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Check out Marcia’s brand new bestselling book, “Do Good While Doing Well” for an excellent introduction to angel investing!

About Marcia Dawood

Marcia Dawood is an early-stage investor who serves on the Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee. She is a venture partner with Mindshift Capital, a member of Golden Seeds, and the chair emeritus of the Angel Capital Association (ACA), a global professional society for angel investors.

She is the author of Do Good While Doing Well, Invest for Change, Reap Financial Rewards, and Increase Your Happiness, which has just been released in September 2024. She is also an associate producer on the award-winning documentary Show Her the Money.

A TEDx speaker and the host of The Angel Next Door podcast, Marcia walks the talk and holds investments in over fifty early-stage companies and funds. She is committed to expanding support for diverse companies that overcome the world’s biggest problems and accelerate positive change. She is passionate about bridging the gap from early-stage inception to building thriving, profitable companies.

Previously, Marcia worked in sales, marketing, and operations for Kaplan Education for over sixteen years. She received an MBA from the University of North Carolina Kenan-Flagler Business School.

Marcia currently lives in North Carolina with her husband, Izzy, and she feels lucky to be the stepmom to three amazing sons.

Episode Highlights

How to tell if your business is scalable
How to develop a credible market size estimate that investors will buy
Solo or not? Pros and cons of going it alone versus finding a team
How to pitch even a highly technical idea so investors get excited
How to ensure you’re building a product that has real buyers
How to handle financial projections and models, especially if you’re a non-financial founder
How to tell if crowdfunding is the right path for your startup
How to find, connect with and evaluate potential investors for your startup
How to say no to investors who aren’t a good fit for you or your startup
Actionable tips for effective investor outreach you can implement tomorrow

Links and Resources

Do Good While Doing Well: Marcia’s latest bestselling book on angel investing
Marcia Dawood’s TedxTalk
Angel Next Door Podcast: Official podcast of the Angel Capital Association
WeFunder – A crowdfunding platform allowing startups to raise capital from both accredited and non-accredited investors.
StartEngine – A leading equity crowdfunding platform that enables startups to raise funds from the general public.
Republic – A crowdfunding platform where investors can support startups and private companies by providing equity and other forms of investment.
Honeycomb Credit – A platform specializing in debt crowdfunding that helps small businesses raise funds by offering loans to everyday investors.
Mindshift Capital – A venture capital fund focused on investing in women-led businesses in the Middle East and North Africa.
Aspire Program by VentureWell – A program that helps early-stage entrepreneurs understand customer discovery and prepare their ventures for investment and growth.
Show Her the Money – A documentary about the challenges women face in receiving venture capital funding, highlighting the less than 3% of funding that goes to women-led companies.

Interview Transcript

Shubha K. Chakravarthy: Hello Marcia. We’re so happy to have you today on Invisible Ink. Welcome.

Marcia Dawood: Thank you so much for having me.

Shubha K. Chakravarthy: You’ve had a pretty impressive career. I’ve known you for quite a while now and you have had a very impressive career in angel investing.

What has been your most surprising insight about entrepreneurship, founders so far through all of this experience?

The Upside of Angel Investing

Marcia Dawood: Well, I became an angel investor 12 years ago in 2012 when someone asked me to come to an angel investing meeting. I remember thinking, what’s angel investing? I’ve no idea what it was. I went to the first meeting and I was totally fascinated at what entrepreneurs were inventing, making, innovating.

So I think that’s probably one of the surprising things. I really had no idea how much innovation was happening around me, how many incredible things were being worked on right in my own backyard. At the time I was living in Pittsburgh, Pennsylvania, I certainly didn’t think Pittsburgh was a hub for innovation but it certainly has become and even was back then.

They have incredible universities in Pittsburgh that are putting out unbelievable innovation and I just am fascinated all the time at the things that entrepreneurs come up with. I absolutely love it.

Shubha K. Chakravarthy: Is there like a thread or like a particularly noteworthy facet of innovation or something that just stands out in your mind?

Marcia Dawood: I don’t have any kind of a science background so I’m not a scientist at all but I am always fascinated at all of the things in healthcare that are being innovated.

I just love hearing from entrepreneurs who are doing things that are trying to cure diseases and they’re trying to make cures or treatments for different things so that people can live healthier and better lives.

Shubha K. Chakravarthy: I’m pretty excited about your upcoming books. I did have a sneak peek. I know it’s called Do Good While Doing Well. And it was obviously fascinating.

But how is that philosophy of doing good intersected with your search for returns as an investor obviously your first question is, what are the returns? So can you just talk a little bit about that?

Marcia Dawood: When we hear the word investing, a lot of times we think that it has to have a financial return to it. And if I don’t do very well at making the investment decision, meaning I don’t get some kind of a financial return, that’s a big windfall. I might look like I don’t know what I’m doing or I’m not sure how to make the right type of decision.

With angel investing, it’s a little bit different.

In my opinion the reason why you’re investing is because you really care about what the entrepreneur is working on and you see the potential for them being able to disrupt a big market. There are potentials for returns and angel investing is a risky asset class but the idea of doing good and being able to potentially get a financial return.

I love donating to charity. I love 501(c)(3)s, I want to be able to help all the nonprofits out there. But the things that for profit companies can do, they can scale on a bigger level.

They can get more funding, they can help with the innovations that can drive everything together because if we try to put the burden all on nonprofit companies, that’s just not fair. We all have to work together. And that’s how I believe doing good and doing well can merge together.

Shubha K. Chakravarthy: That’s a great point of view. And I’m going to flip it and ask you a slightly different way and I’m sure this is true for you as well, right?

When I speak to a lot of women founders and the one thing that’s consistent across literally every founder is they have a mission.

They’re all mission driven, even the most scientific biotech. Founders at the root, they have some mission.

But on the flip side, if I’m a mission driven person and I’m not so heavily dependent on capital, how much focus should I be having as a founder on returns? And should I be giving myself and my startup any slack just because I’m mission driven? What’s your point of view on that?

Marcia Dawood: There’s a lot of small businesses in our country and that doesn’t necessarily mean that they’re a scalable startup. Having a small business that’s mission driven is great. Maybe that company doesn’t need to get capital in order to grow. Maybe they’re just operating even in their local community and they’re helping to build the community and the economic development around them which is perfect.

So it doesn’t necessarily mean that you need to get investors just because you have a small business. You really have to look at what makes sense, can you get the funding that you need in order to get your investors a return? Angels, VCs, any type of investor is going to look for the potential for a relatively big return if they’re going to invest in a company that is so small and looking to scale which is at its riskiest stage.

Shubha K. Chakravarthy: The big takeaway as I’m listening to you for me is, hey, whether you’re mission driven or not, your big question is how big do I want this to be?

Scale is like a fundamental lever that I have to make a choice on as a founder is like the message I’m getting. If you do want to scale regardless of where mission plays a role in your overall scheme of things, you better be worried about returns as a founder. Is that a fair way to say?

Marcia Dawood: That’s a fair way to put it.

What Makes a Business Scalable

Shubha K. Chakravarthy: Which brings me to the question of scalability.

So especially for first time STEM women founders, there’s this question of how do I get comfortable with scale and how do I even assess an idea that I have and I’m excited about first potential scalability?

