Super Angel #276: Angel investing insights with Edwina Johnson, GM of MoneyGram Online, Head of Global at Alloy, and angel investor.

0:00Welcome, everyone, to today's podcast. Today, you are being hosted by Anthony Dannon from value to$1.5 billion as its COO in New York City. She's not just about corporate leadership though. Edwina is also an angel investor with Adaventures, a mentor in the UK's women innovation program, and an expert in residence at C-Ventures. All of this has made Edwina become one of the most recognized women in fintech in the UK. And I promise you, you're in for a great episode. This is a dream? No, it's not a dream. I'm an angel. Why would God send me an angel? Because God knows that everyone needs a little coaching now and then.

1:10I'm loving angels. I saw an angel. All angels say. Angels. What do you say? It's me an angel. The smile on her face. We're here now together. But don't want me, Angel. Thanks, let's find an angel, girl.

1:28In a world where podcasts outnumber humans, we try at EUVC to be mildly more interesting. Tune in at EU.VC to watch this episode instead of just listening. EU.VC, where the extraordinary is just another Monday. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Edwina, welcome to the Super Angel podcast. I'm super excited to have you with us. Thank you. Particularly excited given your unique perspective, you know, having gone back and forth between the UK and the US, but you'll tell us all about that. So maybe let's get started with that, actually.

2:10Do you want to share a bit about your story and what got you into angel investing in the first place? Yeah, happy to. I have always been an early stage business builder, either as an early employee, a founder, an advisor, mentor, et cetera. Always love that kind of challenge of building. And most recently, I've done this at Alloy. I joined Alloy as maybe the sixth employee out in New York when they closed their seed round of fundraising. And I worked alongside the founders to build the business through to nearly 300 people and our unicorn valuation at Series C. And that was before moving back to London to head up our global expansion.

2:53And I've always been interested in kind of working with founders, working on business, and investing side of it really drew those different components of my past career together, particularly working at startup bootcamp and running fintech accelerators and meeting hundreds and hundreds of pre-seed startups every year as well. The other components of angel investing for me and what motivated me to do that is, you know, getting access to very high risk, but potentially high return investment, investments that you don't necessarily get access to otherwise. And then secondly, I have a real passion for improving the diversity of the tech ecosystem.

3:33So being able to put money into the hands of folks who wouldn't normally get access to investment cash. And I've done angel investing personally, and then more recently through Ada Ventures as an angel associated with Ada Ventures. Would you like to share a bit more on your transition from, let's say, started bootcamp into Alloy? Like, how did you come across them or anything else that's like an interesting part of the story you'd like to share? Yeah. So working in a startup accelerator and you're meeting hundreds of startups, you're reviewing pitch decks, you're following their journey, you're seeing how they play out.

4:11And the one kind of thread that tied any success together from these startups was the founders. So no matter how good the traction, the market, the technology, how wonderful the IP that was created, if the founding team wasn't strong, then the business would fail. and when I met Laura who was one of the founders of Alloy and then subsequently Tommy and Charles I just saw this you know wonderful founding team they had past experience of working together they had this incredible vision and mission they had really strong values and you know most importantly they were open to feedback and they were kind of listening to what people were saying and taking that back into the business and you know optimizing the business accordingly and those are huge strengths that really drew me to them as founders, you know, more than actually the business idea at the time.

5:05Super interesting. And it's really interesting to hear that kind of transition, as you said, from the Startbook Camp to working more directly with Alloy, which is a fascinating business, I think, really, really making an impact on the fintech scene globally currently. I guess honing in on the angel investing side, it'd be great to hear a little bit about, you know, maybe a memorable deal, maybe it's something which is one of your first investments or even you know a more recent investment or even you know a deal which comes to mind when you think about angel investing that was you know memorable in in some way love to kind of like unpack that a bit yeah it's probably my first investment that I made which was into fiat republic it's like if I if I could invest I would definitely invest I was like wait I'm at a stage of my life where I could now start doing this so I had this kind of quite shy awkward conversation.

5:58It's like, do you want another really tiny check investor on your cap table? Would you be open to that? Can I find out more about the business? So I'm taking that first step into angel investing. And actually, it's quite interesting because I've actually found that in the end of the day, the most interesting deals, they don't care so much about the size of the check when it comes to angels, but so much more about the value add, right? And if they can see that you're committed to it and you have skin in the game, which is not necessarily commensurate to the investment size, right? When you're an angel, I think that's what matters most.

