#86, CEO and Co-founder of Angel Academe, Sarah Turner: Diversifying Angel Investment

0:00Every day I see a new platform trying to connect investors and entrepreneurs or do a bit of that process that do the deal flow analysis and stuff like that. But there are so many platforms that there's not going to be anyone that solves all the problems. And it's going to be quite a fragmented market.

0:27We have discussed on the show many times before that female participation in the tech sector is going in the right direction, but still has a long way to go. This is clearly reflected in the amount of female-led technology startups pursuing investment. When I found out about Angel Academy, we were determined to get the founder, Sarah Turner, on the show, an experienced entrepreneur in her own right. Sarah has built an impressive network of investors committed to assessing startup and scale-up business opportunities led by female and mixed founding teams. We talked about how Sarah assesses an investment opportunity, what typical mistakes founders often make in their investment journey, the proliferation of AI technology, what sector Sarah is most excited about, and much, much more.

1:23What a great episode. If you've not listened to the Tech Leaders podcast before, this is a perfect place to start. Sarah has everything you look for in a guest and some more. It's Sarah Turner.

1:38So, Sarah, thank you so much for coming on the Tech Leaders podcast. I've been really excited to speak to you. Thank you for having me. It's a pleasure to talk to you. Likewise. And so we always start with this question. I'm particularly interested in hearing your take on this. But what does good leadership mean to you, Sarah? Right. OK. It's an excellent question. I, you know, personally, I think it's about leading by example. I've always thought I wouldn't ask and couldn't ask people to do things that I wouldn't be prepared to do myself. I think it has quite a lot to do with integrity and reputation.

2:17I want to be seen as trustworthy. I want to be able to trust other people around me. I think those are probably the two key things. I had some very good bosses early in my career. And those are two principles that they stuck to as well. They didn't talk about it, but I realised on reflection that that's what they were very good at. And that's what I admired about them. So do you mean in terms of like sort of saying what you do, doing what you say and saying what you do type thing then? Just having clarity on your intent. Yes, and transparency and genuinely supportive of other people, not just saying what's convenient.

2:58Yeah, no, absolutely. I think that's, I think when it's authenticity, isn't it? when you're authentic with your message, it really shines through, doesn't it? You know, no, that's a really good, really good point. So Sarah, some of the listeners may not be aware of yourself and Angel Academy. So I want to dig into your backstory and maybe just do a bit of an introduction to yourself. So why don't we start with the early part of your career? Why did your career follow the path it ultimately ended up following? What got you into this sector and this direction? Well, I think a lot of lucky accidents, really.

3:34It's easy to look back on your career and say it was all well planned career path. But I actually got into tech because I graduated into a recession. It was really hard to find a good job. And, you know, in those days, you were grateful for anyone who would employ you. Things are a little bit different now. and I found out about this master's course that it was a conversion course for people who'd done a arts and social sciences degree which is my background and teaching them about technology because at that time there was a shortage of people who could kind of communicate and sit I suppose between the coders and the customers and translate that.

4:17Because you did a history degree I believe yes history and politics so absolutely fascinating my university was a hotbed of revolutionary activity and stuff really exciting to be part of that but you know no obvious career path afterwards but actually the transition into tech is is not that hard it's not that insurmountable and there are opportunities whatever your skill set you don't have to be a programmer or you know I went in as a kind of project manager and then we were making digital media stuff so it's a bit sort of a producer as well well do you know what Sarah I did a history degree too and I too work in the tech sector and I too do a little bit of media as well as we are yeah so we've got quite a bit in common I think maybe but so talk us through the early part of your career then you you said after you obviously you completed your master's and then you got into sort of project governance, project management.

5:14Was that your first step into the IT technology world then, yeah? Yeah, exactly. So, a lot of my colleagues on the master's course went off and joined banks and were earning kind of double my salary, I suppose. But I was kind of very hooked on digital media. It was a very exciting time. You know, none of it worked easily. It was, you know, real wild frontier stuff, but it was the point at which users interacted with computers. And that's what I love, the sort of the communication side of it. So I was kind of project managing and producing some very early digital media efforts. We were still making stuff on CD-ROM and then we kind of moved into the web.

5:59So it was all kind of, it was all about problem solving. It was all about bringing clever people together to sort out particular problems, trying to do it within these very unreasonably small fixed budgets and make some money for the company at the end of it. So I loved it, but it was hard. Oh, absolutely. I can imagine. And especially being such a new medium up against traditional media at that time. So you obviously were part of the startup founding team of an organization over a four-year period. Looking back now, Sarah, having that experience of being part of a startup so early in your career, what did you learn from that experience that set you in good stead beyond when you exited?

