introduction for me to the firm that I joined to help start. Because I was I remember having that epiphany and being like, I would love to do what you did. And he was like, I have an introduction for you. And then things, you know, all came together. But it really was through that experience of like being in an established firm that had outgrown so many processes and seeing the pain points. If you’re not kind of thoughtful in advance. And just thinking like, yeah, I want that challenge of thinking about all of these policies and compliance manuals, and whatever. Even when, you know, we’re creating something that’s like a best practice, even if we only have three people in the office, and that whatever we create will be relevant when we have 70 people in the office and thinking through that I found to be like, really intellectually challenging, you know, like just thinking through all the cost structures, I mean, even something as simple as like a travel agency, so many companies may work with, like a mom and pop one when they’re small. But at some point, if you scale your company, you have to think about savings and contracts and frequent flyer and all this other stuff. And so like, how do you do that? At the start, so that you know you don’t scale your company and then all of a sudden everybody in the group is like, why don’t want to stop working with Sheila from the two person shop. So that’s what I was talking about is like that, that winds up fleecing the company later. Yeah. But if you think about all of that stuff in advance, you know, who you’re ordering supplies from, and all of these things like you can save hundreds of 1000s of dollars. So that was the challenge is like how can I do this right from the start?

14:48
Do you think that entrepreneurial experience is something that all angel investors need to have?

14:55
No, not necessarily. You know, because I think what’s so interesting I’ve given this so much thought To at the seed stage, I don’t think that you necessarily need a depth in a particular area. Right? It can be helpful, but like, I know great seed stage investors that spent their whole career in like the food industry, I met seed stage investors that like were entrepreneurs like me, I, you know, maybe they came from a different like vertical or something, or maybe they’re like an expert in marketing. And I feel like at the early stage of a company, any one of those areas, if they’re relevant to that startup can be a huge reason for their success, you know, and so I feel like having a little bit of all of those things in your advisory board or on your cap table, as investors can be helpful to you. And they help in ways that maybe I can’t write like I could invest in a food company, for example, and I may never be able to talk to my entrepreneur about the CO Packer she should use or like, you know, or how to exit to General Mills, but I can talk to her about like getting her media coverage, and I can talk to her about her financials, and I can introduce her to tons of other entrepreneurs and tons of investors, and I can help her with, you know, the fundraising process. So maybe I’m a little bit more of the breadth, but she definitely needs someone with a depth whether they’ve been an entrepreneur or not. So there’s, you know, and I just feel like when you’re so young, as a company to, you need help in so many ways, there’s so many areas like Barbie, and for me to be like, No, you have to have this background to help. Like, I just feel like entrepreneurs are like, Yeah, I’ll take all of it, like all the help all the time, send it all my way.

16:29
That’s good perspective to have. And I think that’s interesting to note, because a lot of times founders do have that concern of oh, this person doesn’t have experience make history. I can’t, I can’t take money from them. Oh, I shouldn’t take money from them. Because I, you know, I see both perspectives. Right, right, is the perspective that, well, this person doesn’t can’t open doors in my industry, right, they could open a lot of other doors in other industries that could be beneficial, beneficial. So yeah, it’s interesting perspective to have.

17:00
Yeah, I mean, I see that like, one area I don’t really get involved in investing is anything having to do with clinical trials really, for that reason, because I just don’t feel like I can be helpful to them. But I think that at the end of the day, if you have someone who truly cares about the success of the entrepreneur, and they really want to help, they will find ways to help. And especially if someone’s in a role where they’re an investor, I mean, you assume that they’re at that point in their career, because they had their own level of success, they became influential in some way they have that accredited investor status. And so odds are that if you looked through their LinkedIn, assuming they’re on it, it’s not going to be just people in their industry, like they probably went to school with some people that could be helpful. And you know, the network is like, so much broader than that. And if they want to be helpful that they can be, you know, and I think a lot of times, it’s, it’s not being able to solve the problem yourself, but at least knowing someone that you can put in touch with the entrepreneur and be like, I can’t help you in this area. But here’s who can, like, here’s who you should talk to, and like, hopefully, someone is willing to do that, then, you know, that’s enough.

18:03
Well, and I’ve witnessed since us first meeting that you’re great at doing that. And it’s probably one of your superpowers. Another comment one of the many superpowers? Well, I know, you know, so I can genuinely say that. You know, I think it’s one of the things I admire, here comes another compliment. One of the things I admire most about you is that you have been able to kind of jump into new industries into new roles. Yeah. Whether that was fearlessly or not, you know, I probably was some amount of fear jumping from private equity, to Angel investing. What is your number one piece of advice for someone that wants to get into angel investing, you know, right, has some capital or has some people that have capital, and they want to pull it together to an Angel Network network?

