03: Angel vs VC, finding purpose and community in startup investing - Rachel Sheinbein

02/27/24 • 63 min

Rachel Sheinbein is an angel investor with over 250 startup investments. She shares her insights on angel investing and how it allows her to work with founders “even before the seed stage,” writing $25k checks into technology startups through her vehicle Very Serious Ventures. Later, Rachel discusses how building a community drives her investing strategy and lessons from memorable startup investments. Shaherose and Aamir kick off the show with a special message for founders who like to argue and end with their personal takeaways from the conversation with Rachel.

Highlights from our discussion:

Why Rachel chose angel investing over a partner position at a VC firm
What to look for in a quality angel group
Using a DAF to align with an investing purpose
Detecting founder passion and coachability
Defining your purpose

This is for information purposes only. This is not investment advice.

Topics

(00:00) - 03: Rachel Sheinbein, Angel
(01:14) - PSA: Your startup's users know more than Aamir the angel investor does
(02:51) - Rachel Sheinbein, angel investor and advisor
(04:56) - From engineering to venture capital to angel investing
(07:28) - Do angel groups and angel networks provide value to startup investors?
(13:23) - How Rachel aligns purpose and philanthropy with her early-stage startup investing
(16:08) - Rachel's first angel investment was in a gaming startup
(19:17) - Investor experience, startup luck, and Sequoia
(21:49) - How does an angel investor like Rachel measure bad outcomes in startup investments?
(24:53) - How angel investors operate differs from venture capitalists
(29:47) - Pitch decks - do they matter when seed investing so early?
(33:45) - Startup founder signals that matter to an angel investor
(40:47) - A climate tech seed investment that paid off quickly and returned funds
(46:39) - Very Serious Ventures angel invests $25k super early in founders
(48:51) - An exercise to help you become a better angel investor
(51:04) - Speed round, and the best book on strategy for startup founders
(52:59) - Our takeaways on better startup investing

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Twitter/X @shaherose

Twitter/X @avirani

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Highlights from our discussion:

Why Rachel chose angel investing over a partner position at a VC firm
What to look for in a quality angel group
Using a DAF to align with an investing purpose
Detecting founder passion and coachability
Defining your purpose

This is for information purposes only. This is not investment advice.

Topics

(00:00) - 03: Rachel Sheinbein, Angel
(01:14) - PSA: Your startup's users know more than Aamir the angel investor does
(02:51) - Rachel Sheinbein, angel investor and advisor
(04:56) - From engineering to venture capital to angel investing
(07:28) - Do angel groups and angel networks provide value to startup investors?
(13:23) - How Rachel aligns purpose and philanthropy with her early-stage startup investing
(16:08) - Rachel's first angel investment was in a gaming startup
(19:17) - Investor experience, startup luck, and Sequoia
(21:49) - How does an angel investor like Rachel measure bad outcomes in startup investments?
(24:53) - How angel investors operate differs from venture capitalists
(29:47) - Pitch decks - do they matter when seed investing so early?
(33:45) - Startup founder signals that matter to an angel investor
(40:47) - A climate tech seed investment that paid off quickly and returned funds
(46:39) - Very Serious Ventures angel invests $25k super early in founders
(48:51) - An exercise to help you become a better angel investor
(51:04) - Speed round, and the best book on strategy for startup founders
(52:59) - Our takeaways on better startup investing

Connect with Us

Follow the First Funders Podcast

Newsletter with behind-the-scenes access and key takeaways

Twitter/X @shaherose

Twitter/X @avirani

Email us with feedback and suggestions on topics and guests

Previous Episode

02: 300 startup investments, 500 LPs, sharp elbows - Jenny Fielding, Everywhere Ventures

Jenny Fielding, a pre-seed investor and angel with 300 early-stage startup investments, discusses investing in FinTech, hard tech, and consumer spaces over the past decade. From studying law to working in finance to leaving it all to found not just one but two startups, Jenny brings a founder-operator mindset to her fund, Everywhere Ventures. She writes pre-seed and seed-stage checks for $50k to $250k.

Highlights from our discussion:

Jenny’s first seed investment and its fast, huge outcome
Her simple evaluation framework for startup companies and their founders
The way larger funds can screw early angel investors
Everywhere Ventures’ latest seed investment comes out of stealth
A yearly ritual to become a better angel and startup investor

This is for information purposes only. This is not investment advice.