6:43So this was my second job in tech, leading this kind of brand new network that was about connecting all the digital media businesses in Brighton and across Sussex, of which there were quite a few. We had some real pioneers in that area and basically kind of trying to promote that community and put it on the map. And we were very much the first organisation of that type. So we became a model for lots of other regional initiatives as well. It's very exciting being on the ground floor of something and basically kind of creating something from scratch. But, you know, I was lucky I joined the organisation, had a bit of funding.

7:29We had to kind of make it sustainable within a period of years, but we had some funding to go on. So that gave us some space to to kind of experiment and speak to lots of people and just sort of focus on some particular areas to to develop that would then lead to a sustainability plan for this particular business. So I think I learned a lot about building community, building relationships, bringing people who in some areas would compete with each other, but in other areas could collaborate. So, bigging collectively for bigger projects and things like that. And it got me into contact with other startups.

8:11So, other entrepreneurs who are building stuff from scratch and leading the way on this Wild West frontier of the internet. Yeah, absolutely. Obviously, it was a very, again, it was a very exciting time with lots of startup activity, probably for the first time at that scale in the UK, would you say. There wasn't really an explosion of entrepreneurialism pre the dot-com days. What was there, Sarah? Is that fair to say? I think that's absolutely right. You know, of course, we've always had entrepreneurs in this country. But I think what happened was it was the first wave of infection by that Silicon Valley spirit where you had not just entrepreneurs, but you had people with money that were investing money into these businesses so they could grow not just at a typical organic pace, but really charge super growth.

9:07And so that was very exciting. It all felt very, very new. There was only a small number of people doing it. So you could quickly form connections with everybody. It was a really exciting thing to be part of. And And that has sort of stayed with me throughout my career. So could you give us a snapshot? What was it like to raise capital in those days? You know what I mean? How would you go about finding investment for your startup in the early 2000s? What was the process? You know, you would come up with an idea. You would start doing a little bit of work on it. You would kind of create a pitch deck.

9:48You know, business plans weren't needed. It was a pitch deck, you know, fairly punchy, concise. And then you would try and take that to investors. So, you know, there were some people who were angel investors. So these are individuals, often had had a business themselves before, like to invest in other individuals at an early stage of their startup growth. So relatively small amounts of money, but very personal. Was that done via brokers? There were things called angel networks, not very many of them, but where you had groups of investors who clubbed together and invested together. And then there are other people who are just kind of very well networked, so would meet entrepreneurs and invest that way.

10:36And then there's another group of people, venture catalysts. So these are institutional investors. These are people investing other people's money. So they tend to get involved a bit later once a business has got a bit more legs, a bit more what we call traction. but all looking to get involved in very exciting, potentially high growth businesses in the hope that some of them, not all of them, would yield outsized returns. Yeah, sure. So there was clearly an appetite brewing for investment in new ventures. It's exciting. Obviously, the dot-com bubble exploded, but it felt like this was year to stay.

11:21I mean, the entrepreneurial spirit within the software technology industry was, you know, it had potential. So talk us through that sort of period afterwards then. And it seemed like you were bitten by the bug, if you like, of the startup and scale up world. How did that play out for you in terms of right up until when you set up Turner Hopkins? So after that, working with startups and scale ups, as you say, you know, definitely bitten by the bug. I then moved into a period of doing consultancy. and a lot of the same sort of work, but it was kind of more on an international scale. So this was working on projects, open innovation.

12:00So working with some large corporates, many of them international, and trying to connect them to the exciting startups and scale-ups that existed in the UK. So around different areas of emerging technology and the corporate partners would either invest or buy from these startups. and so that was a very exciting space and another way I suppose of kind of continuing to support startup businesses and stay at the cutting edge of innovation. Yeah no absolutely. This episode is brought to you by Be Digital UK. Be Digital are a trusted partner to leadership teams of technology-driven organizations delivering ROI-led solutions across cost optimization and also data and AI adoption.

12:52So obviously you've set up Angel Academy whilst you know at the same simultaneous with Turner Hopkins. Can you talk us through how that come about and just give us a little bit of an overview of Angel Academy and what the purpose of the company is? Yeah so Turner Hopkins was our consulting business so innovation partnership consulting business. I got to a stage of my career where I had a little bit of capital that I could invest. I started doing some angel investing, went along to these networks, was usually the only woman in the room and certainly the only woman angel investing, I think, at that time.

