Super Angel | Tom Wilson (Seedcamp), Anthony Danon (Cocoa) & Sarah Harvey (Tunic Pay): Angel investing insights

0:00Welcome everyone to the Super Angel podcast. we're delighted to have you with us today and we're even more delighted to have our guest Sarah Harvey joining us. Sarah it's lovely to have you on the show. Thanks so much for having me here I'm really excited about our conversation. Here's a few words from our beloved sponsor. This episode comes to you by the support of our partners Portfolio IQ by Synaptic. Portfolio IQ is the most effective way to track your portfolio. It pulls data from all sources board decks, financials, MIS sheets, forms, emails, everything, and creates a true single source of truth for your portfolio data.

0:37With Portfolio IQ, you can track all the metrics that matter, not just the standard metrics. All metrics are reviewed by a team of certified accountants. You'll get 100 % accuracy. Not sure about a number? Just click on it to see the exact sale in the document it came from. Portfolio IQ also adds a layer of standardization to make the data comparable and useful for benchmarking, valuations and reporting. All of this is as simple as forwarding an email. Zero added work for your fund or your portfolio companies. Portfolio monitoring that you'll fall in love with. Go to synaptic.com forward slash portfolio IQ.

1:13That's S-Y-N-A-P-T-I-C dot com forward slash portfolio IQ. The good folks at Synaptic will be happy to give you a no-cost trial. Is this 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. I'm loving angels. I saw an angel. All angels say. Please say it's me an angel. The smile on her face. We're here to get that. But don't want me. I'm being touched by an angel, girl. Girl. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Thanks for joining, Sarah.

1:59And I think it's rarely we have someone with such a multidimensional background. So very, very keen to dig that in. Maybe you want to start by telling us a bit more about kind of your background, your story, and then what got you into angel investing in the first place. Yeah, absolutely. So I spent the first portion of my career working in strategy roles, both in companies and also in the not-for-profit sector. and I moved into operating roles in startups in 2012 and I've worked in three startups one that was non-tech two that were tech and very much in kind of general management roles so overseeing kind of a bunch of different things.

2:33On the surface companies are very different but I had great learnings from each one which I was able to kind of take through so the first one was in the leisure space and I launched the events business Tough Mudder here in the UK before growing it out through all the kind of international markets and then finally moving over to the US to our headquarters and kind of running a portion of the business from there. Then I moved into the great world of fintech and a bit of an odd move, I think many people would think, going from Tough Mudder to a square or block as it now it is. But it was a great experience for me.

3:03I was the first employee in Europe and the goal really was to start the business up here in the UK and then grow it out from there. I think fantastic opportunity for me to really understand how you build great tech products with an amazing team out in San Francisco, but also how to really think about customer acquisition. At Tough Mudder, the business was mainly bootstrapped. So it was a very different type of challenge and one that feels quite relevant to today's world. And then a third startup that I worked at was a company called Prodigy Finance, which is a Series C fintech based here in London, lending money to postgraduates who want to study overseas outside of their home country.

3:40And it was really there that I saw how interesting angel investing could be because we had a couple of angel investors on the board at Prodigy and it was a fantastic opportunity for me to really get a flavor as to the sort of fantastic value add they could bring. I definitely didn't consider it for myself though I really had this sense that angel investing was for people that could write a hundred thousand pound checks at a time you could do hundreds of those a year you really needed to have a serious amount of cash to do this but actually a good friend of mine who was also an operator at a fintech convinced me that that wasn't the case.

4:13And she had started doing some kind of small check investing with a syndicate called Ventures Together, which is ex-operators from across Europe. And it seemed like a great way to dip my toe into the water. So I signed up with her and got started on the journey of angel investing. Tell us more. I mean, you know, I think you've had quite an interesting mix of like having seen like Bootstrap, like Venture, like how much of that do you bring as a lens to the world, you know, when you look at angel investments and then maybe you want to reference like a memorable deal or so? Yeah, absolutely. I think a lot of my experience at both kind of probably Tough Mudder and then Prodigy really comes to bear with the angel investing.

4:50Square was at a later stage, it was still small compared to where it is today. It was only about 800 employees when I joined, but it IPO just as I joined. So we were in a very different kind of position. But I think that bootstrapping experience, and then also the experience of Prodigy with VC investors, and also looking at kind of debt investment there as well, have really influenced how I've thought about it. And in terms of memorable deals that I've done, I think one of the ones I've been really privileged to join recently is someone that I've known for a very long time. So we have been friends for 15 years.