So what are the key indicators I should look for as a founder to make sure that the idea that I’m going to invest all this time and potentially my own money and others is does have that potential for scale

Marcia Dawood: I think you have to look at the problem that’s being solved and look at the market that could potentially use your solution. Most investors are looking for that market where the solution can be sold to be relatively large, meaning billions of dollars are already being spent in that market.

If it’s something like your local coffee shop. The local coffee shop probably isn’t going to get big enough that they can sell coffee across the entire U. S. out of their 1 coffee shop. Probably not.

So, how is it that you can get to that market where there it’s nationally whether it’s internationally, how is it that you can do that and be able to make sure that you are serving your customer properly, that you have the right solution which they’re going to want to buy and they’re going to pay for all of those things that to me shows that you’ve thought through the scalability.

In a lot of cases if the market is very large you’re hoping to get a fraction of a percent of that market. You’re not trying to get 50 percent of the market but the idea. Is it something that people will buy repeatedly? And will you be able to get more and more people to buy it as the solution is getting more well known?

Evaluating a Realistic Market Size

Shubha K. Chakravarthy: That brings up two interesting questions.

One is this issue of starting with a single coffee shop doesn’t mean that he can start as a single coffee shop, right? The point that I’m hearing you say is you could start at one coffee shop as long as I see that you have in your mind a plan to get to a zillion coffee shops or whatever.

And I can see a visible path from one to 1000 or whatever the case might be.

The second issue is you brought up this billions and billions of market size, right? I want to understand from you as an angel investor like how are you evaluating a realistic market size?

I’m sure you’ve seen this. Lots of founders come up with the three bubbles. Here’s a big TAM, here’s SAM, here’s SOM, right? So is that enough?

What kind of realistic robust test should I be applying as a founder to make sure that there is in fact a real market that I can access with my product?

Marcia Dawood: I think that comes down to as an investor, I would ask the founder to explain to me how they came up with the number. Where did they research their total addressable market or whatever that may be? And how are they really thinking about the market and who they’re going to sell to?

And I’ll give you an example. I’ve seen products. I used to work in the education industry with Kaplan education. And I used to see people say that they’ve got this like ed tech product, educational technology. They’re going to be able to sell it to school districts. I can tell you right now how hard it is to sell to school districts.

If the founder was saying that here’s how big the school district market is that they think they’re going to sell into. This is the amount of penetration I think they’re going to get going to really have to question if they haven’t already established a relationship with those people and that they know.

They’ve already actually gotten some sales because for the most part they could just be climbing up a mountain in mud trying to make that happen. It’s really about understanding. What do the founders really believe is their market? What can they realistically sell into? And how is that going to be important for when they’re trying to scale the company? Is it something that they can realistically do?

Shubha K. Chakravarthy: I love the edtech example. From all the other industries and pitches you’ve seen, are there other red flags or typical pitfalls you’ve seen with founders falling in terms of misestimating their market size or trying to make it look even though it’s bigger than it really is that come to mind?

Marcia Dawood: Any type of a B2B sale. Even B2C sales are tough because you’re trying to break into the market to get that scalability which is when you have something that you are solving a super difficult problem and the solution right now is just so bad that your solution is going to be so much better.

That’s when I started to see there be real traction. But selling to and I was just using school districts and as an example. But even like hospital systems, NGOs, these are big organizations that require a lot of navigating and then getting to the right person in order to make a decision to close the sale.

The sales cycles are often quite long. And as a founder, I believe that what founders really need to do is spend a lot of time figuring out how long is the sales cycle? What is it that I have to do in order to sell to x, y, z, whatever you’re selling so that you have a true understanding and a realistic picture of what that’s going to look like.

Shubha K. Chakravarthy: So it sounds like you’re not just looking at any market size in isolation.

You’re evaluating it in the context of how real it is and what is it going to take for this founder to actually crack into it and gain some real traction with the typical customers in this market. Is that true?

Marcia Dawood: Absolutely true.

Importance of Founding Teams

Shubha K. Chakravarthy: The other question I have around scalability, right? We see a lot of questions around solo versus co founders like to what extent is the founding team impacting your evaluation of their scalability?

And can you talk me through your thought process on that?

Marcia Dawood: So in founding teams, there’s like a love-hate relationship between founders. I need a co-founder. I want a co-founder. Should I get a co-founder?

I’m not sure about this whole co-founder thing. I’ve seen solo founders do well if they surround themselves with the right advisors, the right team. Typically having two, three co-founders is better. Maybe in some cases it could be better because now you have different skill sets who have a lot of skin in the game of making this company grow.

But one thing I will say is that let’s say this company has three co founders. I would absolutely under no circumstances split the equity at the beginning three ways. That just doesn’t make any sense. I think co-founders, whether you’re one, two, three, you’re gonna obviously bring on more people.

You need to determine who is gonna do what. You need to have the hard conversations early because it’s a little bit like a marriage. So what happens if there’s a divorce and one of the co-founders wants to leave. All of those kinds of “Oh, that’s not going to happen to us conversations.”

It could happen. So have the conversations early before you really get too far down the road because I’ve had entrepreneurs come to me and they’ll just say, “Oh my gosh, I’m having a terrible time with my co-founder. They’re not doing anything or I’m doing this and they’re supposed to be doing, I don’t know.”

There’s whatever the story is. And then you end up with hard feelings. They have too much equity. I should be having more. All kinds of problems.

So I really encourage founders to have the hard conversations early because it will matter about how you end up scaling your business. It’s really important that as founders, you are all on the same page.

That does mean that things are going to change. They’re going to evolve. You’ll have to pivot. You’ll have to do things differently. It might not always be the way that you dreamt it up at the very beginning. And that’s okay as long as you keep talking about it and you keep those lines of communication open.

Shubha K. Chakravarthy: It sounds to me like if a founder came to you and you were looking at the team from a scalability perspective. It’s like a two way sword or a two edged sword.

On the one hand, you don’t want to be a solo founder because then you as an investor are going to look at me and say that she’s only one person. How’s she going to scale this?

But if there’s more than one, you’re going to be evaluating other things like do these guys have a co-founder agreement or at least some kind of understanding of what could go wrong. Are they being realistic and sound about how they’re splitting up equity?

So are these pretty much the things that you would look at from what the team’s impact is on the scalability? Is there anything else like that you think they should be thinking about?

Marcia Dawood: Those are the main things. In a lot of cases if they just communicate openly with each other, everything will be pretty much fine. What I sometimes see is there’ll be a founder who has a great idea, needs the tech person to be the co-founder so that then the tech person will build the tech but the person with the idea maybe doesn’t have the skillset to be able to build the tech and that’s okay.

It’s like how to now. That’s just an example like how now these two people come together and create what they really want to create together. And be able to essentially work together through all of the iterations that are going to have to happen to get to that product that you really know at that point will be able to scale.

Because obviously whenever you’re starting something, you’re going to have version A and then that’ll be version B. You have to go through that before you get to the final end product.

Shubha K. Chakravarthy: Can you think of any example from your experience where a company came in, where perhaps on the face of it first blush and you’re like, this is never going to scale but once you started listening to them, you realize that they actually had a plan and that you were excited about it as an investor.