13:34It just got me thinking about where are all the women? And the odd occasion when female founders came and pitched to these groups, the conversation inevitably didn't go well. All those cliches that you've heard about female founders getting different questions, it really did sort of play out in front of my eyes. I could see that. And it just got me wondering that what would happen if there are more female investors in the room, that the conversation might be a little bit different, not just for the female founders, but for all entrepreneurs. And where are the women? Because I know plenty of other women like me that have got an appetite for risk, have done reasonably well in their careers and would make amazing investors.

14:25So that was the germ of the idea. I set it up as a side hustle alongside Turner Hopkins. So I started running events just to see what would happen and the first event we did it's quite a long time before we formalized the business was um in in 2012 it was part of the digital olympics during the london olympic games we were lent a very nice entertaining space a pop-up space that had been put on and you know it ran an event and it was called angel investing for women and i thought i was targeted women who would like to be angel investors. But actually, all the people who turned up were founders looking for money, mostly female entrepreneurs who had great ideas.

15:13So, you know, I knew that the deal flow was going to be there because one of the things that you need for angel investing is you need access to good opportunities. So, there are probably about 100 women looking for investment that turned up at this event, but only a tiny number of women who sidled up after me and said, oh, I'm interested in investing. And actually, you know, that has been the harder part of the business to grow. Speaking to women about angel investing, what it takes to be an angel investor, why they should think about doing it. I know it's not going to be for everybody but I would like women to at least know about it and decide actively whether it's for them or not so this has kind of become the the mission.

16:01I was just going to say Sarah I interviewed a lady called Catriona Campbell who works for Ernst & Young and she's the CTIO of Ernst & Young okay she's a lovely lady very very successful experienced but her background was banking and And I remember her saying that she basically had a startup idea quite early in her career and took it to a load of investors. And they pretty much said to her that they had concerns about her being a female entrepreneur. So therefore, they wouldn't invest because she was at an age where maybe she would be, you know, having children or whatever. OK, I don't think I said that in those words.

16:44This was going back a while, obviously. clearly there are challenges for women and have been and I do think that is changing and going in the right direction whether it is fast enough is another another conversation but so but but why do you think there was such a deficit of female entrepreneurs at that time when you start around the 20 around 2014 10 years ago I mean female entrepreneurship has grown massively I think you know to the point I made before more people are talking to women about it. I went to university, I did the milk rounds, nobody ever mentioned entrepreneurship as an option. And I didn't even consider it, even though my, my dad was actually an entrepreneur, although he always referred to himself as self employed.

17:31So, you know, even the language has changed. So nobody talked to us about it. I think, you know, there are expectations on us about what we might do. I think we do have a slightly different attitude to risk. And frankly, you know, if we hold ourselves back from being entrepreneurs, I'm not sure it's a bad thing. I think that, you know, female thoroughness approaching things more carefully is no bad thing and it's not risk averse it's risk aware so you know the women i've noticed who start businesses um take a bit longer to reach that decision which means they have bigger networks they know more about the area they're launching a business into they might have some savings to fall back on which is vitally important so you know they're more considered about it which might mean there are fewer number of us but there are probably fewer of us failing in our businesses because we've given it a bit more thought we've had lots of discussions about this and you know I think there are societal pressures there are perceptions you know I was speaking to a male investor who'd been looking at this and he's saying that you know actually that he felt that women weren't allowed to kind of borrow money or be in debt or have loss making businesses that you know men are given a free pass on that because they're potential unicorns but women are expected to demonstrate revenue straight out of the the gate so there are all sorts of challenges but yeah sure so it's a complex picture isn't it it's really complicated and i don't think there are any easy answers or easy solutions.

19:20But we've just had Atomico, which is, I think, you know, one of the largest VCs in Europe set up by the Sky founder. Every year they do a state of European technology report. Part of that every year is looking at gender statistics and all female founding teams got three percent of the euros invested across European venture capital this year a little bit more if you're in a mixed gender team but if you're in a mixed gender team that normally means that the CEO is a male so you know women are finding it harder to raise capital it takes them twice as long they raise much smaller investment rounds so you know those barriers are very real despite the ever-growing number of female entrepreneurs.

20:11There's lots to unpack there but I think it is a complex picture but I think that in order to address this Sarah we probably need to look at it at grassroots level don't we and I think ultimately I'm a father of two daughters and I would love them one of them to enter the technology or software industry and I would also love them to be ambitious and I think those are the two things that we need to be conscious of at grassroots level within our education system? Are we pushing young women towards more, unintentionally mad, towards more stereotypical careers inadvertently? Okay, I think that's what we need to probably look at.