6:29Sophie's great, right? I think I remember her from back in the day in Germany. She's amazing. Do you want to actually, now that you've done a few more, right? Before we go to the next segment where we'll unpack a bit more about your strategy and some of the different topics you already mentioned, which I'm excited to speak more about. Would you like to tell us a bit more, now looking back over the last few years that been angel investing, what would you say it's given you like personally, professionally, why do you keep doing it? Yeah, definitely the surprise benefit has been the network and the industry knowledge.

7:03It wasn't something that I went into angel investing with the objective of gaining those two things. But yeah, both of those really have come across, particularly working with various angel syndicates and different communities of folks who angel invest, meeting some really incredible people and then learning about how they approach angel investing, how they think about opportunities, just seeing the trends that are coming through the market based on the number of deals that you get on a certain topic. For example, you see like, oh, okay, this is where people think opportunity is. And also like subsequently, is that invested in by VCs or not?

7:39Do other folks see an opportunity here? One of my colleagues, Monica Murphy, was on a podcast the other day talking about her angel investing journey and the idea of if you write just a handful of very small checks each year it's actually kind of comparable to some of the members clubs that people set up for the benefit of network and industry knowledge so it's like a different way you can kind of almost justify some of the costs that you're putting against that from personal basis from that perspective and then the the second surprise thing is just rekindling my love for working with different founders on different business ideas having been so long, super focused on alloy.

8:17That's been a joy as well. Someone told me once, I think a lifelong kind of seed investor that doing pre-seed and seed, and maybe that resonates with you, Tom, is like from a purely financially rational perspective, kind of on the spectrum of irrational, like if you wanted to just make money, you can just sit back and do Series C. So it's so much about like the passion of being by the side of founders from the start right completely and also i think that you know you touched upon there the the idea of almost building a network joining kind of like a different club and and using this in a way to do that and i've also seen people you know consider things like even advanced degrees and mbas and instead actually go actually i'll learn more about business models and working closely with founders from investing money and and being involved in that way so it's it's yeah i think there's this there's many kind of tangential benefits which may be on totally obvious on the outside but definitely once people kind of like take that plunge see that's been some of your experience as well oh no it's been it's been really good to kind of like understand a bit about your story and you know why why you're angel investing and and hear more about about that and in the journey so far.

9:37I'd love to actually kind of like dive in there and understand a little bit about maybe where you are today in terms of number of investments, what type of portfolio companies that you have invested in, whether you have like more of a sectoral focus or not. So it'd be great to hear a little bit more about that strategy side of things. Sure. So I have done just under 10 deals. So very extensive angel investing so far, all in B2B SaaS, fintech, regtech space. And I said, done a bunch of these personally, and then some I'm doing through the Ada Ventures angel program. And they include the likes of Fiat Republic, OPTO, Rosalie.

10:18So across, it kind of deals across both the UK and Europe. And what about, I mean, have you put, maybe it's, still early days, but have you already put some thought into generally how many are you targeting on doing portfolio diversification? And then I would love to shed a bit more light on the thread on your thesis behind your investments as well. So I knew that I absolutely had to have enough capital to do at least 10 angel investments because of how high risk they are and the likelihood of return. But ideally doing more than that to give you a higher chance of seeing something come back. As an operator, there's only so much time and attention I can give to this.

11:02So not too much that it like stretches me too far in terms of the other things I need to be doing in my life. I can dig more into my thesis, angel investing thesis. So when I think about angel investing, I start with kind of three qualifiers. So the first one is, is this deal in the B2B SaaS, fintech, or ragtech space? Again, as an operator, I need to filter out a bunch of deals quickly and spend my time and energy where I already have knowledge and where I think I can kind of have an advantage, a competitive advantage. The next qualifier is whether or not they have a diverse founding team. So a team that comprises or includes some typically underrepresented folks within that team.

11:47There are two reasons why that's kind of critical. It's a table stakes for me. So the first one is that diverse founders or leadership teams have proven to drive better business results. So as an investor, I want best return on my money. So therefore, it makes sense to invest in that. And then secondly, diverse teams are more likely to be overlooked or underestimated. And therefore, if you can see an opportunity where others can't, then you might be getting a more interesting deal. and then the third you know qualifying factor which I dig into more later is do I personally care about this am I interested do I want to work on this topic is it something that I am going to willingly spend time on and that's another thing that has helped qualify out the deals to start with and then I start looking at the deal itself so after those kind of three things have been ticked up and then I start looking at the mission and vision the values are very like founder driven to start with.