18:48
So I would say a few things. The first thing I’d say is there’s no substitute for experience, and you should just jump right in, right? Like, you’re gonna make mistakes. I remember when I first started out, I read the book winning angels. And I think one of the things they say in that book is like, you will lose money on your first investment, right? And it’s just kind of like, oh, no, I won’t. And of course, I did. Right, like, so I think I think that you deserve to be excited. Right? I mean, so I think that that’s the first thing is like, just jump right in, because there’s no substitute for experience, and you might as well just start learning that you know, this sooner rather than later. The second thing I would say is like, you know, definitely do your homework, which sounds very trite, but it’s just the obvious thing, right? Like, even in the last five years that I’ve been doing this, I’ve really tried to like process what I’ve learned and then put it out there in bite sized bits of learning, right? So you and I both do the in contributor thing and and you know, some of the articles I put on there is like what can you ask of an advisory board or like how do you prepare for board meetings and so these are things I think before you become an angel investor, if you know these resources are out there, you know, you might as well read winning angels and intro to Angel financing by Susan Preston and check out some of the Inc articles and you know, I did a webinar with plum alley not too long ago where I just kind of went walked through in the course of an hour, like, here’s my own path to becoming an angel investor, here’s how I decided, You know what I would invest in directly and what I would invest in fund wise. And if you do or don’t have this kind of time, here’s how you can think about where you fall on the spectrum. And the reason I mentioned that is because the resources are out there to help people think through. Okay, what matters to me? Like, what are the questions I should be asking myself? What location do I invest in? What are my check sizes? What are my valuation preferences, you know, how active am I going to be? And so I think there’s like a little bit of jumping in and learning just because there’s no better way to do it. And also just making use of all the information that’s out there, because it’s become a well known asset class now, and there are some really good books out there to kind of prep you for these conversations. So So yeah, and then the final thing I would say on that front is, if you are interested in Angel investing, knowing that these are just high risk, high return investments, make sure if you’re investing directly, that you’re not just like following every shiny new toy that you really do believe in the entrepreneur, and whatever they’re doing. Because then in a worst case scenario, if the investment doesn’t work out, you, I think, will have less of a probability of having regrets, right. So it’s kind of like, if you’re just like following a herd or or, you know, you see your buddy investing in something and you’re like, oh, that sounds like a hot investment. And can you carve out a piece and when something goes wrong, it’s kind of like, you feel that it’s like, shame on me, because I didn’t do my diligence, right. But if you really, like, want to see someone be successful, and you care about what they’re doing, and like, you’re really eager to be involved and be helpful, because it feels good. And like maybe, or maybe it’s a social enterprise, and it’s something you care about, like, that’s easier to walk away, you know, if it doesn’t work out, then you know what, well, you could just say, well, I put 25k, to a company that tried to solve solve Alzheimer’s, like we didn’t work out, but like, I put 25k, to a company that tried to, you know, solve the water crisis or whatever, like those are, or maybe I believed in this person. And they, you know, I think there’ll be successful later in life. And this is going to help them get there. And like, I felt that it was something that was beneficial to me to be able to mentor them, right, like having that connection, I think, lessens the blow if you lose. But that’s my preference. Right? That’s,

22:20
that’s good. I think it’s helpful for potential angels are angels to hear that I write helpful for entrepreneurs to hear that and to, and realize that having investors that really are bought in and really do get their business is better than just having a check,

22:38
right? Well, at the same time, I usually say there’s like a barbell structure, I feel like you don’t want every person on the cap table helpful all the time. Because it is it’s, you know, a lot of work to be in these relationships. And so if you have like, if you’re very selective about a small group of people that have that relationship, that connection with you, great. And if they, through their networks, bring in other trusted investors that aren’t going to harass you, and you know, give that extra money to fill out your round. Well, that’s great, too. But I think the trouble is, sometimes when an entrepreneur only wants, you know, checks and no advice, or maybe they’re not screening, and they’re getting advice. It’s not useful, like when there’s that mismatch of not having a little of both, or not finding the right fit with the person on either side of that barbell. That’s when I think things fall apart.

23:27
That’s good perspective, that too, I think we’re starting to tap into some of what I want to tap into, okay, in this next segment of the interview, and this is something new we’re trying, where I’ve actually asked our community, and then I don’t know how much you know about this, but been around for seven years, over 1000 entrepreneurs have pitched on our stage, awesome. Collectively, they’ve raised over half a billion dollars in capital for their companies outside of Silicon Valley is amazing. We really have just as many if not more founders who haven’t raised capital yet, and are considering it, or are already in that fundraising mode. Sure. So I’ve got a bunch of questions from then I’m gonna rapid fire some questions, too. Sounds good. All right. So here’s what I got. How do you really research your investors before asking them for money?