Does any story like that come to mind?

Marcia Dawood: There’s been plenty of companies that we’ve talked to where at the beginning it seems like a daunting thing that they’re trying to solve. They want to do something big.

For example, if they wanted to have some type of a medical device and they were going to say, “hey, we’re going to do this. This is going to be better for people to use that we could then sell into hospitals and it would be able to scale it.”

At first, I can think of one in particular and it had to do with a heart stent. And this was like really invasive surgery. They’re putting something into somebody’s heart.

At first I’m thinking to myself, wow, that seems big. How are you going to get through all the hurdles, the FDA regulations and all that kind of stuff?

But the founder was a physician and really knew what she was doing and knew that this was very needed in the field. And even though it was a relatively small market, this is still a big enough problem and a big enough market that backers got behind her and she did quite well.

Shubha K. Chakravarthy: Was there any one thing that stood out or a small combination of factors that helped her overcome that initial disadvantage of being a solo founder going into a very technical market?

Marcia Dawood: In a lot of cases, what I see founders do poorly is that I think if they did it a little bit better, it would make their lives a little easier if they’re not explaining the problem as well.

So in this particular case, this woman, she was able to explain. I’m not a heart surgeon, obviously. I wouldn’t know what she was talking about related to this device that she was creating. However, when she explained in the first five minutes of listening to her what the problem was and how many people were dying because this solution was not in the market, I was like wow, I had no idea.

Us angels, we write checks out of our own checkbook. You can pull at our heartstrings a little bit and we’re going to come along for the ride as opposed to maybe a VC who answers to their other investors. If that isn’t in their investment thesis then they can’t necessarily invest and that’s okay.

But with somebody like me, I’m seeing this and I’m like, “Oh my gosh, I love this because people are dying. Now here’s the solution. Here’s somebody who knows firsthand because she was a physician. She was a surgeon. She knew firsthand what the problem was”.

And she’s like that – she’s going to solve this problem. And now I can see the scalability and there were enough people when we did our diligence.There were enough people that were behind her saying that they’re surgeons also and they know that this is a problem.

Shubha K. Chakravarthy: That’s fascinating because what you’re telling me is almost that the founder’s ability to convince an investor is in fact a lever to scalability.

Because that opens the doors to more funding which then helps her overcome what might have been fatal barriers or insurmountable barriers which I had never thought of before.

Marcia Dawood: When you’re a founder and you’re pitching to a group. You have no idea who’s in the audience. Let’s just say this particular case. Let’s say that this company really wanted to pitch to other doctors and people who really understood the problem because they had already encountered it in their own hospital or something like that.

Well, that’s great. But guess what?

I could be just as passionate about it as another surgeon because you explained the problem to me and I’m seeing people are dying. That’s what I care about. I care that this is going to solve the problem of helping people get past whatever heart disease they have.

What if someday that heart disease person was me or somebody I loved? Well, so now I care about it even more.

It’s just like explaining the problem no matter what the problem is that a company is solving to explain that problem down to we’re saving babies, humans and the planet.

All of these things are the things that investors care about. While I don’t have any medical training, I could relate to the pitch and what she was talking about because at the very beginning she explained the problem so well.

Shubha K. Chakravarthy: It has even more validity because if you’re a STEM founder especially in technical fields like health or bio or clean tech, chances are that your investor regardless of whether they’re VC or angel, they’re not going to be as much of a domain expert as you are.

It feels like it almost behooves you to be able to translate in very compelling terms why this is important. If you’re an angel, I might add the humanitarian aspect. If you’re not an angel, I might over focus on the market aspect.

But the main point remains. You have to be able to translate which brings me to the flip side of it. What have you seen the pitfalls that founders fall into in terms of not being able to demonstrate a scalable potential for their great idea? Any that come to mind that you think founders should watch out for?

Customer Discovery and Product-Market Fit

Marcia Dawood: Sometimes founders do have a solution that’s in search of a problem. Like they think their solution is so great, like look at this shiny thing that I made. It’s so great.

But people are already solving this problem by using X or X and Y. And they’re like, “But I put X and Y together. So isn’t this so cool?” But are people going to change their behavior?

So one of the things I learned early on when I was on diligence teams and I was a brand new angel is how hard it is for us human beings to change our behavior. We like routine. We don’t really like to change.There’s that book, “Who Moved My Cheese”.

We don’t even like to change seats. If we sat somewhere yesterday and we’re in the same room the next day, where are we going to sit? We’re going to sit at the same place.

Shubha K. Chakravarthy: Guilty

Marcia Dawood: So this whole idea of change and changing behavior is challenging. If you’re a founder and you’re like, I got this thing and it’s so great but I’m over here and I already have that brand type of toothpaste.

Do I need your fancy toothpaste that now includes toothpaste and mouthwash in the same? I don’t know.

I’m just making this up but you know what I’m saying? All of a sudden the solution isn’t necessarily so big. I’m not going to change my behavior. And I think that’s where founders get in trouble.

Shubha K. Chakravarthy: What do I need to do as a founder? Obviously I’m in love with my product. Maybe good, bad, indifferent it’s a truth.

But how do I bring that objectivity into myself before I come and talk to you as an investor to say, “Let me make sure I don’t fall into this trap.” What kind of tools or techniques would you give me as a founder?

Marcia Dawood: I would say, don’t even make the solution until you’ve done enough customer discovery to know that your product or whatever it is that you want to make will actually be bought by your customer.

You want to go out and talk to the potential customers and find out what they’re using now as a solution. Would they change it? How much do they hate it or love it whatever the story is?

So customer discovery is so important. A lot of times entrepreneurs don’t necessarily like to do customer discovery because they think that it’s going to be great. But that customer discovery can be so important.

I’ve actually watched founders go through a program and you know the program through Aspire, which is done by VentureWell and they do an amazing job teaching entrepreneurs about customer discovery.

I’ve watched entrepreneurs start in the program and they think that this is their solution. Then they go and talk to some potential customers. They start the whole process of customer discovery and within a couple of weeks, they have completely pivoted.

They have a different solution now because they’re realizing that their customer really does want X, Y, and Z together, but they can do that in an even better way that now they will change their behavior if founders can make the solution

Shubha K. Chakravarthy: One last question on that. I’m just fascinated with this. Is there like a clear tip off to you as an investor when you just look at a pitch or listen to a pitch and like, “You know what, they haven’t proven this that this is 10x better than the current alternatives.” Are there clear signs that you see that immediately tip you off?

Marcia Dawood: If I can’t understand what they’re even talking about. I’ve had entrepreneurs show me a pitch deck and they’ll be like here’s the problem we’re solving. I still don’t really understand exactly what the problem is because they haven’t articulated it very well.

Then they’ll go right into the tech but they are so close to it that they’re explaining it to me. For example, with the other product I was talking about the medical device. They would be explaining to me like I was another surgeon and they’d be starting to use all kinds of things like jargon and lingo that I didn’t understand.

And all of a sudden I’m like wait a minute. They’re so focused. I’ll just use that as an example. That’s not what happened with that company. Let’s just say that a particular person started to go right into the solution and how great it is and in a real technical way. But I didn’t really understand the problem at the very beginning. Now my eyes were kind of glazing over.