5:20She is her second time founding a company. It's called Tunic Pay in the fintech space and they're attacking APP fraud. And Nikki, who was also the founder of Nova Credit is a good friend of mine. And I've also got to know Nico, the second co-founder. And I just think their wealth of experience both in the space, but also the fact that they have founded companies before really made this a no-brainer. And there's something really nice about being able to kind of back someone that you really believe in personally as well. I'm also really excited about another company that I've invested in called Visible, who are a health tech company, which provide activity tracking for people with chronic illnesses, and it helps them manage their pacing.

5:59And essentially, they have this fantastic customer insight that lots of people with chronic illnesses were trying to kind of hack activity trackers, but obviously activity trackers try and encourage you to do more. And actually what you need for these types of illnesses is pacing. And they have got off to an absolutely phenomenal start. Their stats are amazing. 91 % of their customers say that it has made a fundamental difference to their illness, which is fantastic. And it's quite rare to see that take up in health tech. So really excited about that company as well. You know, when you look at like angel investing now, and maybe thinking through not just what it's brought you professionally but maybe what it's brought you personally as well and I'd love also to hear a bit about um because you mentioned that you thought that angel investing was for people who were going to write 100 ,000 pound checks and was you know a very different world to you know what we know it to be so it'd be interesting if you've now started to like almost educate others on that or expand a network in that way as well it'd be really interested to dive into that yeah definitely I'm a huge proponent of it and I mean I think there is also a bit of a female dimension to this as well like you know women typically think okay I've really got to know my stuff before I could go into this and actually it's a real opportunity for me what I found personally with angel investing to really get to know new sectors new spaces really keep your ideas and thinking fresh you know this is the equivalent for me of kind of joining almost like a professional networking group and mentoring group etc and so I have very much been trying to kind of tell other operators in the space that this could be a really great way of learning more.

7:32And I think that that kind of sense of networking and keeping things fresh is really important. I feel quite old potentially in the angel investing community. I am 42 and definitely feel kind of old in the tech space sometimes. And actually it's brilliant to see kind of ideas coming through from people who are in their early twenties and really keeping kind of pace with things that are happening. So I have absolutely loved being involved in angel investing amazing no and definitely not old definitely not old sarah not at all um and you know it makes it a ton of sense the way that you've kind of navigated from you know tough matter to now like more tech facing roles as well and i think that's a huge amount of like a varied experience you know i think we we have we've been fortunate to have lots of people on this show but that's a really unique perspective which i think is hugely valuable our own cap tables.

8:27Okay.

8:31So if you've heard that noise, then that's the sound of us moving from this kind of like segment of introductions and Sarah's background more into looking at the investment thesis segment. So that means we're going to dive into a little bit more around your kind of strategy and approach and how you think about angel investing, I suppose, as a distinct kind of activity? Well, I've done 11 investments to date. So I'm very much kind of at the start of my journey. And they're split between six in the UK and five in the US, which probably reflects where I've also spent kind of my time working between those two jurisdictions.

9:08And two thirds or just over two thirds of the investments are with diverse founders, which was also quite important to me as I was thinking about kind of going into this space. about 50 % of my investments have been in health tech which really became of interest to me during COVID I did a really small amount of work for the government here in the UK during COVID running the kind of maybe the not the most popular app in the world but the trace it COVID tracing app but what I learned from that being able to see how the power of tech and how it could be used to kind of nudge and change people's behavior when it came to health has really meant that like kind of this half of my portfolio has focused on health tech.

9:46And the others are a complete mix of different investments where I think that there is a real opportunity. And I guess like a big, a big element of how you think about the world is founders, right? I mean, I would love to share from you if you have, you know, any element you look out for explicitly in founders or, you know, any specific ways to think about the types of founders you really love to back and vice versa, you know, any any traits or sorry any kind of like indicators that maybe it's not one for you as well yeah so I think one of the first things I'm really looking at is how wedded are they to their solution versus the problem space I am really looking for people that are focused on the problem space because I don't know a single business that hasn't had to do major pivots in its history and I find that people who are too focused on their specific solution and that they're only going to solve it this way really kind of makes me nervous particularly as an angel investor because obviously you're so early in the journey there are obviously going to be changes so I think that's one of the kind of the key things that I look for along with kind of tenacity you being an early stage company is really really tough and I haven't been ever been there from day one but I've been there maybe from day like one and a half day two somewhere like Tough Mudder and you get a lot of knockbacks you get a lot of people telling you that you're not going to be doing the right thing.