24:15
So I was alluding to a little bit of that earlier, I think it’s two things. And one in one part of it is the classic checklist that I was mentioning where it’s like, you have to figure out whether the investor invest in your geographic area. Some people are pretty particular about that you have to figure out what they say their level of involvement is you have to figure out what their check size is and whether the valuation range they want is like, consistent with what you have. And you have to think about what their background is and how that fits with what you’re potentially looking for. Like all those things are like that. You could put that in a spreadsheet and just kind of go through and check the boxes. The second part of it is really the qualitative part. And that’s like the tough part. I would say again, like kind of similar advice that I was giving to potential Angel Lester’s is like make use of all the information out there. Because for the people who are very active investors, they’ve done podcasts, they’ve written articles, they’ve invested in tons of companies where you can talk to those companies, the portfolio companies and figure out what it’s like to have worked with them. You can go on CrunchBase, you can go on AngelList, you can see the types of things they invest in, whether it’s a conflict of interest, because maybe they have a portfolio company that’s to like you. So I think that like, there’s the classic list of questions. But then there’s also just getting a feel for the person and trying to figure out like, what’s their approach? Let me listen to them talk about it. Let me like read their writings directly. Let me follow them on social media, let me see like, all of the information out there that’s available through all these entrepreneurial resources, whether it’s, you know, like I said, a CrunchBase, or a gust or AngelList, or anything like that, or maybe like, just figure out a time to go listen to them speak on a panel and ask a question, and just see the way that they react with you, right. So I think there’s all these things that you can do to get a sense for, like, what they’re really like in person, or how they, how they interact with people on a social level before you ever think about approaching them. And I can say that I do that, from the perspective of CO investing with people like I love listening to other podcasts of of investors, because I want to have a sense of like, Is this someone that’s driven by ego? Do they seem to be aligned with the kind of values that motivate me to like, what I want to share deals with them? And so I say this from the perspective of someone who’s doing the exact same thing, but just for a different purpose, a very similar and related purpose, but the information is out there. It’s just doing the homework. You mentioned asking a question that wasn’t rapid fire, I just realized that was a really long,

26:45
no, your answers do not have to be long, I should have stipulated that ahead of time. My questions are rapid fire, I found our responses can be as thorough as you want. Okay. All right. I’m on it. I do. Actually, that answer prompts another question, which is, how do you approach an angel investor? What’s the right way? I imagine you’ve been approached the wrong way. Yeah. As most angel investors I’ve shared.

27:09
Yeah. I mean, I think this also the angel space is just so varied, that like, you’ll have some somebody say, oh, you know, I answer all my cold emails. Like I don’t, I just don’t and I say that to be very upfront about it. So especially if someone emails me and they don’t get a response. I don’t take it personally. I just, you know, sometimes you just get too many. Your sec.

27:27
You get a lot of cold emails.

27:31
Yeah. I mean, there’s just you, I think most angels who even have like a remote, you know, a little bit of a public appearance or presence, probably get a lot of cold emails. So I think that it’s not the best way, although you never know, because sometimes maybe that is a connection. Maybe you write something in an email that that catches someone’s eye. I mean, I do read them. I just don’t always respond.

27:54
What’s, uh, I don’t want to dig

27:56
in there. Yeah, what were they gonna call it? Can you think of a cold email that you got that you decided to reply to?

28:02
Yeah, it was usually if it was somebody that I knew where they were mentioning something that was like, personal to me, or like a direct connection? And then did

28:10
some research? Yeah. Yeah. Dropped in name or dropped resource? Yeah. Or if or if it was