I don’t really understand what you’re talking about. So now you’ve lost me. Now we’re four or five minutes into the pitch. And remember a pitch is to get enough interest from the investor to have another conversation.

You’re not going to have the investor decide in the first five, seven or ten minute pitch that you’re giving if they’re going to invest. You’re just trying to get to that next conversation where you could be three minutes in and you’re going into all your technical yada yada.

And I’m thinking about what I’m having for dinner.

Shubha K. Chakravarthy: That’s crystal clear. We talked about if it is scalable. And a big part of what I’m hearing is, convince me that this is a problem in terms I understand and I can get excited about regardless if I’m an angel or a VC or and so forth.

But that’s just one aspect of investability, right? There are other things you look for as an investor. What are the other kinds of top factors of investability that you’re checking right off the bat to see should I even be spending time with the startup?

Marcia Dawood: I think a lot of it you mentioned earlier about the team, founder, co founder, who the founders have hired, how big is the team, how much more of the team needs to be built out in order to get to that level of scalability.

And again, the answer is that most of the time, it depends on the type of company. It depends on what they’re doing. It depends on how built out the solution is that they’re building.

But when I talk to a CEO or the founding team, I’m looking for not just what they’re saying that is so great about them or even their immediate founding team members but what is it that they know that they don’t know.

If they know that they don’t know how to fundraise or they don’t know how to scale the company past 100 employees or whatever the story is going to be or a certain amount of market size or a certain amount of revenue, then we can start to have a conversation. They might say that I know I can grow the company to X but I really want to take it to Z. I need help with that. I’m going to need to be surrounded by the right types of people.

Now, I can get a better idea of what it is, how far this founding team can take it. Then what’s going to be needed in order to scale it. Those are the types of things I’m looking for. How realistic is the founding team? What is the expertise they’ve already surrounded themselves with?

Because sometimes you’ll find that founders have a lot of the same characteristics of each other. If you’ve got one engineer, they’ll tend to gravitate toward another engineer. Then who actually is building the business? Who’s the executor? We got a lot of people coding but are people actually executing on building the business?

So all of those things come into the factoring that is this a team that I would actually want to invest in? In some cases, there’s a reason why we tend to like serial entrepreneurs. Meaning they’ve done it before, they can do it again. They saw how hard it is. They’ve surrounded themselves with the right types of people. That’s really what we’re looking for.

Shubha K. Chakravarthy: A couple of things. I’ve just got so many questions on that. It’s such a rich topic, right? Let’s take a couple that are important.

The first is what you talked about. I need to know what I know and what I don’t know. So I get that. But that intersects with pivoting. So does that presuppose that when they come to your first investor, like I’m coming from my first outside round to you. You’re an angel. Is it an unstated assumption that I’ve pretty much nailed what I’m going to sell?

Or are you still anticipating the possibility that there’s a pivot? If there is a pivot then how does that then reflect back on how you’re going to assess me as a team? Because you’re now considering the possibility that I might end up having to do something completely different. Does that make sense?

Marcia Dawood: These are small companies. There’s always going to be the possibility that companies will have to pivot. A good example is Joylux which is an incredible women’s health company. They had to majorly pivot as of March of 2020. The way that they were selling their product and how they were going to reach their customers.

I will tell you that it is a great story of a CEO who pivoted and took her company on a totally different trajectory, but did a fabulous job, and was surrounded by the right team to be able to do it. They all worked together in order to make the company successful during a time when a lot of companies not only struggled but a lot of them went out of business because that pivoting aspect is challenging.

It’s something that I think a lot of founders get on this path of like, “I’m going to do this. I’m just going to keep bulldozing through the walls in order to make it happen.” But sometimes like making a turn left or right can be okay.

Shubha K. Chakravarthy: It sounds like it’s a combination of both technical chops, especially if it’s like healthcare, for example or clean tech and personal characteristics, ideally the best proxy for personal characteristics as I’ve done it before.

I’ll come to you and I’m telling you that this is my third startup but I have to be a first time startup at some point, right? What about first time founders and how can I as a first time founder, especially in a STEM field come and convince you that I’m the right configuration or I’m the right person for this startup and for you?

Marcia Dawood: I think all the things we’ve already said. One, make sure you’re surrounded by the right kind of people either on your team or through your advisors.

Then have you done the customer discovery? Do you know what your customers really want and how that’s all going to work so that you can build a product that’s actually going to sell?

Financial Projections and Realistic Growth

Shubha K. Chakravarthy: One last question on this. Given that you’re still talking at an early stage and potentially you’re the first outside check. To what extent do you worry about financial projections? Do they factor into your decision? And if so, what about them are you looking for?

Marcia Dawood: You always want to look at financial projections. They’re always wrong but you want to look at them. Projections are just projections.

Usually in angel world we say you need to double the amount of money that the company is asking for or they think that they’re going to need in order to scale an exit. You have to double or even triple the amount of time they think it’s going to take.

Then when you look at the financial projections, you look at those and you cut them in half. These are the realities of a startup world. I look at the financial projections. I’m looking for some semblance of reality but yet some semblance of growth.

I’ve seen too many companies that will show a 5 year growth projection and they’ll be like that we’re going to make 100,000 dollars in revenue which could be relatively realistic. In year 2, we’re going to make 1,000,000 dollars. By year 3, we’re going to make 3,000,000. And by year 5, we’re going to be at 25,000,000.

The reality of that is probably not going to happen and then I’ve had companies where they have said that and I’ll go back to them at year five.I’ll be like, go ahead. Where are you at right now? And they’ll be like, maybe this year we’ll hit a million. So there’s no way they’re getting close to 25 million.

To me, it’s like, you got to look at the financials and see how realistic they are. Not just with the revenue but with their expenses. I had a company a while back where the two founders were a little bit older and they had to travel outside of the country for business and they wanted to fly business class all the time. A big part of their expenses that was built into their financial projections was business class travel back and forth to Asia.

And I thought, I don’t think that investors really early stage investors who were only giving a little bit of money in the grand scheme of things to get this company off the ground, want to be paying tens of thousands of dollars for business travel for the founders. So those are the types of things you have to look forward to.

Shubha K. Chakravarthy: Then one of the questions you brought up, like then it presents a conundrum to the founder, right? You’re not going to be interested unless I tell you that there’s a growth story here.

But then if I show you a growth story, rightfully so then you’re skeptical. What is the balance and how do I convince you that it is a growth story but that I have a realistic chance? What are those? What are the pointers you’re looking for and how can I set myself up for success to actually achieve good growth as a founder?

Marcia Dawood: That’s the million dollar question, right? I don’t know if we have the answer. It’s more like have the customer discovery, make sure you have the right solution, know your market, know who you’re going to sell to figure out how you’re going to get that growth story going.

Sometimes it might take you a couple more months or even a year before you get the company off the ground because you’re taking the time to really understand your market and how you’re going to grow it.

Shubha K. Chakravarthy: From your own experience looking at so many of these pitches and founders across the years, are there things that popped up in the way they constructed their financials or the way they thought about their growth that showed you that they were more realistic and were able to achieve better growth targets than the ones who just came up with the fancy hockey stick?