20:46But we are now nine years down the line. I think it feels like that there is definitely progress being made. I'm certainly, I know personally, a couple of female entrepreneurs within the software world. How much progress has really been made by some obviously you're a much more informed opinion than I am. How much progress is being made, in your opinion, and how far have we got to go? I think progress has been made. That 3 % of all investment dollars we're talking about is up from 2 % last year. So it's slow, but there is progress. As we've talked about, there are far more women building businesses, but also tech businesses, highly scalable tech businesses we at angel academy have invested in it's just about to be 49 so you know there's they are there these brilliant female founders are there there is recognition even if it isn't translating into investment money that that something something structurally is wrong that women are kind of not getting anywhere near their fair share off the pie and And I think, you know, that awareness and that knowledge is one thing.

22:00And there are way more angel networks now. Our investment ecosystem is much bigger, much more active. There are lots and lots of VC funds. We now have a lot of the big American VC funds. They've got their European presence in London. So there's a lot more capital around. There's a lot more entrepreneurs competing for it. But the whole ecosystem has grown. And then, you know, as you all know, how technology has changed in that period, it has transformed our lives and especially coming out of the pandemic. In the investment world, there is just this old cliche that, you know, you can't do an investment without looking into the whites of someone's eyes.

22:45And then lo and behold, when we couldn't do that, actually, we were managing to make it happen over Zoom or Teams or whatever it was. because you can actually build relationships if you kind of invest the time in doing it. So, you know, a lot of what we do became more productive because we weren't having to always organize events and things like that. So there's been some productivity benefits, definitely. So help entrepreneurs, how does your angel investor network, what do they do for entrepreneurs? What do they bring to the table? What is the sort of unique selling point of the angel investor network?

23:22Well, our unique selling point is, there's more than one here, but we're a mainly female community, which is pretty unusual in the investing world. But we've been going longer and we are writing bigger checks, I'd say, than the other kind of gender or diversity focused networks. Do you take mixed founding teams? We do. Yeah. Yeah. We're looking to support female founders. We are investing in sole female founders, teams of just women, but also mixed gender teams. So as long as there's a female founder that owns a decent chunk of the business, pre-dilution, and is in a senior role, then we're very happy to consider it.

24:08You know, I always make the point, this isn't about keeping men out. This is about supporting more women. I don't think anyone would see it like that, Sarah. But yeah, you know, I think it's great. I mean, it's, you know, look, it's really good, especially for female entrepreneurs would get a lot of assurance, okay, entering into a, you know what I mean, a conversation with someone who runs a female orientated investor network, do you know what I mean? And that could be the difference between them pursuing investment or not, you know? I think that's it. You know, we hear it from a lot of the entrepreneurs that we me that it you know it's so nice talking to women um our style of questioning might be a little bit different our style of operating is is I think it is quite different you know and it's a nature of what we do that we have to say no to quite a lot of people but we try and say no in a constructive way and give feedback so that if people kind of come back to us again you know they've had some helpful advice and you know they they might have a better chance the next time around yeah sure what's the main pieces of advice you give to very early stage female entrepreneurs who maybe they've got a product developed or something but they you know they they want to scale it what do they do for you know to get themselves noticed and find investors and and how do they just get going sarah well i mean the first bit of advice i always give founders is you know get as far as you can under your own resources before you go out and you ask people for investment because the more value you can create at an early stage the more you will be valued by the market so do what you can to try and prove what we call traction so some progress in your business then make sure you target your investors carefully so you know if you're a really early stage business it's no point speaking to an investor that invests at what's called series a so that's quite a few steps on from you you'll just be wasting your time and there so target people who are investing at your stage and in your sectors just to be clear your in your network looks at pre-seed until investor a is that exactly until series a yeah you don't look at anything beyond that yes broadly we might follow on beyond that if we can afford it but yeah we we tend to participate in those those early rounds we're not investing in anything that's still an idea yeah sure typically not investing in things that are an mvb of mvp you know you you you can get something to market relatively quickly and cheaply now there are founder loans that you can take out and grants you can leverage and all sorts of different things to help get that early funding I know it's tough but you know as an investor I want to see that the founders have got some skin in the game as well that this isn't a job for them and they're just expecting investors to come and pay their salary.