11:04So that kind of sense of tenacity, I think, is really important. And that can have come from professional experience or kind of personal experience in a founder's past. But that's definitely something that I look for as well. I guess the other side of the coin, which is, you know, what is your value proposition to founders? I mean, I can guess many things from your experience. And as Tom mentioned, I think, you know, very valuable background that you can bring to the table. But, you know, why would they seek you out? How do you even kind of almost round yourself if even so for founders as part of the cap table?

11:34Yeah, absolutely. I think because I've covered such a wide range of functions that I've looked after, I think one of the things that is quite nice about me is that founders can have in one person someone that they can kind of quickly message both about go to market, could be ops, it could be risk, it could be product. And if I don't know the answer, I'm likely to have someone in my network that can. So rather than needing to think, okay, I want an angel investor that covers, you know, this function, that function, etc. And you need to have a huge number on your cap table, hopefully, I can cover a number of kind of different bases.

12:07I also think more recently, my experience with having, you know, bootstrapped and not necessarily needing investment, therefore, by helping people think about extending runway has been important as well. And Sarah, as you think about, because I think it's really interesting, the way you talk about kind of healthcare and, you know, building on obviously your fintech background, but then also the time you spent with the, um, with the track and trace, uh, initiative in the UK, like if you kind of fast forwarded, you know, three, five years maybe, and you look at your portfolio, do you think it's still going to be around those, you're going to kind of more specialize and kind of double down on healthcare, fintech, those kinds of themes, or are you, are you always open to kind of being as you said like brought into other areas by like passionate founders that you meet like how do you how do you like yeah anticipate the kind of portfolio developing as you go forward I definitely think I'm going to remain to have kind of a fairly large focus on health tech like interestingly I haven't done too much fintech which is kind of slightly unusual given uh my background but I I think that what I've because I have really gone after kind of health tech investments you obviously get your deal flow that you see a lot more of those sorts of things I think what I broadly think about sector that I think about first of all is there really a big total addressable market like whilst I'm not in this to make a load of money I also don't want to lose like every single cent that I put into this and unless I'm going after a market where I really think there is the opportunity for this business to be like 100x there's no point in kind of doing an Asian investment so I think really big total addressable market then thinking about is this business going to make the world a better place is this the world that I want to live in kind of going forward and it's probably why I haven't done very much kind of b2b in particularly because it's not my background as well and so a lot of the stuff I've looked at is kind of either consumer facing or in the health tech space b2b to see and I think with those kind of two lenses on I have really invested in some quite diverse businesses from kind of social commerce in Africa because I've lived in Africa for 10 years through to a biotech business which I just think is fascinating because they have the ability to potentially spot cancer markers a decade before you have the first symptoms of cancer so a real range of things amazing no I love it and you know someone who because I do at Seek Camp obviously reinvest across a number of sectors but a lot in healthcare more recently I'd love to kind of just like double click on healthcare for a second and when you think about having operated and worked in the US and obviously the UK like is that something that you that lens is very important when you look at healthcare companies that they have the ability to be able to expand to the US or do you think that when you talk about that 100x that it's possible with more of a domestic play?

14:57It is I think fundamental that you can expand outside of the UK. The UK is a difficult market for health tech. I think markets overall in Europe can be more difficult for D2C health tech, because historically, we have all experienced kind of having this kind of health provider network, you know, that's paid for by the government. And therefore, consumers are less willing to put their hands into their pocket. On the kind of B2B side in the UK, specifically, you really kind of have one customer that you can sell to, that is the NHS. And whilst there are lots of different kind of levels that you can sell into at the nhs i think that can be quite hard particularly for vcs to get behind because there is so much customer risk associated with that so i think the ability to expand outside of purely the uk is really really important for health tech companies and what i'm finding interesting is that some of the companies even if they have uk founders are actually deciding to move out to the us and starting off there because they find it easier to back into the uk than to start off here.

16:02Tell me a bit more. I mean, you did mention that, like, you know, doubling down on healthcare means like you're unlocking a bit, you know, better deal flow and all of that. So, I mean, how do you think about collaboration? You know, do you collaborate with other angels, other VCs? You mentioned like doing, you know, health and like social commerce in Africa and, you know, biotech in the US. I'm sure that there's a common thread there, but we'd love to hear a bit more on how you're thinking about that collaboration. Yeah, absolutely. I'm not sure there is always a common thread in what I do, but that's been the case across my whole career.