Marcia Dawood: I really think that the CEO and the founders need to be the ones who create the financial model even if they aren’t the finance people. They can get help from the finance people to make the model look pretty.

But I’ve seen too many times that a CEO of a startup will have their finance person who built the model come on to an investor call, especially once in diligence. The financial person is explaining the model and explaining the growth trajectory and the CEO doesn’t understand enough to be able to explain it themselves.

If that finance person who built the model isn’t there, they can’t explain it which is bad. You really, as a founder or CEO need to be able to articulate every single part of how you’re going to grow your business. You don’t have to be a finance expert. You don’t have to put the Excel spreadsheet together but you have to understand all the assumptions that are in that spreadsheet that are going to make your company successful.

Shubha K. Chakravarthy: In other words, what I’m hearing you say and tell me this is, being able to translate what your financials are speaking in terms that tell you what business actions I’m going to take as a founder and what results I expect from each of those initiatives or efforts or levers that I’m going to pull. Is that a fair?

Marcia Dawood: Absolutely. It’s a story. The financials aren’t just numbers on a spreadsheet. The financials are telling a story about how you’re going to sell to your customer, how much money it’s going to take, how many people it’s going to take, how long it’s going to take. All of those things. If you cannot articulate that story as the CEO then I don’t have a lot of faith in your growth trajectory.

Exploring Funding Paths for Women Entrepreneurs

Shubha K. Chakravarthy: It’s super helpful which brings us now to paths to fundings. There’s a bunch of different paths. There’s some that are overhyped like VC and some that are less known for women but founders in particular.

Let’s start at the beginning like friends and families as in the first place to go. But we know that not a lot of women have access to rich friends and family who can write big checks.

What are the pros and cons and what is the right or what’s a good way for women to think about their first round before they go to angels? How do they even think about what might be friends and family?

Marcia Dawood: First of all, I think any entrepreneur should really think about how scrappy can I be before I go to fundraise. I’ve seen entrepreneurs at times go out to raise money a little bit too quickly. Women in particular tend to be super scrappy which is awesome, right? Sometimes maybe even too scrappy.

But you need to find that healthy balance because you don’t want to raise too early or too late. Building relationships with investors early so that when you are ready to fundraise, that is something that entrepreneurs don’t do enough.

If we could get them to start to talk about the things that they’re doing, start to surround themselves with the right advisors then when it comes time to raise money, it’s not necessarily going to be easy.

But it’s going to be easier because a lot of the investors that could potentially put in capital you’ve already built a relationship with. I say that because I’ve had too many people come to me at the time that they’re ready to fundraise. I don’t know them. I don’t really know what they’ve been building. I don’t know what they’ve been working on.

In a lot of cases, entrepreneurs say, “I don’t want to tell the investors yet because it’s not ready.” And I’m like, “I don’t care. I don’t care about that. I know it’s not ready yet. That’s okay. That’s like the whole nature of the startup business. But if I can see the process of how you’re going about building the business even before you’re ready to take on capital, I will have a better understanding of how you work with others. The types of things that you’re trying to do in order to make the planet a better place or whatever it is that you’re working on.”

All of those things factor in to being able to get that initial funding. Now with that said, you’re right. Friends and family rounds can be very challenging especially for women and people of color.

One of the things that I tend to tell entrepreneurs and it depends on the type of company you have but crowdfunding campaigns. There’s a lot of different ways you can crowdfund nowadays that you couldn’t do before could be a way especially if you have a product that is going to a consumer that you would be able to market or even let’s use the, the heart device thing for a minute.

Exploring Crowdfunding Options

Marcia Dawood: If you told the story right and you’re like, “I’m raising money for my product and it’s going to be this amazing device and it’s going to take forever because I got to go through the FDA.”

Maybe we would all be like, we’ll support you but let’s say that you have the next cool widget and we’ll want to buy that too. That’s another way that you can start to get funding.

Some crowdfunding is non-dilutive, meaning that you don’t have to give away any part of the ownership of your company some crowdfunding because of what happened with the JOBS Act in 2012 and the SEC changing the rules in 2016.

You can do what’s called equity crowdfunding where you can give away a piece of ownership of your company in order to raise money. But the other thing that a lot of people aren’t talking about nearly enough and I’m a fan of now because I sit on the SEC Advisory Committee with George Cook who is the CEO of a company called Honeycomb Credit in debt crowdfunding.

If you have a company that is making some type of revenue even if it’s just a little bit, there’s a possibility that you could take debt crowdfunding early on and be able to do that or even revenue based crowdfunding.

In a lot of cases at the crowdfunding level, you don’t have to find accredited investors. These could be people in your neighborhood. They could be in your friends and family but maybe at this point they only have to put in 100 dollars or 200 dollars and not thousands of dollars.

So I think the barriers to that early money. We’re starting to see some more of that. I’m hoping that as we talk more about it and as more people know about it, we could actually get those early funding needs met so that then companies could scale a little.

Shubha K. Chakravarthy: That’s super interesting. What I’m hearing you say is yes women and people of color are more challenged to get friends and family funding. But on the other hand, they could use crowdfunding as a bit of a proxy and potentially a bridge maybe to angel and other outside investors later on.

That is the first point which I get and then there’s a second point around different forms of crowdfunding and why they don’t necessarily have to be dilutive and you can do this. I’m going to ask you and possibly slightly challenge you on what I’ve heard about crowdfunding and some potential hidden costs that maybe founders aren’t as aware of. I want to hear what you think about that.

Hidden Costs of Crowdfunding

Shubha K. Chakravarthy: So there’s obviously a cost to raising funds, right? There’s the visible cost which is I have to go pay accountants and lawyers and all that other stuff.

Then there’s an invisible cost which is taking away time that could be spent building my business in going and having meetings with investors, or I’m essentially marketing. It’s a retail marketing exercise.

If I’m doing crowdfunding, let’s be clear about it. So there’s a cost of like again I have to go build a market. Now if it’s a consumer product, it’s easy because essentially I could be selling the product to them. It’s two birds with one stone but if that is not the case, what are your thoughts on how do these costs compare?

What should founders watch out for in terms of the potential risks and downsides of crowdfunding?

Marcia Dawood: So on these crowdfunding portals that they’re called platforms right now, the top three that have the market share are WeFunder, StartEngine, and Republic.

By the way, I do have several podcast episodes on my podcast, The Angel Next Door, related to crowdfunding. I’ve had two entrepreneurs come on who raised a significant amount of money on these crowdfunding platforms and then I’ve also had Howard Marks, who’s the CEO of Start Engine. He’s come on before Justin Renfrew of WeFunder and has been on the podcast before and assumed coming is the CEO of Republic.

I tend to really like the idea that startups can not only start to fundraise this way. To your point in some cases and in a non dilutive way, there are costs there. These platforms will take a percent but when you fundraise with even a convertible note and let’s take crowdfunding out of it. You’re going to need to get lawyers and paperwork and all kinds of things. That costs a lot of money.

There are definitely costs to fundraising and you should understand what all those costs are as a founder. There is a huge opportunity cost to operating your business because you do have to fundraise. Many entrepreneurs will tell you that fundraising is like a full time job and building their business is like a full time job.