27:15So, you know, you've got to be entrepreneurial and have hassled your business to showing some traction. Yeah, sure. No, absolutely. So the other thing is, you know, be super organized. Most half decent investors will have some standard questions and things that they'll want to see from founders. You know, one of the main things is your EIS or SEIS preassurance. So this is something from HMRC to say that you are eligible for those tax breaks, which is what most UK angel investors are after. But, you know, set up a data room with your financial model, your deck, any employment contracts, any commercial contracts in there, all the sort of information that somebody who's doing going to do due diligence on your business will want to see and then you know you don't share it with the world you want to check who's accessing that information because it's sensitive but if you find an investor and you think they're trustworthy then make that available to them so what we're looking at during this process is kind of you know how entrepreneurs are handling themselves how they're responding to our questions if they're surprised by their are questions then they're probably possibly you know it shows they're a bit naive and inexperienced if they've got the answers to hand we think wow you know they really know what they're they're doing so you know you can do lots of things to get yourself ready and get organized that's really good advice i got to ask you this one though sarah what do entrepreneurs do wrong or do badly at this sort of pre-seed to seed level Canter calls with investors unprepared.

29:03So, you know, one of the first steps once people have submitted an application is to invite some of those applicants to a screening call with the investors. And although it's relatively informal, we do send instructions about, you know, what will happen on the call and what we expect. And some people just ignore it and they turn up and they've been asked to talk through their presentation for 10 minutes. They either don't have a presentation or they ramble on for 20. And it's just sort of, you know, if you're oblivious to how we work, it doesn't create the best impression and it eats into somebody else's time as well.

29:41So, you know, be aware of the dynamics, be prepared, be emotionally intelligent about this because it is about connecting with people and respecting people. Yeah, sure. So how are you finding the investment landscape right now, Sarah? I'm hearing stories that VC money, for example, is quite, is a bit more difficult to come by than it was. The flow of money is a little bit slower than it was, say, you know, a year and a half ago. What is your sort of take on the current investment landscape and what do you think is driving whatever those trends are? It's a really tough environment. We are paying the price of a bit of over-exuberant behavior a couple of years ago.

30:23The post-COVID. Yeah, it was crazy. During COVID and coming out of COVID, everyone was just making these assumptions that growth and adoption of these technologies will continue like this. and that, you know, behavior will remain the same. And although some things have changed, we're probably all spending a bit less time watching Netflix, aren't we? And there are lots of other services. So, you know, the world has come back to normal a little bit. And, you know, a lot of our investments that, you know, had achieved nice valuations in the market are, if they're in the unlucky position of having to fundraise again, are having to go back with much more modest valuations.

31:08Actually, as an angel investor getting involved early, it's a good time to be investing, but it does take a little bit of confidence that the market is going to recover. So a lot of good entrepreneurs have been, you know, laid off from the scale ups they were part of, they've taken that experience, they've started businesses themselves. So there's some really good founders coming through in the pipeline and modest valuation expectations so we can get in relatively cheap now. But, you know, I think people are feeling a little bit poorer and it's very hard to be confident while all this terrible stuff is going on around us.

31:50And it does feel like it's one sort of economic or, you know, global shock after another at the moment, doesn't it? Yeah, it does. But I think that does make total sense. I think there was definitely over-exuberance post-COVID there was so much money flying around it just feels like everything and anything was getting invested in I think we're in a position now where it's this term corrections the market's having a correction isn't it and I think the reality is setting in now and profit and profit is kind of like more important than growth all of a sudden and I think that needs to happen doesn't it you know yeah all the mantra of growth at any cost and throwing throwing money at user acquisition that's that's all gone away for the time yeah and it's probably a more you know realistic more sensible market right now i suppose isn't it a more sensible market but you know unfortunately we had this sort of you know over exuberance followed by over correction and you know it's a really tough market to be a startup raising money at the moment even if the business is doing well we've got lots that are doing well and having to be a lot more modest in terms of their their valuation and how much money they raise at the moment.

33:01Yeah, sure. What type of businesses are attracting attention from investors right now then, Sarah? I suppose the obvious one is AI orientated companies and automation. So, you know, absolutely AI is generating a huge amount of attention and investment, but also kind of, I suppose, what we call less sexy businesses, things that are kind of, you know, will make businesses operate more efficiently. So they make things work faster and cheaper. Things that are sticky. Once your client has signed up, it's very difficult for them to leave. You know, these are all the principles that we're looking for.

33:42Also things that are kind of genuinely need to have anything that's a bit sort of a nice to have at the moment is lower down the shopping list. I think consumer, anything consumer oriented is struggling quite a lot at the moment, unless it's something that is genuinely recession proof. Right, that's interesting. I think cost savings and efficiency is the sort of, that's in fashion at the moment, it's in vogue at the moment, I suppose then, yeah. Now that's really interesting. So what kind of technology innovation are you most excited about in the world right now, Sarah? I mean, you know, we've touched on AI and everyone's talking about that, you know, both the kind of the opportunities and the threats and both are interesting.