28:15
something that was like, directly related to something I cared about where it was like, so spot on. And maybe they didn’t even realize that, that I was like, Yeah, this is something I want to learn more about. But that’s so rare. It’s like one out of 100 emails may may catch my eye. It’s a good stat to keep in mind. Yeah, entrepreneurs are cool with email. Yeah. And that’s probably better than like other people out there. I mean, I just don’t think a lot of people respond to it. So I think, you know, everybody says this, but it’s true, is it to the extent you can get a warm introduction, not only will it open the door, but when the door is open, the interaction you have quality wise is so much better. You know, I have portfolio companies that I introduced to my colleagues who are like other angels or VCs. And I mean, the truth is, is that like, they may not want to necessarily meet with my portfolio company, because they probably have all their own things that keep them busy. But we are trading favors really, because they know that when they asked me then to meet with one of their portfolio companies, I’m going to do it right. And because I have respect for them, I’m going to make sure that when I do meet with their portfolio company, I’m coming in prepared, I’m thinking of ways that I can be helpful so that in a worst case scenario, their entrepreneur feels like they got, you know, some good information out of the meeting. And I think that like that’s what a warm intro brings you is again, it’s not just getting your foot in the door, it’s having someone actually care about making a good impression in the meeting because they are trading favors and they are doing something for for somebody that they respect and they care about. So I think that’s probably and then if it’s not that, then it’s a matter of, I think trying to meet them in person at an event because that is a way that I have met people if I if I go speak at an event like a company I invested in as I was walking off the stage Ah, the entrepreneur approached me. And I just immediately got a vibe that I like, I didn’t know I would ever invest in the space, but I just was like, I got this vibe where I was like, she’s super smart, and she’s amazing. And she was she was like, Fulbright Scholar. And then, you know, it was like Cambridge and Yale, you know, like, passionate about developmental work in Africa, and then launched a food company, like, I could just, there’s like this moment when I first met her. And it wasn’t, I didn’t invest until I’d met her for coffee a couple of times, but it was that initial face to face meeting, sitting down for coffee later and then wanting to be helpful. And then all of a sudden, after a couple of meetings, I’m like, why am I not investing? And then I was like, asking her to make room for me and her oversubscribed round series. And then I went on to lead co lead her second round. I mean, it’s so it just goes to show there’s like this level of serendipity and happenstance that you can never predict. But it’s so much easier to read someone face to face, it’s so much easier to like gauge that connection very quickly. It’s so much easier to ask for something face to face and not be turned down. You know, like, if you pinpoint someone face to face and be like, Can we meet for coffee? It’s really, it’s harder to say no, right?

31:09
I’ve been in this scenario. So we got us a lot of events, and I get a lot of coffee, as I’m sure you do as well, I think that’s really good to point out that, you know, serendipity is great. You got to put yourself in opportunities where serendipity can happen. That’s right, too. Right? That’s right. You gotta you got to show

31:27
up. Yeah. And do all the research behind it that you’re like showing up to the right place,

31:33
and showing up in the right way? Yeah, yeah, that’s great. When should founders raise money? How far in advance? Like, what’s the right timing? I have an idea, should I go raise money?

31:44
Right? So I would say two things on this front? And it really, and I’m sure I’m preaching to the choir, you probably already know the answer. But my answer to this is, I think it does depend on the competitive environment. And by that, specifically, what I mean is, you have to, you have to think about whether it’s even feasible in the environment you’re in to be successful raising money, because if it’s, if it’s not even feasible, don’t even waste your time. And so specifically, if you know that other people around, you’re raising money based on initial revenues, or based on a million visits, or based on, you know, X number of strategic partnerships, if you don’t have those things, it’s, it’s going to be an uphill slog, right. So I would be really thoughtful about what you see around you who’s raising money and what they raised it based on in terms of traction and the size of their team, and, you know, their opportunity. So that’s just being savvy about the market environment. The second thing I would say on that front is I think it’s so much harder today rate to base to raise money based on an idea unless you’re a serial entrepreneur. So unless you can say, I’ve already raised some money in the past, I gave my investors this return, this is my new endeavor, and I’m taking in new money just because I’m looking for some kind of strategic edge, then you can do it, then you can raise money on an idea. But that’s a rare situation. And for everybody else, the onus now in the marketplace is that there is an expectation that you would have at least maxed out your credit cards, at least put, you know, at a very minimum, put 5010 20k into the company and gotten some result from that spend that shows that the business is viable, and that there’s traction there, whether it was a landing page that you set up that you started to gauge demand, whether you did some kind of initial Kickstarter campaign, if you’re a consumer company, whether you like lined up, you know, a first paying client, or maybe someone agreed to be a client once you hit certain milestones like, there is that that expectation that you have put that skin in the game, and that you’ve kind of moved past the idea stage? That, you know, you’ve figured things out? And then finally, I would say, I think the other onus, and I would put this on entrepreneurs is make sure that when you’re raising money, you’re raising it, because you’ve already figured out what works in the company, like from a business model perspective, and so that what you’re really doing is bringing in the money to supercharge the growth, right? So it’s not like, oh, I want to take the money. And I want to keep on trying like this customer and that and I don’t, you know, we’re gonna test out these channels, and I’m not really sure what. So I think it’s much easier when you can go and say, Look, you know, we tried these different things. This is the channel we’re focused on. We know we spend X in marketing, it results in this amount of revenues, or we know if we hire this salesperson, it results in this level of additional revenues. Like it’s so much easier to raise money. And I’m not saying you have to have all these things. But if you want to be more successful, having that traction, having a sense of what’s going on broadly in the marketplace, knowing that you’re bringing in money to fuel growth, not to kind of tinker with the basic business model. All of those things, I think lead to a more successful fundraise. and a more efficient fundraise for sure.