Sometimes they have children and families and they might want to do something like go out to dinner every once in a while. There are other things that are coming into play that really tax an entrepreneur’s life. With that being said, I tend to really want to help entrepreneurs save time. I like the whole crowdfunding portal idea, at least at the very beginning.

If you have the right type of company because at least for the period of time that you’re doing the crowdfunding, you can concentrate all of that into one place. Now you’re not having meetings over here and there because part of the rules are that you have to at least with equity crowdfunding. You have to have all of the information in one place. You can’t have side meetings. Everything has to be very transparent which I really like.

I think that entrepreneurs should also spend a little bit of time up front just getting all of your documents together with your pitch deck. Make a video of yourself giving a three or four minute pitch because if you can send that to a potential investor as opposed to just sending out a deck.

In a lot of cases, I see entrepreneurs just send out a deck. Then if I get a deck and I look at it and I don’t really know you, then am I going to be that excited about it? But if I see you in a video talking to me about the deck that is a different story. You can put it on a gated thing.

You don’t have to have it be seen by a lot of people. It’s not like it has to be public but these are ways that you can potentially save yourself some time and be able to get in front of more investors. I think all of those things can really help to get not just the physical cost down but the opportunity costs as well.

Shubha K. Chakravarthy: I know that this has been a very rapidly evolving source of fundraising, right? So what I’m getting the sense from talking to you and we’re definitely going to put links to all of those episodes that you talked about. So thanks for that pointer but the main message I’m hearing is as the industry is evolving some of these barriers that founders faced early on are probably crumbling or at least reducing because the enablers such as the folks that you mentioned realize them and are doing things to lower the costs of crowdfunding for these founders.

And the second kind of big takeaway was, as that happens, there’s other offsets to go into a regular investor that can be put to better use and greater focus with a crowdfunding platform. So those are definitely points that are well taken and thanks for bringing that up.

The Role of Venture Capital for Women In STEM

Shubha K. Chakravarthy: I’m going to talk about the 800 pound gorilla which is VC investors. What are your thoughts about getting venture capital for early stage founders particularly women and what’s the recommended or appropriate role of a VC in the first time STEM founder’s life if she’s a woman?

Marcia Dawood: Again I’m going to answer with, it depends. This is only because back in the day, let’s just say maybe what we may typically think if we thought about in the dictionary and it says venture capitalist. What is there a picture of? All right. I would think from back in the day, it’s like an older white guy.

I don’t know. It’s just me. Right? But that is not true anymore. There are venture capitalist funds all over the country, all over the world who are run by people that look like all different shapes and sizes.

I really believe that there you can find venture capital money that fits in with your company. They’re maybe not the easiest to find yet because they’re still so much up and coming and it is changing and evolving quite a bit.

But for example in the movie, “Show Her The Money”, the documentary about women getting less than 3 percent of venture capital funding, there are several VC funds that are run by women that look at many different types of industries that they invest in and they look at different stages. So some invest very early and some wait until later. That’s just one example.

I think that VCs can come in very early nowadays and that could be great if that’s the right investor for you.

But I always encourage founders to look for the investors that fit with their company. Don’t take capital and investors and put them on your cap table just because you want the money. That’s just not the right answer. The right answer is find the investors that will bring more than capital that will actually help you to grow the business.

They’ll help open doors for you. They’ll be advisors. They’ll be cheerleaders. They will be the people. And that could be an angel at first. That could be a crowdfunding campaign where your customers actually rally around you. I’ve seen this happen to where people are so excited about the product and they’re like, I can invest in the product.

This is so cool. And they’ll rally around the company. And I’ve also seen VC funds who have come in at some of the earliest stages and been some of the greatest partners. It just depends on where you’re going and making sure that you’re figuring out the right path.

Shubha K. Chakravarthy: I love that point. The takeaway on the VC side that I’m getting is don’t rule it out just because it’s hard to get. If there’s the right VC that fits your thesis and your startup, keep your eye open but be selective. It’s like the big message I heard from you.

And also this point about finding the right people to hang out with because it’s like a marriage and probably it’s going to last longer than a typical marriage.

And then I’m going to tie that back to one thing you said just a few minutes earlier which is start building relationships well before you need them. How do you do that?

Is there an example of someone because we know that women find it difficult to have networks or break into networks. Rather than asking what women should do, I’m going to ask you, can you think of examples of women who just did a bang up job of this where you look back and say, they really nailed it. And maybe there are some lessons in there for the rest of us in terms of how to do that, right?

Building Relationships with Investors

Marcia Dawood: Founders should definitely get to know other founders. Being an entrepreneur can be very lonely. You’re building your company. You’ve got your heads down. You’ve got to do all these things but getting to know other founders either similar to you, similar to industry, similar in size, similar stage, whatever.

It doesn’t matter. Just get to know some of the other founders that have some commonality with you and then start to talk to them. I’ve seen some founders say that they’ll get to know other founders and then they start to say, “Hey, I got to talk to this investor and I found out about this fund and this fund wasn’t right for me but it might be right for you.”

That whole networking thing, it’s real and it’s a great way for founders to start to know what is out there before they actually need money. This idea of just going out on the internet and looking for VC funds. Most VC firms have a website that they at least say who they are, what they invest in, what stages they invest in.

A lot of them do. Just figuring out, could I build a relationship with them? At Mindshift Capital, we invested in a company. I knew the founder for 6 years. Before we invested in them. So it happens.

It’s just a matter of time and building the business. And of course, during the 6 years was during Covid so that made it a little challenging and a lot of people had to pivot during that time. But it might seem like it takes a long time but it’s all part of the process of growing the business.

This is not for the faint of heart of course. Definitely you want to be working toward the things that you’re trying to build but you want to build those relationships early so that you can get the interest and get people to understand the problem you’re really solving early on.

Shubha K. Chakravarthy: Then there’s this kind of tight line you have to walk. You don’t want to be seen as a pest or someone who is intrusive to investors. They get bombarded with all these requests.

What’s a good way for founders to build those relationships? What is the basis of those relationships and how can they make them lightweight yet effective especially when they’re not immediately looking for funding?

Marcia Dawood: One of the best examples I saw was as a founder was growing his company. He put out a monthly newsletter. I use the term newsletter loosely though because it wasn’t a newsletter. It was just an email. It was very simple.

It was an email where I think during the day, at the end of the day, maybe during the month. He would just jot down like, this happened today or this happened or whatever. So he did do this monthly.

At the end of the month, he would send out an email to potential investors, current investors, friends of the organization and his friends. He sent it to a lot of people. It was not a proprietary or confidential email in any way but he was always talking about what was happening.

We got some new customers this week or this month or we got to be on blah, blah, blah, pitch competitions or we found this or that. I don’t know. We had a new tech release. Name it. It doesn’t matter. But the idea that the founder was sending this email monthly.

But let’s say now, 10-12 months go by and now he wants to go out and fundraise. That became a lot easier for him because we were in the know. We knew what was happening. So that to me is a great way.

If you meet somebody, let’s say it’s even just at a pitch event or some type of thing and you get their information. You could even do this on LinkedIn. Put out something so that people are always seeing that you’re updating with how your company is growing.

It doesn’t have to be super fancy. It doesn’t have to be super proprietary or confidential but just that you are moving forward because I cannot stand it when an entrepreneur is fundraising.

