Entrepreneur Turned Angel Investor

with Josh Felser

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Investor Relations

Your relationship extends beyond the check


Instructor
Josh Felser

Co-Founder of Spinner, Grouper & Freestyle Capital

Lessons Learned

Management is different as an investor versus a founder.

Work with investors you like: when the phone rings after you are funded, will you want to answer it?

Investors should focus on areas where entrepreneurs raise their hands for help.

Smart companies should reach out to an investor's existing portfolio to hear about their experience.

Transcript

Lesson:Entrepreneur Turned Angel Investor with Josh Felser

Step #4 Investor Relations: Your relationship extends beyond the check

When I think about management as an investor, it's less intense. Managing a portfolio of founders is less intense than managing a team of 50 people, each with different… Managing a founder at that level is different than managing a director of marketing or an engineer.

I will say that what is similar is that I feel like I'm a therapist. I felt like I was a therapist as a CEO and I feel like I'm a therapist as an investor. A lot of our companies and a lot of our founders, they want that. If you were to interview enough of our founders, you would eventually find one that said, "Oh, yeah, Josh was my therapist during the difficult times."

So, the management is different. It's less stressful because I'm spreading myself over a portfolio of founders. But a lot of those skills I developed as a leader, as an entrepreneur, I definitely use to manage.

It's also, they all know that I've been a CEO and a successful founder. So, most of them tend to really want that management and feel like the advice I'm giving them is coming from the right place.

So, sometimes when you're managing a larger, as an entrepreneur, you're managing a large group of people, not everybody wants to be managed. But in this world, I feel like most entrepreneurs are comfortable and want as much as I'm willing to give.

Whether it's us or whoever you choose as your investor, just imagine you've raised your capital, you have your lead investor and every few days, your phone rings with a picture of your investor on it.

Are you excited about answering that phone call or are you like, "Send to voicemail." If you're thinking already, "Send to voicemail," don't allow that person to leach around, assuming you have that luxury.

I think that it's hard to visualize. You're so caught up in raising your round of funding and it's hard to step back and imagine life post-funding. That's one way we use to... We want the entrepreneurs to want us as much as we want them. Don't take our money just because you want our money, really want what we have to offer. If you don't, then that's fine. Find someone else that you want.

It's certainly interference when they tell us to stop. I have not heard any of our entrepreneurs, they haven't told us to our faces that we are interfering. If we are, I want to know about it because that's the last thing I want to do.

It seems like we're so conscious of not interfering, of not telling them but advising them, of helping them kind of get to the right answer without saying this is the answer or this is the path you have to choose.

We had two very different experiences as entrepreneurs with our companies. The first company, Spinner, we had all these investors telling us what to do. It was a constant battle. It wasn't always a happy relationship.

The second company, we just did whatever we wanted. Both worked out. So, we're sensitive because we have this first negative experience. We're also sensitive about the hands-off kind of attitude. So, we've found this happy middle.

We also tend to focus more on the things where, we consciously focus on the areas where the entrepreneur kind of has raised their hand for help. We get less involved in features because though we have opinions about it, we think that's really where the entrepreneurs need to shine. They need to own that.

If we are constantly stepping in, it's harder for them to own it and they can become dependent on us for that. So, we kind of focus on the areas where we can add the most value anyway. So, so far I haven't seen anything on Secret saying we're interfering. But I want to know if we are.

First time founders have an especially challenging time assessing the investor community. There's no easy place to go to do it. You can go to The Funded, but I think that's flawed. It's challenging, though I think the smartest entrepreneurs will reach out to the portfolio companies even cold that are in that investor's portfolio and get their take.

I can't imagine… If an entrepreneur had met with me a couple times and we were seriously looking at each other, our portfolio companies would totally respond to somebody who reached out seeking information about us. I would hope they would respond honestly.

So, I think you just have to apply that same entrepreneurial experience and drive that you have for your company to figure this out. This is critical to at least the first phase of your company. So, I think to spend the same energy getting to know that investor by checking them out because it's not that hard, you just have to have the drive to figure it out.

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