16:31So I'm fine with it. Definitely collaboration is massively important. Like there are no deals that I have done without having spent time with some of the other angels who are kind of doing the deals. And that's been a mixture of kind of more formal syndicates, and then kind of more informal relationships that I have with a number of different angel investors, both here in London and a couple in the US as well. From a VC perspective, I haven't done as much directly with VCs, although there are clearly VCs on some of these cap tables. But actually, one thing I did do just before I started angel investing was actually become an LP in a VC.

17:06And for me, that was also another amazing opportunity to understand from a different perspective, what it is like, what the VCs have to go through, how they have to report to LPs, how they talk about the companies they have, I found that such an educational experience. And so whilst I have a very mini check and I've gone in alongside someone else it's been a fascinating opportunity to really understand from a whole different level what goes on in the industry I think I mean for someone who said like you know that you don't have a contract I do think you're very thoughtful at least you know on collaboration strategies probably best in class to what we've heard and seen so that's amazing to hear and thank you for sharing

17:52and if you heard this sound we just moved into the next segment uh which we will talk a bit more about the core learnings um so maybe let's start with that so maybe we've touched on some already but like if you had to look back you know and you'd have to kind of like you know hand pick three core learnings from your time you know angel investing what would those be so i think the first one is that make sure you're really clear about why you're angel investing. I think whilst for some people, this very much can be an asset class, and they are really looking to make a great return. I don't do it to make money per se, and therefore I'm approaching it in a slightly different way.

18:28So I think being really clear about why you are investing is important. And then I think the second thing we've touched on this is the networking is really key. It's both for deal flow to do your DD, but also why people will want you as an angel on the kind of on their cap table because of your network. And then I think the third thing, and maybe this is a bit more with my operator hat on, but I try really hard to be decisive and let people know whether I'm in or out quickly. I think it can be really frustrating for a founder if someone, particularly if you're writing a small check, is kind of wavering, taking a long time.

19:01So I try and be decisive and get back to people and let them know as quickly as possible. On the being clear on why you're angel investing, let me just double click on that. You're not doing it to make money. Do you think, and maybe you're not well positioned to say that, but would you think that it's a good enough reason if someone would do it only to make money? Or do you think that there should be more than that? I absolutely think someone can do it just to make money. I think that they're going to have to have some sort of like magic eight ball to discover the future to be really clear that they're going to make an absolute fortune and I think you know for most people who come into this space they're doing it because they're interested in a particular like facet of tech they're interested in learning there are very few people I've met who are just in it for the money I think that what you've got to be really clear about is you know is this money that you can afford to lose because particularly with how long you're locked in for and if you want to keep angel investing that's really important this isn't like any other asset class where you can kind of pull your money out after two or three years right i'm looking at each of these investments as 10 plus years and when you when you think about that because i think it's really interesting what you said earlier as well which i agree with and i think one of the things which me and anthony think a lot about this show is like the kind of diversity that you can get around cap tables in particular having like more women angel investing do you think that like that approach which you've clearly got really comfortable with is something that is felt more acutely by women or like you know that kind of idea that you have to be comfortable with like losing the money and be confident with going in and because it's we're trying to I guess understand what we can do more to increase that kind of diversity on cap tables and I think that point and that learning might be a really interesting one to just like dig into a little bit more to understand yeah I think one of the things that you see just more generally and I sit on the board of a public company that's an investment management company and there what we definitely know from our research is that women are historically kind of more risk averse and you know talking about a kind of a category that is you know really risk heavy therefore there is also a tendency to think that like maybe angel investing isn't for you and of course there are also the kind of structural biases whereby because most money has flowed to male founders it's men who have made more money to kind of reinvest back in the sector, which also kind of compounds that issue because women don't have as much money to put in.

21:26But I think the kind of two of the things that can be really helpful in this space, one is really learning that you can write small checks, you can write checks of 2000 pounds, and they are still a valuable check, I think is the first thing to really get people comfortable with. And then I think the second thing is, I think women do tend to invest in their careers, they'll be prepared, prepared to join professional networking groups, prepared to join kind of clubs to pay for further education. This is just another thing in that bucket. And I think if you see angel investing in that way, that can also potentially open it up to more women as well.