12:42What are they trying to do? And what are they trying to tackle? What do they believe in? Why are they doing this in the first place? How are they driven? What kind of execution they've done so far? Any traction, any testing of assumptions, even if they haven't got revenue, what are the little things that they've been doing to chip away and solidify their idea? And then technology, because I like investing in technology businesses and particularly innovative or businesses with high scale potential. The market, why now? Why this opportunity? And then what's going to make them win out of other folks in the space?

13:18So that's kind of like my run through when I'm thinking about a deal. It makes a ton of sense. I think everything's definitely covered there. I suppose those initial checks that you've done, that kind of like 10 company portfolio that you've started to build up. Have you found any of your, if you think about those kind of buckets and those criteria that you have for investing, that the weighting has changed at all from when you began and maybe you thought it's all about the team to what it is now? Or have you kind of seen that be applied quite consistently? The one that was a new learning was the do I care about it?

13:53And I felt like I should assess a deal for whether or not this has got good potential and good returns. And, you know, is this really something that could be a great business opportunity at a great scale? And I've spent quite a bit of time and energy doing that. And then I realized, actually, I just don't care. I don't care about this business, even if it's going to be great. Like, it's not something I'm going to spend time on. And if I'm putting my money in, then I want to be, you know, I want to be connected to the founder and the business problem. Yeah. One thing I wanted to ask, actually, you know, honing in a bit more into kind of criteria, specifically founders, right?

14:32Having now met, I'm sure many companies to have ended up with, you know, 10 portfolio, like, what would you say is the one element you look out for when it comes to founders or a few that like, you know, for you are, are indicators that these are people I really want to back? Yeah. So the mission and vision is important to me. Because when you're very early stage in your journey, whatever you think you're going to be building as a business probably isn't going to be the business that you end up with. And if you have a broader mission and vision, you'll be able to change and edit and optimize that business to meet the end objective that you're heading towards, but without going off course.

15:13And it gives you more room to be flexible on that business idea versus saying, this is exactly what we're going to do. We're going to stick to it. I also think the mission and vision are really important because it's a compelling story which you can hire folks with that you can get investment on and having that narrative and story is really really important at early stage and then being open to feedback and ideas and understanding where your strengths and weaknesses are if you meet a founder who is who's too high on ego and can't do that then they're not going to take the market learnings the customer learnings of product insights and take that back in the business they're just going to stick on the I know this is a thing people just don't understand and and I've seen that really being a key deal to a few founders over the years.

16:01Is he kind of I suppose taking a step back from from that specific area but if you think about when you're working with founders so when you've actually you know made the investments what what have you found is the you know the value prop that you bring post-investment that is is most resonated with the founders that you've supported so far? yeah it's a bit of a mixture at the moment that was actually that's another learning investing through syndicates sometimes means you get really engaged founders who want to take advantage of the angel network and sometimes folks use the syndicate to get money so that so that's a learning for future investments that I make with syndicates and thinking about what do I want from this angel investment is it purely returns or is it engagement with the founder and And for me, often it is like, I'd like to work with the founder of the business a little bit.

16:51And then value prop through a range of things that I've worked with founders on from network, either connecting to other angels or investors or experts that might be beneficial to their business. Talking through some of their particular challenges they're facing and scaling at the moment. Talking about some of the industry expertise that I've gained over the years. so yeah kind of pulling on different threads depending on the founders and the business and where they're at got it got it no no i can see i can see him so much kind of like value to to provide and and unpack there which which makes which makes a lot of sense if you're thinking i suppose taking taking conversation in a slightly different direction but obviously one of the the missions of this podcast is to help kind of connect the the european ecosystem so you know broader and obviously you've got this experience from us and also in the uk but i'd love to hear a little bit about how you think about kind of international investments you know if you make the makeup of those 10 investments so far where they where they are are they mostly UK have you have you gone outside of UK and how you think through that kind of international lens yeah so I've done a couple of deals in Europe but the majority have been in the UK when I think about doing international investments it's having a trusted party who you know has done the due diligence on that deal, on the market, they understand the dynamics.

18:17So the things that you're going to be less familiar with often help get conviction in investing in somebody who's operating in a different country. So as much as you can do the diligence on the founder and the vision, mission, et cetera, not being as close to the actual market dynamics, that's why I look for kind of that expertise elsewhere to help guide me on that. Couldn't agree more. And would you practically like seek doing more international as in, do you think about that as a lens on, you know, diversifying on portfolio? Or do you feel that like proximity really matters, right? I'm, you know, talking about two topics that contradict.