I haven’t heard from them for months and months and then all of a sudden they come back and they’re like they need money now. But I haven’t heard anything about how the business is doing. What has happened? Did they have customers? Are they making any money? I have no idea. Have they hired anyone? No clue. Why? Because they don’t talk to me until they actually want funding. That’s just wrong.

Evaluating Potential Funders

Shubha K. Chakravarthy: Great tips, thanks for those. Then there’s one other point you made earlier which is be careful who you get your money from. I want to dig a little bit into that.

So how do you know if a funder is not the right source for you? Are there signs? How do you evaluate that from the get go?

Marcia Dawood: That also is like a marriage, right? Founder and funder, that’s going to be a long time that we would know each other. You don’t want to rush into that lightly. I always tell founders really get to know your investor, like go have a coffee with them or get to talk to them more than once or twice, figure out what do they care about.

Why are they interested in funding you? I talked to a company the other day and they had gotten a term sheet from a VC group. They weren’t even really a VC group. They were an investing group and they didn’t really understand early stage investing. So they put all kinds of unusual terms in the term sheet.

Then the founder was really uncomfortable and said, “Well, I need the money but I just don’t think these are the right people for me but I don’t know what to do because I really need the money.” And I was like, these are not the right people for you and you know it because you can feel it.

It just wasn’t. They were almost trying to fit like a square peg in a round hole. It wasn’t a good matchup either way.

Shubha K. Chakravarthy: There’s definitely that gut like red flags right? Things that are out of the ordinary. What are the other ways? Because some of the things I’ve heard from founders is things can turn sour after the marriage so to speak, now the deal has been signed and they’re on your board or they’re on your list of shareholders.

Are there things in advance that you’ve learned from experience that maybe you can tell novice founders. Look out for these non obvious signs as well in addition to the obvious ones which are very important like what you just walked us through.

Marcia Dawood: Sometimes you just get that gut feel like something feels wrong but then you’re like, maybe it’s just me, it’s okay. But if there are signs at the very beginning that there could be a problem and then especially like to your point, if they end up on your board that could just make your life hard.

Your life’s hard as an entrepreneur anyway because you’re trying to do all these things at the same time and build a company at lightning speed to have that kind of extra stress.

If you’re having meetings with people and you walk away and you should feel energized after you meet with an investor. You should feel like, this is the person who’s I want helping me with my company and standing alongside me as we go through this adventure together.

If you’re walking away from a meeting and you’re thinking to yourself that this is a little bit, I don’t know. It just doesn’t feel right. That’s your red flag.

Shubha K. Chakravarthy: On that point, do you have any stories or examples where a founder that you knew or worked with actually listened to that gut and something else proved them right or didn’t listen to it and then ended up regretting it. Both would be very instructive.

Marcia Dawood: I’ve seen people that didn’t listen to it. Then they end up with somebody on the board. Then it’s down to two things. Either you’re trying to get the board member kicked off the board which is never pretty or the board member is now trying to get the other board members to oust you as the CEO.

Neither situation is good for anybody. So that is very bad.

I have seen entrepreneurs actually not take the funding. I know it is a leap of faith but I have seen it come back to them in spades that they made the right decision. It’s almost like they said to the universe, “I’m not going to take this money because I don’t feel it’s the right fit for me. And I just don’t feel like these are the right investors.”

And then I can think of one specific example where the founder then got the money that they needed with the right type of investor. That was a good fit for that particular company. And all investors can be great for certain companies.

So it’s just a matter. It’s like anything. It’s like marriage. It’s like long term relationships. You just have to find the ones that make it so that you’re both going to drive the train in the same direction and you’re after the same mission.

How To Say No To Investors

Shubha K. Chakravarthy: If you have such an investor, maybe they’re excited about your thesis or some proprietary technology you have but you have this niggling feeling that they’re not the right fit for you.

How do you tactfully say no without destroying the relationship? Because they could be connected to other investors and you don’t want them to be bad mouthing you.

Marcia Dawood: That’s tough. Especially if you’re saying no and you really don’t have other funding. But you know what I’ve always found is the more honest you can be the better. Maybe it isn’t that the funder isn’t completely the right person and you’re just going to say no altogether.

But maybe this means that you have a deeper conversation and maybe you can make it. The relationship works because you’ve said, “Look, here are the things I’m concerned about. I want to see X, Y, Z happen and you’re saying that you want ABC and. Are we really aligned here? And if we’re not, then I don’t know if you are the right person to fund our company”.

Because you’re the CEO. It’s your company. You have the ability to say yes or no. I know in times of desperation, you want to say yes to a whole bunch of things that could potentially be easy to sit and say this. I’m sure people are listening.

They’re like, it’s easy for her to say but at the same time think about the long term ramifications. Because if you’re making decisions too much in the short term and that long term isn’t something that you’re thinking about enough. That could derail your whole mission.

Shubha K. Chakravarthy: It sounds like what I’m hearing you say is stay respectful, stay honest and stay issues focused and be trying to find a way. If there’s common grounds for resolution.

If there isn’t, you leave on the same good terms and say, “Hey, I like what you’re doing. It’s just that this is not the right fit at the right time for where we are as a company.” I wish you the best. More or less, right?

Marcia Dawood: I would have so much respect for a founder that said that to me if there was something that like, my investment thesis or our fund investment thesis didn’t fit with what they were. But I would really appreciate the transparency and the fact that the founder really knew what it was that they were looking for.

Shubha K. Chakravarthy: So the upsides are much bigger than the downsides

Marcia Dawood: I think so.

Tactical Tips for Reaching Out to Investors

Shubha K. Chakravarthy: I want to conclude with one set of questions around some kind of tactical tips on how you reach out to investors, right? You already mentioned early on this need for make a three or four minute video, make it personal so that they understand what are some other tips?

That’s clearly a big one. Are there other things that you’ve seen work really well in terms of an outreach and initial outreach to investors especially those that you don’t know well or may not have a warm introduction to?

Marcia Dawood: It depends on what problem you’re solving for. But let’s just say for example, for anyone out there that’s seen my TEDx talk, I talk a lot about the fact that my mom passed away from ALS.

If there was a founder out there that was working on a treatment or some type of a solution that would help people with ALS because it is a terrible life ending disease, I would be super excited to talk to them. So how would they find me?

If I were a founder and I was working on something like this, I would be putting it out on social media. Not necessarily so much about my company but about the solution that I was looking for and the types of people I wanted to connect with.

All of a sudden you will find that somebody will say, “Oh, I know somebody”. Not necessarily at this point, you don’t necessarily have to be looking for investors. You’re trying to find the people that are like your people. They’re in your camp. They’re going to help you propel your company forward because they really care about what you are trying to do.

Shubha K. Chakravarthy: The recipients of that email essentially right?

Marcia Dawood: Exactly. Just being able to say, “Hey, I want to network.” That’s the one thing I think especially women are very generous with. If you put it out there like, I’m really looking to connect with and then just fill in the blank. People will start to open doors for you and when you have like, 3 followers on LinkedIn, it’s going to take a little while.

But it does build up and you just keep asking the questions you keep talking about what you’re doing. I believe that is the magic that brings the universe together with the investors and the founders that really need to know each other.

