A series profiling North Carolina women in investing would be incomplete without a conversation with one of the leaders of the angel group in our own backyard, Jan Davis.
Davis took a break from her role as Entrepreneur in Residence and “professor of the practice” for Minor in Entrepreneurship at UNC, where she was preparing for a series of lectures on entrepreneurial finance and capital formation.
While that topic may be beneficial to many of our readers (maybe another piece, another time), we focused this interview on her role as angel investor with Triangle Angel Partners (also known as TAP).
How did you get started in investing? And, how did you get involved with Triangle Angel Partners?
I started doing angel investing well before TAP, after serving as the CEO of ShopperTrak and becoming heavily involved in the entrepreneurial community in Chicago. It was there, in 2010, that I wrote my first investment check to a company where I had served on the advisory board. That led to additional investments in Illinois and also here in the Triangle.
As those companies developed, it was clear that as an individual I didn’t have the amount of deal flow or the kind of investment opportunities that I needed. When we moved to the triangle in 2010, I heard that TAP was getting organized and thought there were at least three things I could get from being involved in TAP. First, better deal flow, then better process (actually a structured process), and diversification. I fully expected that we would invest in things that I didn’t know a lot about, but that my fellow investors would be experts in.
I also saw this as a way to get to know other people with similar interests, and a good way to get to know entrepreneurs. I truly enjoy getting to know young companies whether it’s in an informal role or an advisory-type capacity.
It took about 18 months for TAP I to get organized and funded, with our 1st close in May 2011. I was elected to the executive committee in the fall of 2012 for a three-year term. In 2013, I was elected president and served as president for two years. In TAP I, there were only three women investors out of more than 50 members.
We started raising TAP II last spring, and it took about six months for the first close. That was a new experience for me. Our final close was $4,050,000. With that fund, we grew to more than 80 members, and now have 11 women. I made that one of my priorities, not only to get more women investors, but also to get them to actively participate in meetings. If we wanted to get more women entrepreneurs to present, it would be good to have women investors in the audience.
We haven’t yet backed a woman founder, but my hope is that having more women investors will make it easier for women entrepreneurs to come to us.
What advice would you give to other women thinking about angel investing?
I would like to get more women involved. I think a lot of women aren’t aware of these opportunities or they need more education. If they are new to the funding world, the Angel Capital Association (https://www.angelcapitalassociation.org) offers many opportunities to learn more about the angel investing process and the vocabulary, things like convertible debt, preferred stock vs. common stock, etc.
Having that knowledge can make a real difference in their future success. As I said, based on my personal experience, joining a group or fund will increase your odds of success significantly, again with better deal flow, better process, better diversification.
What is the most important thing you look for in a founder/individual you want to invest in?
All investors look for a big, interesting market. If the total market value is only $50 million in a niche market, that isn’t a great fit.
We also look for a great team. While it’s great to invest in serial entrepreneurs, we don’t want to exclude first-time entrepreneurs. It might be more accurate to say we look for a balanced team, with someone that knows sales and marketing, someone that knows technology, or whatever the subject matter is.
We also look for novel solutions. We really prefer not to invest in something that has already been done.
And, we aren’t right for lifestyle businesses. We invest in companies that will have an exit strategy, that is either going to be bought out or go public. Ultimately, we want that return on investment.
What advice would you give entrepreneurs who are seeking angel investment?
Look at who has gotten funded in this area. Check ExitEvent, TechCrunch, CED, etc. to see who else has gotten funded. Look at who is funding what,i.e. B2B software, B2C software, a medical device, etc. If you can find an enterprise that is in the same general space where you are, that gives you an idea of what investors to approach. If possible, try to get a warm introduction through your accountant, attorney, mentor, or another entrepreneur.
Be prepared! You don’t need a fancy deck the first time around, but you must have a clear explanation of what it is that you plan to do and how you are going to help the investors make money. Surprisingly, that last piece is often missing. It’s almost like they haven’t thought about our motivation. In spite of our name, we not that angelic, we are not a charity, and we are looking for a return.
What unique challenges do you see women entrepreneurs face in the funding arena?
I think that data shows pretty clearly that it is harder for women to raise money than it is for men. I know there are a lot of efforts underway across the country to try to address that. It has a lot to do with pattern recognition; it has to do with the way people’s brains are wired. Because of that, women have to be even more prepared when they go after funding.
This quote comes to mind. I used to think it was Gloria Steinem, but its actually Charlotte Whitton – “Women have to be twice as good to get this far, but fortunately it’s not that difficult.”