For our latest Investor Spotlight series, we chatted with Angelica Morrone, an impact angel investor, distinguished Keynote speaker, and author of the Amazon bestselling book, Invisible to Investible.
Growing up, Angelica was lucky to be included in investment discussions within the family. This sparked her curiosity in the process and the potential of investing, and her studies and subsequent work experiences did the rest.
What startups do you invest in, and at what stage? Why do you choose to invest in these types of startups?
I invest in early-stage startups, which are better if they are impact driven. I have identified 7 investibillity criteria that I apply to any investment decision. If the startup scores well, I meet with the founders/team and determine the investment opportunity.
When choosing investment opportunities, which one do you go with the most: your head, your heart, your gut, or a combination of the three? Why?
The head will drive the first meeting. The heart will come into play after meeting with the founders. The gut is always present. If something doesn’t feel right, the gut wins!
How often do you invest in a year, and do you have a typical investment ticket size?
I typically invest in 4 to 6 startups a year, and the ticket size varies from 10 to 50 thousand.
What was the most rewarding startup you’ve invested in so far? Why?
The most rewarding investment to date is the one I will do tomorrow, and I always feel that any investment will be rewarding and satisfying. However, in general, the ones that I have liked most so far are those where I have been involved in the Board of Advisors and where the company is growing very well and very fast with a fabulous reputation and fantastic track record.
Making mistakes is part of the “growing pains” every successful investor needs to go through. Can you share with us one investment mistake you’ve made and the valuable lesson(s) the experience taught you?
As an investor, I take a hands-off approach and usually let the founding and management team do their work. In one case, the founders took the wrong approach to marketing and PR. They turned almost fetish and provocative. I mentioned this in one of our meetings but not forcefully enough. A few months later, they went bust.
Had I been more forceful and hands-on, I might have helped avoid such damage to all stakeholders.
What are some “myths” or misconceptions people have when investing in startups, particularly on crowdfunding platforms, that you’ve debunked throughout your journey?
Many people think that only because a startup is on a crowdfunding platform it must be safe. That is not the case.
The same due diligence must be performed to ensure that the investment is aligned with the investor’s investment objectives and time horizon.
There has been much talk about the need for investors to support startup founders from minority groups. This may be obvious to you, but can you share with our readers why it’s so crucial for investors to support startups with diverse and inclusive teams?
Diversity and inclusion must be part of the investment philosophy.
As an impact investor, I have made it front and central. I firmly believe that there is an enormous amount of untapped value in founders from different backgrounds, geographies, races and genders, and providing fresh and different perspectives and new solutions to problems and challenges, large and small.
If you had a chance to spend a day with someone and have the liberty to ask anything, who would that person be? What three questions would you ask?
Since I come from the world of finance, I would like to have a chance to spend some time with Warren Buffett. His traditional buy-and-hold investment strategy has been hugely successful for him, which is most impressive considering the span of time that his experience covers. I would ask him:
- Have you ever doubted your investment decision, and if yes, how did you handle it?
- What is the one tenet that keeps you on track in spite of enticing trends?
- What is your most important legacy (apart from the pure financial gain you have attained to date)?
Can you share your favourite quote with us and why this is so relevant to you?
“You must be the change you wish to see in the world” by Gandhi.
I strongly believe that even a small change can have positive outcomes and that if we focus on the consequences of our actions, we will be much more likely to do well by doing good.
Great! Now, let’s go to the main focus of this interview. What are the critical red flags you watch out for when choosing startups to invest in and why?
The critical red flag is an overly confident founding team. While confidence is important, even essential, presumption is the mother of failure. If the founding team cannot listen and consider different perspectives, it’s an immediate no go for me.
What would make a startup stand out and get you interested to learn more about them? Can you share with us examples to show this?
I have selected my investibility criteria that I always use as a sieve to filter through the options of investment I receive.
When the team is competent, trustworthy and aligned, the product or service has a demonstrated or demonstrable market fit, and a good and viable business model has been identified, I am ready to hear more about the company. Most of my current holdings met these criteria.
What are the top three traits startup founders need to have to be able to launch their startups successfully? Can you expand on why you chose these traits?
I have four that I would like to see in a founder: Vision, determination, integrity and coachability.
In your opinion, what are the critical elements of an excellent investor-investee relationship? What tips can you give startup founders to ensure they consistently provide this with you and other investors?
A good investor/investee relationship must be based on mutual respect and trust. Investors must respect the founding team and trust that they will execute their vision.
The investee must respect the opinion and feedback of the investor and trust that all feedback is given in good faith and to see the venture to success.
By the same token, investors should stay away from wanting to actively manage the company they invested in, and investees must listen to negative feedback.
How often should startup founders update their investors on their progress? What method is, in your opinion, the best way for startup founders to use when updating their investors?
I like to receive a written report (one-pager) every month and a call once a quarter.
Let’s flip things around. What three things can cause an investor NOT to invest in a startup, and why?
The big red flags are: an overly technical team, lack of product-market fit, and lack of governance.
As a parting gift to our readers, what are the top three pieces of advice you can give them about investing in startups?
Investors in a startup must understand that startups are very different from other investments, so the expectations and behaviours should be tailored accordingly.
Most investments in startups have a very long-time horizon, 5 to 10 years, and there will be ups and downs along the way. As an investor, we must stand by our investees, being there for them with advice and connections when they need it.
Thank you for these fantastic insights and for your time. We truly appreciate it and wish you all the best in your investing journey.