35:02
Absolutely. What if you can kind of show the this plus question mark equals this. And for those that can’t see me right now, which is everybody, because I’m gesturing, you know, point, point A being lower on the graph, point C being higher on the graph, and the point B is sort of like ad money. Yeah, the more you can kind of show that direct line of correlation,

35:26
exactly the better. And if you can get to break even, which, again, not a necessity, but if you can do that, so that you’ve totally de risked the investment to a large extent for investors, you’ll be in such a better situation, negotiation wise, valuation wise. And again, you’re using the money to supercharge growth. I mean, these are all nice to have, like, knowing this going in, if all of these goals are even within reach, like I would shoot for them before having the conversations.

35:52
That’s really good. Good advice. Last Rapid Fire question.

35:56
Rapid Fire question with long answer. Yeah, it’s perfect. It’s perfect.

35:59
Ooh, I really liked your answer on this on Power Pitch. I want to talk to you about that in a minute. But when should you raise debt instead of equity?

36:11
So I think there’s a couple things to think about with debt versus equity on the debt front. I mean, debt is obviously great. Because it can be a lower cost of capital than equity. And if you have revenues that you’re generating in your business, and you have some sense that you’re able to pay off the debt, then you should probably go that route, right? Because you’re not taking in somebody else on the cap table, your cost of capital is much lower, you know, you can pay it back. And it’s, you know, it’s a pretty clear cut transaction. If you do not have those things, if you don’t have incoming revenue flows are any certainty that you could potentially pay off debt than equity is going to be a better bet, because you know, you need you need the money. Unfortunately, it’s higher risk, higher reward, but you need it from a longer term, you know, bet perspective. So I think, and were you referring mainly to convertible debt? Or we’re just straight debt? Okay,

37:09
because that was probably Yeah. Straight debt.

37:13
Oh, straight. Yeah. So that was my answer was Yeah. On the straight up your answer? Okay. Perfect. Yeah,

37:18
perfect. In other words, it’s not converted to equity. But what’s right, when should you raise debt financing, as opposed to go and kind of angel or equity route?

37:26
Yeah, I mean, I see it more often with consumer companies when it’s some tangible product. And maybe they have already demonstrated there’s demand for it. And so the debt really serves the purpose of maybe paying for the inventory, because they already know that they need to pay for the inventory up front, but that they will sell it and there’ll be able to pay back the debt. Right, that kind of like, security around the situation of borrowing money and being able to pay it back is is what you ideally want to say? Absolutely.

37:53
The

37:55
that’s a great answer, by the way. And I think that, I think if more people thought about it that way, a lot more people might go that are a lot more entrepreneurs might go that depth route for some of the rounds.

38:07
I mean, if you can get it, that’s the tough thing is like so many banks just don’t want to lend to startups. And you have to have X number of years in business or like more stringent financials. But if you can get it and you fit that criteria, go for it, because again, the cost of capital is that much lower.

38:24
Good response. I want to shift gears a little bit. Okay, and dive into the part of your career. That is actually how I initially found out about you, you were invested in one of the companies we covered. That’s right, we ended up following each other, I ended up watching a ton of your stuff on cnbc.com. Because I don’t have a TV right. But I’ve enjoyed following your expertise. On that segment.

38:48
Can you talk to me a little bit about how you ended up getting involved with a media

38:53
network and getting that sort of platform? Because I imagine a lot of investors, a lot of entrepreneurs would love to figure out how to tap into a platform