18:53predict yeah i think in terms of the value that i could add as an angel investor and the deals that therefore i'm interested in i would be interested investing in more european deals as long as i can see the potential to scale internationally because that's something that i can really lean in on and support with and i think you touched upon this this earlier adwina which i'd love to kind of speaking a little bit about now obviously how you kind of collaborate and maybe work with with other vcs obviously i mean i'd be come from that that side of the table a little bit and you mentioned the the work you've been doing with with ada so i'd love to hear a bit more about how you're collaborating with vcs whether it's you know you're sharing deal flow with vcs or vcs are kind of bringing you into deal flow and how you've seen that network develop again during the course of the 10 investments you've made today yeah all of those flavors so vcs sending me deals that they think I'd be a good fit for as an angel, me getting to know different VCs and their portfolio strengths and interests and being able to send them deals.

19:58And then more formally with Ada Ventures, they run an angel program where they bring in a group of angels from across the UK with different communities and different networks and give them the financial ability to go and angel invest under the Ada Ventures brand name, but with financial upside as an angel. So they're really trying to board now and diversify their deal pipeline and also VC investment in general. And then certainly through this process, yes, absolutely met a lot more investors through being an angel investor. Are you thinking about like systematizing some of that as in, you know, I'm putting my VC lens hat on, right?

20:36We usually like to, you know, systematically, I'd love to collaborate systematically with Tom, right? And, you know, do deals together and share like besides the ADA kind of structure and I think, you know, you guys are amazing. Are you thinking about systematizing that or is it very opportunistic, like people that you like hanging out with or people that you end up meeting in more events over time? You know, how are you thinking about all that? Yeah, it is absolutely opportunistic at this time. Oh, the other, you know, great things I'm involved in that I've mentioned over this podcast already has been the angel syndicates.

21:06So there are a few different syndicates with different flavors, different intentions and meeting people through that as well. over time yes i will refine and hone that in terms of you know which places or which groups or syndicates are my most likely to be getting the deals that interest me and who are the people that i tend to like working with or again get inspired by their deal flow so i'm sure that will kind of just optimize over time but so far more the broad opening sign to see what's out there and then come over on time and please do resist like you know, VCs that like to do everything systematically, right?

21:42In the end of the day, a lot of it is about enjoying it, right? And why you're doing that. So with that in mind, actually, let's move into the next segment.

21:55So let's talk about core learnings. You might have touched on some already, but if you had to choose three core learnings from your time angel investing, which would those be? The first one absolutely has to be how network-driven investing is. I don't think I fully appreciated this when I came in, nor did I appreciate the role that angels play as that gatekeeper to the network. So angels are often ones that are bringing the deals through, that are connecting them to other angels, that are connecting them to VCs. So they are the starting point to that whole cascade of network that exists in the world of investing.

22:34if you are motivated by diversifying where vc dollars go then feel a responsibility to broaden your network and try and make your network more accessible and that has quite there's quite a burden an operational burden on it a time and resource burden to do that ada ventures is doing this by bringing these angels who already have existing networks and trying to kind of empower them to do angel investing and therefore like give access to new communities into the angel ecosystem but yeah i think i've underestimated the network piece second learning it's going to be the role of hype and fomo and raising around again hadn't you know i knew it's important but i hadn't really like got fully immersed into that hype cycle so you invest in something you want to others bought in you want to say yes i stand behind this deal so you have to kind of create some of this hype as well and it's the fear of missing out in order to drive further investment interest the vc industry is pretty small so a deal moves quite quickly around folks like within a matter of days as various people have whatsapps you a particular deal have you seen this have you seen this so once you're out there raising everyone knows you're raising and if you're a founder and you poorly time this, maybe you want to do the first round of your pitch and then you come back and iterate and then come back out again and try and raise again.

24:03It can be pretty disastrous because there's this herd mentality. And if the herd says, no, we're passing on this, then it takes a lot for an investor to stick that knack out and say, actually, no, I do believe in this business. And as an angel investor, I've kind of become a little bit repelled by hype, which is a little counterintuitive too because there's some great deals that have got a lot of hype. So you want to try and cut through where the hype is real and where the hype is not and don't be turned off from a deal if it feels too hype either. The last learning is just like getting excited about a deal and you want to spend your time on things you care about.

24:45You know, looking at businesses which are not just a band-aid but they're doing something really impactful on a particular problem. I saw a pitch deck the other day that was trying to solve a problem, which was a six-day problem. I was like, six days isn't a problem. Something takes six days. Let's think about something that's really big or chunky to spend time and energy on. And yeah, digging in on things you get excited about. I really like that. I wanted to jump in actually and make a comment or ask you following up on your second learning on kind of resisting FOMO, right? And I think you touched on a lot of very interesting things there, right?