Topics

(00:00) - 02: Jenny Fielding - Everywhere Ventures
(03:07) - How does Shaherose know Jenny?
(04:17) - Jenny's Journey into Investing
(05:10) - Why did Jenny choose the investor side of the table?
(08:27) - How did Jenny land her first investment (which went big!)?
(11:02) - How does Jenny evaluate companies?
(15:39) - How Jenny categorizes companies and check sizes
(17:49) - How an angel investment went public and yet Jenny got nothing
(25:18) - How does Jenny maintain authentic relationships while seed investing?
(29:38) - Seed investors promise access to founders - does it matter?
(33:39) - Jenny's successful seed investment in a Blockchain company - for real!
(37:53) - Angel invest and chill? What signals help assess your investment early?
(39:26) - How Jenny seed invests and then helps with future fundraising
(40:46) - Using secondaries to generate returns and lower risk
(44:18) - Pre-Seed fund return profiles - what's the goal and reality?
(46:14) - Jenny and Everywhere seed invest in the "table stakes economy"
(47:21) - What is the difference between pre-seed and seed startup investment rounds?
(48:56) - Does valuation discipline matter for early angel and seed investors?
(51:44) - Jenny's latest seed investment: Fora comes out of stealth
(53:47) - Jenny's one trick to become better at startup investing
(55:43) - How Jenny partners with Scott to make investment decisions
(57:00) - Jenny's hot takes
(58:21) - Takeaways from the interview

Connect with Us

Follow the First Funders Podcast

Newsletter with behind-the-scenes access and key takeaways

Twitter/X @shaherose

Twitter/X @avirani

Email us with feedback and suggestions on topics and guests

Next Episode

04: 3x tech founder turned seed VC brings a founder mindset to startup investing - Amit Kumar, Accel

Amit Kumar, former founder and angel investor, is a generalist venture capitalist at Accel focused on dev tools, healthcare, and fintech startups. Twitter acquired Amit’s third company, and it was then that he realized his true purpose was supporting startup founders, and he shifted to venture capital. Amit shares insightful stories and lessons learned from 8 years of early-stage investing out of a large, top-tier VC fund.

Amit writes checks of $2M to $4M as the lead and first institutional seed investor.

Highlights from our discussion:

How Amit frames venture capital as a long game
Why Amit considers himself a “co-founder as a service,” and how that serves his startup community
The right way to think about deal setup for successful early-stage investing
Why the problem slide in your pitch deck is most important

This is for information purposes only. This is not investment advice.

Topics

(00:00) - 04: Amit Kumar - Accel
(00:16) - A startup idea seed investors will definitely say NO to (but maybe Shark Tank will take it)
(03:35) - Amit Kumar - seed investor and First Funder at Accel
(05:17) - Amit's Transition to Accel and the Power of Networking
(07:38) - How Amit learned about angel investing - friends, conferences, and meetups
(08:47) - What does it look like when a VC firm recruits you as a potential founder? Potential partner?
(12:14) - Angel investing as risk diversification and knowledge sharing, especially for existing startup founders
(13:56) - Venture capitalists can provide "co-founders as a service"
(17:21) - How Amit chose between being a founder again and investing full-time
(20:06) - Amit's first investment, and how past founder relationships build trust
(22:23) - Startups that don't go public in 7 years - does that hurt your model and LP relationships?
(24:11) - Conviction, not consensus - but what builds trust among GPs when startup investing?
(26:30) - Startup valuations: Amit's venture capital POV and moving targets in 2024
(28:37) - How does a large early-stage VC think about follow-on investments and the number of startups to fund?
(31:57) - Taking bigger risks earlier
(34:49) - How startup investors consider incumbents in a space when assessing competition and exits
(36:24) - Headway, and what Amit has learned about identifying good startup investments in new markets
(42:05) - How to think about thesis investing, conflicts of interest, and competing startups
(45:14) - How Amit thinks about return profiles and seed investing today
(48:08) - What founder and market signals does a venture capitalist look for?
(50:39) - How to get on the Midas List - it's the fundamentals
(51:47) - A movie you must see to understand venture capital and startup investing matters
(54:15) - Takeaways from Amit Kumar's First Funder approach
(01:01:18) - Outro