39:02
like that. Okay, so I will not only tell you my story, which is maybe less interesting than the second part. The second part I will tell you is any recommendations I have for people getting media, which might be more of what they’re after, but the sure why short story. The short story is I had no media background whatsoever. And you know, we you and I have talked before my background was like I was a math girl growing up and I spent my career in finance. So it wasn’t like I was ever aspiring to be on TV or had any media training or anything like that. The way it happened was there was a producer at CNBC, who was working on a pilot show and it was right when crowdfunding was first coming out and they had this idea where they were going to like crowd fund live on TV and the show at the time was called Cash crowd. And he and I were put in touch with each other because I had invested through circle up the crowdfunding platform and he was like, Oh, can I talk to angels on your platform that could help walk me through some information or you know, give me some background on this Bass. So that’s how it started. It was really just a connection and a desire to be helpful to him. And we just got along we’ve since become really good friends. But during the course of the course of the conversations, at one point, he turned to me and was like, why don’t we put you on? And I remember feeling like almost guilty that he said that because I was like to be clear, I wasn’t angling for that, like I wasn’t, you know, he’s like, no, no, I know, I know you weren’t. But I actually think this might work out. And so it wound up being like the first time ever I was on TV was a 15 minute live segment in the middle of the day on CNBC, which is unheard of. It’s just crazy. And the funny thing was, and it was like, awesome, too. I was on the same panel with Eric Ryan, one of the founders of method, and Lynn Tilton, the billionaire and I’m like, Oh, my God, how did I even do this? I don’t know. But I’m just gonna say yes, and figure out, you know, all the details later. But, um, what happened was, although that pilot didn’t work out, the producer was like, oh, we should loop you into power pitch. And so you know, fast forward, that was maybe a couple of years ago, now, I’d been on Power Pitch, like 60 or 70 times and it was like, weekly for a while. And the funny thing was, is the first time I did the pilot for cash crowd, I kid you not when I was, I left the studio, and they you know, give you your car home or whatever. I checked my email, and I had an email from MSNBC. And they were like, how did we know about you? I’m like, What’s like, me? Like, I just because I’ve never been on, you know, because I don’t exist in your world. That’s why you don’t know about me. So it was just crazy. And they were like, Can you film this Thursday? And I was like, Yeah, and so like, immediately, just having a producer and another show see a clip from their sister station. He was like, Yeah, I want to reach out. And we’re always looking for, like new people to put on the show. So you just never know, you know, it’s like all of that, like serendipity we were talking about, sometimes I’ll be on a panel somewhere, and I’ll talk about a portfolio company and someone in the crowd will come up to me and be like, I would like to meet them for these strategic reasons, you just don’t know. But um, but anyway, that was kind of how that happened. And then what I tell people on the media front is, this is what I’ve since learned, because again, I never came from that world. Is

42:12
this all the dirty secrets? Well,

42:14
I mean, I don’t know if it’s a dirty secret. But I do think what people don’t know is that, and this is my own opinion, is that a lot of times when you look at these big networks internally, producers don’t necessarily communicate with each other on what they’re working on. So for example, the producer that I work with at CNBC and just think the world of like, not only did he do Power Pitch, but he also does Secret Lives of the super rich and no, so he has like his dedicated things. And those are the things that he runs. And so if a entrepreneur wanted to be on Fast Money on CNBC, for example, like that producer is not really going to be helpful. That’s not his beat. Do you know what I mean? Like, he doesn’t know what they’re working on. They’re all like, very separate Media Productions and entities. And so, again, like much of, you know, the entrepreneur life, the onus is on the entrepreneur to do really do the diligence on who they’re exactly contacting. So what I’m saying specifically is, it’s not just a matter of saying, like, I want to be on CNBC, or I want to be on ABC, it’s knowing exactly what program you want to be on. And then figuring out through like your own research, seeing the articles that they put out, like, who do you contact for press inquiries, who’s listed as the producer for that specific show and LinkedIn, like, you have to figure out who to connect it to, because otherwise, and it’s like, contacting journalists, as you know, it’s like, you can’t just say like, oh, I want to be covered by TechCrunch. Like, you have to know who covers that be like, who’s familiar with, like, my specific industry, or my area, or whatever, you know, I’m trying to accomplish. And so that’s what I would say is like, just really be detailed and systematic about saying like, exactly, which shows you want to be on, trying to figure out who’s the producer behind that show, or like who’s the press inquiry person listed. And then when you do write them, because it’s visual. And I’m, again, this is very obvious, but like a lot of these shows do prefer consumer oriented companies, because it’s like, they want their audience to see things that they can like immediately purchase or like a product that they can touch and feel or something ecommerce, so you’ve got to like, know, what they put on the show, and then tee up your own pitch to be consistent with that, right? So if it’s a matter of like, saying you want to be on an elevator pitch, it’s like sending the pictures of your product and asking where you can send the samples to, like that makes all the difference in the world. And it always like blows my mind how many times entrepreneurs won’t send me if they have the ability to send a product that’s like not that expensive, like those products should be sent to like every producer on your target list, you know, because it just it does. It makes a big difference in terms of like the branding and the experience and then like touching and feeling your product and having that kind of Action, you’re much more likely to be invited in

45:02
any expertise on how to actually be on media to be on camera. On Air.