25:23Like herd mentality, which goes, I guess, counter to the whole nature of early venture, but in reality is the majority of. And generally speaking, I think maybe specialization really helps in some respects. It can help also counter because you sometimes need to be slightly naive to back exceptional and interesting new things. So we'd love to hear, how do you think about that, right? Do you have any mechanisms on balancing that out or staying cold-minded when it comes to formal culture and being sold on an amazing founder reinventing the world? I think having a thesis, knowing why you're going out and investing and what you want to see, and then comparing the deals to that and staying honest to what you're doing and why did you get into this does help.

26:10And then I think, you know, I have to actually force myself to really look at a deal if it has got too much hype. Because I'm almost like the opposite end of being drawn in. Now I'm almost too repelled. So try, you know, again, try to just put that aside and look at it without thinking about the context in which it's come to you or what else you know about that deal and look at it as is. On your third learning around being personally excited about the deal, I'd love to ask around particularly areas that excite you, but also whether being immersed in such a successful business in one specific space, whether that adds to the excitement that you have for other businesses in that space or puts the bar exceptionally high for when you meet many businesses in that space.

27:00So yeah, it would be great to get your thoughts on that side of things. And this is the thing about being excited about a deal, right? Because I found out I've got very excited about rig tech startups recently, which is definitely not everyone's bang, but I love a bit of rig tech. I love it. I love it as well. I'm with you. I'm with you. So it's whatever person we float to boat on that side. And then investing within the space of your, an industry you're already familiar with, full stop, makes you a lot more skeptical of whether the business is going to be successful or not. I do think, you know, I have a very deep niche knowledge around identity and compliance and fraud and all of that jazz.

27:42And there's some real gaps that have yet to be solved. So I'd be fascinated to see businesses being built in certain areas. And I think when I do see folks innovating or you know really trying to change an existing an existing industry i want to see them i want to see something radically different i want to see like why are they doing like how are they going to do this like what's motivating what what's their thesis that they're building towards as well and why is this really going to shake up something where they're quite a few players in as well yeah that makes a ton of sense and maybe i'm projecting as well because i've done a lot of like fintech investing and you know i did a bit of operating in fintech so it's not exactly the same for sure but like one thing i found as a rule of thumb is you know you have let's say uh prepared mine for certain areas but when it's like a very interesting founder so like an operator that has seen a problem or you know i guess seems like someone who's from the space i'm willing to throw everything in the bin and take the call and then i'm willing to actually like really morph my thing and it's a very intangible proxy right like of like okay i think the way they're doing this thing in kyb there's thousands of and it doesn't make any sense but suddenly there's this phenomenal interesting operator starting something there i'm super skeptical but you know what i'm not i want to go have that call and like be proven wrong yes that's good that's actually that's another learning is this the role i think of confirmation bias you're like this looks super like this business this isn't going to work.

29:16I'm like, the founder is so great. Okay. Okay. I'll ask them about this. And if they tell me this thing, it's definitely no. Then they tell you that thing and you're like, no, I'll sort it. I'm sure I'll figure it out. This is going to be great. So there's, I think, confirmation bias is cryptid and I have to try and reconcile that too. But that goes back to our, you know, the earlier discussion it's having around the founder will be changing their business and they are going to pivot and they are going to take learnings on. So if you believe in the founder and you believe in the bigger mission they're working towards then they'll probably be changing their business anyway a hundred percent i can we can bond over a drink to tell you a bit more a few examples like that that i've backed that have actually ended up being much better than others where i thought i knew better right but that's like my lens to it before we go into the next section that like tom's gonna take us through wanted to double click on your first learning actually and more also for the benefits of i guess both us and the listeners you did mention about how network driven investing is you also mentioned that if you want to change things in the investment sphere that's a place to start from and diversity being a big lens any tips any specific areas any pools of network that you've consciously expanded on or that you're part of that you think can really move that agenda forward yeah i'm definitely still learning how best to do this in practice but i think talking about angel investing talking about it with different folks who wouldn't normally talk about it with just you know trying to think about who is getting angel investment dollars right now and and it's normally people that have worked closely with successful founders or early employees from from businesses that have grown pretty large and have had some kind of exit or you know ability to exit and those networks or types of people are generally the same as well so how can you open up that door how can you give people more of an understanding of what angel investing is how they can access that who they can talk to just trying to kind of demystifying angel investing both as like whether or not somebody can angel invest and then whether or not somebody can go and raise from angel investor i think that will be like the biggest change that we that we can do as angel investors i think it's a super important point to get across I totally agree.

31:33The final section that we're going to go into now is the quickfire round.