Shubha K. Chakravarthy: Essentially start digging the well today, before you’re thirsty. Find the right group of folks that have a common thread with your mission and your solution or technology, whatever it is so that it’s not just about a transactional, “Hey, I need money. You got money. Can you please give me money?” Is that a fair characterization?

Marcia Dawood: A hundred percent. Don’t message people in mail on LinkedIn or whatever it’s called. That just says, “Hey, I see you’re an investor, so I need 50,000 for my company.” Don’t do that.

Shubha K. Chakravarthy: Do you actually get messages like that?

Marcia Dawood: Oh gosh. Yes

Shubha K. Chakravarthy: Can’t imagine why they would do that but that’s just me.

Obviously the first impression, if you do this right, the way that you’re recommending, the first impression would have been because you heard of me as of my common interest in XYZ.

But if that didn’t happen for whatever reason and I happen to get introduced to you, is there something about a first outreach that typically strikes you well that you see people doing well and are there things I should avoid as a founder?

Marcia Dawood: Again back to like, tell me what the problem is that you’re solving. Don’t be like, here’s my email, I’m sending you my pitch deck. Don’t do that either. It’s bad enough when they say, give me money. Like the other thing with angels and VCs too, we don’t always have money all the time.

So right now I am on what I call an investing diet because there hasn’t been any real exits in the last couple of years because the M&A market is so dried up. Hopefully that will be changing in the near future but you never know. VCs are like that too. They’ll run through a fund and they won’t have any more capital to deploy at the time and they’ll have to go raise another fund and X, Y, Z.

You’ve got a lot of things going on. Don’t assume that because somebody says they’re an investor or they’re a VC that they have money right away. Because I’ve had too many people message me and say, “Here’s our pitch deck. Will you take a look because we want to get in the queue for funding?”

Maybe there is no funding right now. I don’t know. It just depends on the timing. I would say that with that outreach, build the relationship on the problem you’re solving. Don’t build the relationship on you’re an investor and I want your money.

Shubha K. Chakravarthy: What would be in that case? Let’s say I didn’t want to send you the pitch deck. What’s a non-transactional way for me to build that relationship?

Have you seen good examples of that happening? I do have a problem, let’s say I’m building a solution for ALS patients and I know that you have an interest.

What’s a good outreach that will make you feel like we’re talking about a common aim here and give me a basis for you to continue to interact with you?

Marcia Dawood: If somebody sent me a message and was like, this is what I’m doing and I’m interested in connecting with whoever they’re interested in connecting with. But they actually start to tell me more about what they’re doing and why they’re doing it. That is something that I would feel a little more comfortable actually engaging with, as opposed to just the messages like, I want to connect with you. I have this company and here’s my pitch deck.

Shubha K. Chakravarthy: There’s still an ask, right? I’m just trying to get to like the tactical. I still need to give you something or give you something to react to for us to continue to have a relationship or any kind of conversation going forward.

Is that like, “I’d like to meet with you and tell you about my company”. Is it “I’d like to hear more about your interest”? What’s a good hook to even start a decent relationship like that?

Marcia Dawood: I’m going to go back to my other answer that I’ve been using a lot today, which is it depends because it does. It would depend on what they were doing and the person that you’re reaching out to. A lot of it has to do with time. We all are short on time.

Everybody’s trying to do 800 things and we’re being completely bombarded by all of the different things that we can pay attention to between what’s on our phone, our computers, and in our regular life. I think being strategic about who you’re reaching out to and why you’re reaching out to them.

So let’s say that somebody really wanted to reach a certain investor, or a certain person. Try to see if there is a way that you could get a warm introduction to them. Is there somebody else that you know on LinkedIn who might say hello for you first. But I’m really a stickler on if somebody asks me to introduce them to somebody else, I’ll ask somebody else, is it okay first before I do that?

Because people do that to me. They’ll be like, here’s so and so they want to meet with you. I don’t have time to meet with every single person that would want to meet. So you just got to be respectful of people.

And in some cases, building a relationship through LinkedIn is not necessarily easy. I think it also has to do with what I was saying earlier about the guy who would send the monthly emails. If you’re on social media and if you’re posted. And somebody asked me, can we just connect on LinkedIn.

Now all of a sudden I’m seeing their posts and they’re posting genuine things about the problem that they’re solving. Now they’re on my radar. Those types of things I think go a long way.

Shubha K. Chakravarthy: I get this point around making sure that it’s a warm introduction if possible and then having something specific that you can build with them. So is one, especially if you’re in the scientific field.

What would you feel as an investor if I said that I’m exploring therapies for ALS and I’m holding a one hour panel with two of my other buddies who are also in the ALS space. We’re inviting people who we think might be interested in the latest developments.

Would that be something that you’d be interested in and say that you’d want to learn more about this. And there’s a webinar coming up on ALS

Marcia Dawood: It depends. I was just using that as an example of something that I personally have an interest in. If you’re interested in meeting with other people and your company happens to be solving a problem in like heart disease then go look for the people that have this type.

Shubha K. Chakravarthy: Very actionable and very on point. I just have a question. I know we’re coming up close on time. Is there anything that you’d like to wrap up with in terms of top three things that you would suggest that a woman founder, especially the first time woman founder in STEM do to improve her prospects of building something scalable that has a good shot of being funded? Where would you wrap up this conversation?

Marcia Dawood: It’s not an easy thing to do. You have to have perseverance. That is one thing that I would tell people is it’s hard to surround yourself with people who will not just be advisors or capital funders.

But surround yourself with cheerleaders, surround yourself with the people who you can call late at night when you’re crying because you haven’t gotten all your things done for the day or whatever that you’re just you’re frustrated.

Every entrepreneur out there gets frustrated with how much time it takes and how much money it takes. Just being able to surround yourself with the right people. I think it is important knowing that it’s a long game and just making sure that you’re also taking care of yourself in the process. It’s a marathon. It’s not a sprint.

You have to think about the fact that it’s okay if you have to take some extra time because you have a family, you want to take care of yourself, you want to take care of your health and make sure that you can be in it for the long haul.

Final Thoughts and Book Overview

Shubha K. Chakravarthy: I want to close with one question. I know that getting women to invest is very close to your heart. I know that your book is coming out. I want to ask you, just to give us an overview of what the book is about, what drove you to write the book and what’s the big message that you hope that your audience gets from reading this book?

Marcia Dawood: It’s a why to book about angel investing and why people should invest. It’s not how to book. That’s why there’s nothing in the title about angel investing but I wrote the book to make it easier for entrepreneurs to be able to get the funding that they need.

I’m hoping with the book that more people will become angel investors. Investors in early stage companies and I talk in the book about a lot of the ways that you can get started and it’s not that hard. I also have a workbook that’s coming out at the same time. The book will be out September 10th on audio book, ebook and hardcover.

Shubha K. Chakravarthy: Fantastic. Love to talk about it. I can’t wait to buy more copies once it comes out. And with that, I want to say, thank you Marcia. This has been an amazing conversation. I know I found a lot of value in it.

I know that other founders will as well. I want to thank you for your time and for all the insights that you shared with us.

Marcia Dawood: Great. Thanks so much.