45:08
Yeah, so the things I would say on that front, and I’ve learned this the hard way is that, I think I mean, preparation, obviously, again, is key. And I always do tons and tons of hours of research, even if it’s just for this, you know, five minutes segment. But what you have to do is just bullet point all of your answers. So, you know, there’s the whole saying that the reason they do telephone numbers in sets of three and four is because that’s how we process we process things in in like, groups of three to five. And you know, you want to make sure that you’re communicating on TV in that same way, and that you have your pros. And so let’s say you’re saying whether you’re in or out on a company, it’s like, well, you know, the pros are X, Y, and Z. And even though the cons, you know, a, b, and c distracted, me I’m gonna go in. So it’s always a matter of saying, like, what are the bullet points? And then how can I get that off in a concise way? Because the problem is, is if you don’t, they just edit you out. And then it’s never how you intended to represent yourself. So you have to force yourself to be concise, or they’ll make you concise in a way that’s not pleasing to you. So I think that like, it’s, that’s what I always try to do is like, after doing hours and hours of research, I summarize on like, one, post it note on like, what are the three questions I have? And if I’m going to say, whether I’m in or out, what are the three bullet points for what are the three bullet points against and if I can just like have this in the back of my mind, do it. And the other thing too, is you can’t memorize stuff that you’ve just got to think about the bullet points, but then kind of ad lib as you walk through them. Yeah. Because otherwise, like, you just you get too caught up when you’re on at least for me, I when I’m on set, I think there’s like a level of nervousness, it’s like, it’s just a whole nother experience of fear than in your personal life probably

46:56
similar to pitching to a group of angel investors or a group of venture capitalists that are looking about investing or not investing? Yes, don’t answer just off the cuff and everything you know about the answer, because you probably know, all that you probably know a lot more than they actually want to know. And your response. The other

47:15
thing I was gonna say You just reminded me of another really good point. And I’ve said this to some of my entrepreneurs that have been on TV is i and this may not be I’ve maybe I shouldn’t say this, but it’s true. I think you have to say in advance what all your sales points are for the company. So like, regardless of whatever questions you’re asked on TV, figure out a way to answer those questions with your sales points. Right. So like, if you want to get across with your company that like this is your traction, and these are the customers you’re looking for. And this is your discount code, whatever they ask, you just figure out a way to work it in. And but I think again, you need that practice in advance to say like, are the preparation to say like, these are the sales points I need to get across? Or these are the big things like knowing what your you want to accomplish? If it’s like you’re trying to use that segment to reach investors, like throw that into your answer somehow. Or if you’re trying to like communicate the discount code for sales or whatever it is, like, knowing what your goals are in advance and knowing what your main talking points are, and then working those into the answers however you can shamelessly like that’s I mean, because at the end of the day, these appearances, it’s all marketing. It’s all marketing.

48:26
It’s good way to think about it. Yeah. And if it’s not, it’s probably not worth doing. Yes, that’s right. That’s right. Well, so I kind of want to close on a quote. Okay, and get your perspective on it. All right. It’s by Simone, we mutually admire. You have said that you you admire as the co founder of Spanx, Sara Blakely. Yeah, I love her. And she said, Don’t be intimidated by what you don’t know. That can be your greatest strength and ensure that you do things differently from everyone else. Yes. That actually really reminded me a view in your career, because you did something that you didn’t know you were going to do from the start, you know, being on television being this angel investor, helping entrepreneurs grow and scale. When you think about that quote from Sara Blakely. I love that quote, by the way, I hadn’t heard it before, but that’s a good one. I love it. It’s great. How have you seen that to be true with with some of the entrepreneurs you’ve worked with? Or even some of the investors that you’ve worked with?

49:22
Yeah, so So I love that question. I think it’s totally true. And I will. So I’ll say this a couple, there’s a couple of thoughts that come to mind. I have an entrepreneur I’m thinking of, and I remember at one point, he said to me, like, Oh, I’m gonna contact this VC. And I remember thinking like, oh, my gosh, you haven’t done any homework. This guy’s like, not even relevant to you, right? But I remember thinking like, that’s kind of what I like about this entrepreneur in a way is that for every 50 times he may contact someone, like he’ll learn the hard way that they’re not relevant, but there’s going to be one person out of 50 it’s a numbers game. That’s probably going to be like, You know what? I’m not for you, but like, I love your spunk and let’s sit down and let’s talk. So I think I think that there is that’s kind of what you’re getting at worse, which she was getting at, I think with the quote is that sometimes it’s better not to know. Because if you have that confidence instilled in you, or you’re just you’re on your mission, and you don’t know things aren’t possible, like you figure out ways to make them possible, or just by playing the numbers game by like putting yourself out there by contacting tons of people like good things inevitably come from it, right, like maybe one small percentage of the time, but still, it’s more than you would have had had you not done anything at all. So I think that that’s part of it. So read the quote, again, I

50:36
want to hear one more time. Yes. The the quote, again, is don’t be intimidated by what you don’t know. Yeah, that can be your greatest strength and ensure that you do things differently from everyone else.