22:00Couldn't agree more. That's an excellent point. And particularly, which is another thing which we try to get across in the show is the fact that it's not that 100K kind of light limit. It can be small. We've got countless examples of some of the people who've been most impactful on cap tables writing a very small check. I don't think the check size necessarily goes correspondence to how much value that people can add so yeah it's a massive thing that we want to beat the drum about absolutely yeah one more thing i wanted to kind of like double click on is on the networking side um i mean anything is obvious that it's kind of very very valuable and i think what you're saying is is very very true i guess if you had to look back when you started angel investing or when you started thinking about networking for the purposes of angel investing like what would you say were the most interesting nodes or maybe you know types of people you wouldn't have thought of being you know helpful in that sense and and have have become much more so i know so it is pretty unsurprising but there are a couple of loose networks of friends where we are all women a mixture of operators founders vcs that have whatsapp group together where i think i have felt much more comfortable asking questions that are stupid into those kind of networks and were really helpful for me at the beginning the person who introduced me and tish nadasan who is now founding her own fintech at the moment.

23:17She was one of the kind of key people who I was able to kind of talk to about this at the beginning. And subsequently her and I, along with a number of others, have done some kind of deals together. And I think it's those WhatsApp groups, honestly, that have been really, really beneficial and make you feel kind of comfortable writing your first couple of checks when you don't feel like you really know what you're doing. Yeah, love it.

23:47Okay, so we've, I think, reached the final section of the pod. It's always my favourite section, actually. So if you're ready for it, Sarah, it's the quickfire section. 30 to 60 seconds each. How does that sound? Sounds great. Looking forward to it. So first question is, what is the most counterintuitive thing you've learned since you started angel investing? For me, it was definitely that people want you for more than your cash. when you hear the word investing you tend to think it's all about the money that you can put in but as an early stage angel I have definitely recognized that people want me more for my contacts my knowledge what I've done before than they do for the amount that I'm putting into the company yeah I definitely think that rings true a lot of companies that that we work with Richard from angels so 100 % um okay so next question is what are your top tips for angels who are thinking about doing more international investments so I think the first thing you have to do is really build out your deal flow pipeline and that really comes from having being able to spend time with people um either you know online or if you're actually kind of working somewhere in person certainly that's how i found some of my u.s deal flow comes about and i think you also have to work out what you might offer to a founder who isn't from the uk as well so potentially if they're thinking about you know expansion into a market you might have some kind of knowledge of already and i think you also have to get comfortable with understanding kind of very different market dynamics and either you have to feel like you really understand that market or be comfortable with the fact that you don't understand that market and you know if you're prepared to kind of go in with that level of dd then that's fine as i mentioned before i'm invested in a social commerce business in west africa and i spent some time living in nigeria which is where the company is based but i would not say i'm at all an expert on the this the entire space but i really recognize a problem statement that they're trying to address having lived there and so i think sometimes just if you've got some international exposure already from your work from your personal life that can be really beneficial make sure you bring that into play great advice love it and on the subject of advice the final question what advice would you give your 10 year younger cell if you obviously if you only had 30 seconds um i would say listen to your gut instincts and there really are no stupid questions, particularly when you move between sectors, like I have done many times, your questions can often really shed light on problems that people haven't fully understood and haven't digested.

26:16And you can feel stupid sometimes the first time you ask that question, but actually it can be really beneficial. There are no stupid questions, which is great for podcast hosts. Exactly. Exactly. Very self-serving, Tom, very self-serving.

26:34we can definitely do with more diversity in cap tables and you know so people like yourself that bring such a fantastic background to the cap table encouraging more of these efforts is what it's all about thank you for joining the show today and for sharing your unique perspectives thank you very much guys thanks so much sir here's a few words from our beloved sponsor this episode comes to you by the support of our partners portfolio iq by synaptic Portfolio IQ is the most effective way to track your portfolio. It pulls data from all sources, board decks, financials, MIS sheets, forms, emails, everything.

27:07And creates a true single source of truth for your portfolio data. With Portfolio IQ, you can track all the metrics that matter, not just the standard metrics. All metrics are reviewed by a team of certified accountants. You'll get 100 % accuracy. Not sure about a number? Just click on it to see the exact sale in the document it came from. Portfolio IQ also adds a layer of standardisation to make the data comparable and useful for benchmarking, valuations and reporting. All of this is as simple as forwarding an email. Zero added work for your fund or your portfolio companies. Portfolio monitoring that you'll fall in love with.

27:45Go to synaptic.com forward slash portfolio IQ. That's S-Y-N-A-P-T-I-C dot com forward slash portfolio IQ The good folks at Synaptic will be happy to give you a no-cost trial Is this 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 I'm loving angels I saw an angel All angels say For love Please save me an angel With a smile on her face We're here now together But don't help me, Johnny You've been touched by an angel, girl