50:45
Yeah. I mean, the other. The other thing that reminded me of is, you remember that, while I’m older than you, but there was the speech, the graduation speech that it circulated around, I remember what it was like when I was in college, and it’s the Baz Luhrmann speech where it’s like always wear sunscreen. And one of the things they say he says in it is, or was sorry, he made it into a song, but it was a woman who wrote the speech. And one of the things in the speeches do something everyday that scares you. And that that’s why the quote resonates with me, too, is like I, I feel like in everything that I do, I’m always scared. But I’m always better off pushing through the fear, and just learning through that process. And so it’s always uncomfortable, but it’s all I’ve just always feel better having taken the chance or having put in, put myself out there. And I feel like it’s unfortunate that people don’t, I mean, maybe I don’t know, some people do talk about that fear. But I feel like we all have that to a large extent, you know, writing your first article for ink or going on TV or whatever, making your first investment or negotiating something, whatever. Like, it’s always scary. I think, I think things are for the first time. But you know, usually it’s like a quick learning curve, and you’re on your way,

51:54
is there anything you do mentally to push through that fear and get yourself to do it anyway?

52:00
I just tried to prepare as much as I can. And then I’m like, Well, I’ve done everything that I can do. And so there’s nothing left to do, but just go for it. No, because what else can you do? But just push forward? I yeah, I don’t know. I yeah, I just think it’s it’s just a matter of just realizing that, like, that’s the normal thing to feel that fear. And then you just have to go for it. Anyway, I bungee jumped once when I was in New Zealand, and I remember being so Oh, my God, I was so scared. I actually, like broke a blood vessel doing it, but But I remember just thinking like, what am I going to do? Like, walk off the platform? You know, like, and I think eventually the guy pushed me.

52:39
But to get past your fears, I

52:41
just remember thinking like, Yeah, I mean, I’m really so I’m scared to death, literally to death. But like, what, what are we going, we’re all you know, we’re here, we’re all going to do it and like, it’s going to be painful for a second, but like, then I’m going to be really happy I did it.

52:54
That’s awesome. I really appreciate you sharing that. Because I think you’re right. And if people do share that, right, and we all have our fears, and we get to push through and try new things. And the best things are on the other side of fear. Yeah, that’s right. Alicia, if people want to find you online, where’s the best place to check you out?

53:12
So I am fairly active on Twitter. I know, LinkedIn, I get messages where it says people follow me there. So I guess you can do that, too. So I think between those two places, like I pretty much post everything, either things that I write or just things that are of general interest,

53:28
and you have a new program coming out. Can you tell us a little bit about

53:31
that? Yeah, that’s right. So I just launched this new initiative, it’s called Point 25. And the whole goal of it is to help women entrepreneurs build robust advisory boards. So the name point 25, is named after the point two 5%, that advisors often get as equity incentive when they serve in the advisory board role. And so basically, what I did was I went to my own Rolodex, and I looked for like, just kick ass C level executives that I knew were already passionate about this issue. And like were already giving their time to mentor women entrepreneurs. And I said, you know, look, I’m going to do a series of four events in June. And I’ll curate the entrepreneurs at the events. And all you have to do is kind of show up, I’ll have a member of the press moderate a panel where you talk about your background and interests, and then you’ll rotate around tables to meet the women entrepreneurs. You’re not locked into anything. You guys can figure out the negotiation later, for whatever makes sense for you. But this is about facilitating introductions. And it was great. Like I just got amazing response. So I have like, you know, the Chief Revenue Officer of SoundCloud or the chief financial officer of Squarespace or like Kelly Hovey, or JJ Ramberg, from MSNBC, your business so they’re all going to be there 16 of them for the summer event. If entre if women entrepreneurs want to apply, they can go to the website and the deadline is May 15. And the website is just the word point and then the numbers 252 point 25 dot splash at.com And if for some reason someone hears this podcast way after the deadlines passed, I’m hoping to do another event or two in the fall slash winter with a whole new batch of advisors.

55:11
So follow us on Twitter to make sure you see the you know, I’m tweeting about it

55:14
all the time now. Probably unfollow me. They’re sick of seeing about it. But yeah, right now, we’re like, curating all the women entrepreneurs. So now’s the time to apply if someone’s interested.

55:25
So exciting. We’ll make sure we link that up in the show notes as well. Thank you so much for sharing all of us on the show. Super insightful, and I really appreciate you bringing the energy on the podcast today.

55:34
Thanks for having me. This is fun again.

55:38
Glad to have you back for a third. We’ll actually publish this one. Okay, sounds good.

55:43
Thanks again for listening to today’s episode. If you have any thoughts or feedback on our conversation with Alicia, let us know in the comments, we’d love to hear your thoughts. And as always, to be among the first to hear the stories about entrepreneurs, investors and other tech leaders outside of Silicon Valley. Subscribe to us on itunes@powderkeg.com Ford slash iTunes. We’ll catch you next time on powderkeg igniting startups