Alicia Syrett is the Founder and CEO of Pantegrion Capital, an angel investment vehicle focused on seed and early stage investments. She serves on the Board of NY Angels as the Chairman of the Board of HeTexted and her past and present advisory board roles include Enerknol, iFunding, Cuipo, The Pitch Deck, Beauty Booked, Cissé Trading Co. and Willa. A recurring panelist on CNBC’s PowerPitch, Alicia was voted one of Wharton’s “40 Under 40” young alumni and has been featured on Fox, MSNBC, Inc, Associated Press, Huffington Post, and USA Today, among others. She mentors start-ups and students alike and is a member of Women Corporate Directors.
Apart from potential revenue stream, what are you looking for in early stage start-ups? What are some signals of their potential success? Is it all about the idea or more about the team?
First and foremost, it is always about the entrepreneur(s) and team. Great entrepreneurs often have great ideas, and if they don’t, they are usually smart enough to pivot to a better idea and iterate as their business progresses. I look for entrepreneurs who are incredibly passionate about their business. They seem unstoppable, and their drive is contagious. They operate with a high degree of integrity. They are responsive, strive for excellence, and are detail-oriented.
Aside from the entrepreneur(s), I look for all the classic criteria that an investor seeks in an early stage startup: a clear and succinct description of the business, a large and attractive market, a defensible business, a product or service which can scale, a well-thought out sales and marketing approach, a degree of milestones or traction already reached, a stellar team and supporting group of advisors (and perhaps investors), a sense of competitive differentiation, a clear portrayal of finances and future projections, an understanding of current and future funding needs, and an agreement on what scenarios are likely to provide a return on my investment.
When does it make sense for a startup to seek VC versus other types of funding?
It may never make sense to take in VC money! I think a business should seek VC funding when the demand is already strong enough for the product or service and outside money is needed to supercharge the growth (i.e. not to prove the concept of the business). There should also be a high likelihood of a future scenario where the investor will be able to monetize their investment. I would not recommend pursuing VC capital for businesses operating in smaller or niche markets or where the founder does not want to give up control of the business in some way. There are many types of non-dilutive funding such as small business loans, grants, crowdfunding, and customer pre-payments which may make a lot more sense for a business to pursue instead of or prior to VC funding.
Startups often target the wrong investors; they spend time pursuing individuals or firms that may not invest in their industry, geography, stage of growth, level of revenue, valuation, etc. They may also try to contact someone blindly without a warm introduction through a mutual acquaintance, and the odds of a response in this scenario are much lower. They may not have prepared a high-quality pitch deck which covers all the main criteria which is of interest to an investor. Additionally, they may not focus on building relationships with potential investors in that they could be combative when answering questions or not maximizing every interaction to develop trust. Investments are more likely to be made after a string of positive interactions rather than a big check being written after an initial meeting!
What really impresses you in a pitch?
I’m impressed when an entrepreneur nails every item on my classic investor due diligence checklist so that I can move on to asking them more interesting, probing questions. I look for someone who can deliver the content confidently whose enthusiasm is contagious. I want to be excited about their idea but also to be eager to work with and help them. I appreciate when they are able to control the room but also seem coachable. I want to walk away thinking that I really want to be a part of their journey and that they are building something very special.
Women entrepreneurs are often criticized for not being growth-oriented. Do you think there is some validity to this criticism?
I think we have to be very careful about characterizing women entrepreneurs of this generation in a certain way, especially when many may be reacting to a broader environment where there are still biases and an increased degree of scrutiny. Women entrepreneurs now are the role models, paving the way for future generations. I think they know this and may be more acutely aware of failure and thus might be more prone to taking a conservative approach by shunning debt, expanding too quickly, and giving up control. They are also often taking the time to set examples within their companies by addressing important issues like childcare leave, flexible work arrangements, and positive cultures.
The onus on this current generation to succeed is strong, and it may be the reason for criticism around not being as growth-oriented since they are maximizing other factors mentioned above along with just growth. I don’t necessarily think that women are less growth-oriented generally, no. I believe they are focused on growth and redefining the system to bring about long-term change. I look forward to seeing more and more women entrepreneurs going forward who build on the successful efforts of the current generation of leaders to create multi-billion dollar businesses.
You are an entrepreneur in your own right, what is the best advice you never got in starting your own business?
Don’t focus on a binary outcome of “will I be successful or will I fail.” Outcomes are rarely that black and white. Instead just take the first step forward. With each step you can iterate and take a more educated step after that. But you have to start. You have to take the first step. You will make mistakes and that’s part of the journey. You’ll figure it out as you go. Just go for it now.
You are on the Board of Directors of two organizations, the Board of Advisors for six companies and you mentor three. You frequently speak at events and are a member of several angel networks. And, you teach entrepreneurship on the side. How do you do it all, and more to the point, why?
I love what I do, and that feeling drives me every day. I like learning, generating ideas, helping my portfolio companies, and challenging myself to accomplish things that I may fear doing at first. I try to be very selective in where I direct my time, and I attempt to live a balanced life (e.g. eat healthy, get enough sleep, exercise, etc.). All the professional activities seem to add up to a lot, but I just take it one task at a time. There is a lot more I intend to do!
We hope this is not a question you’re tired of hearing but do you think you have faced any hurdles in the VC community specifically because you are a woman?
Of course. There are certainly times when you are the minority in the room when you feel your actions are being scrutinized more than others, but there are also times when it is a great advantage to have a woman’s charm or ability to command attention. There are a number of negative players in the industry with entrenched biases, but I try not to deal with them if possible and to instead direct my attention and efforts to fulfilling my goals and helping others who reflect my values and beliefs.
We recently read that women investors think about investing differently than men and collectively their approach outperforms the industry at large. Do you think there are special qualities you bring to the table as female VC?
There is a lot of research out there now which supports the benefits of diversity (specifically with respect to the inclusion of women) and how it leads to outperformance. This is indisputable. I am cautious about saying that one sex is “better” than another in any particular task as I think the best teams have both men and women and that each bring different, unique, and value-added perspectives to the process. You’d have to ask my portfolio companies about how they might describe my particular qualities, but I definitely see a difference in my approach versus that of my male colleagues, and I am happy that my portfolio companies are able to benefit from all of our input.
As an investor, what kind of return do you expect and within what timeframe? When do you start to head for the exit?
I would never push for an exit just for the sake of having an exit. I think you know by situation when it’s the right time. That could be within a year or two of an investment or up to tens years afterwards. Key dynamics to consider relate to how the competitive environment has changed, whether the metrics are trending positively, what future funds are needed to support growth (and what returns are possible on those funds), the broader growth of the market, and the internal outlook of the team. Over the course of time and multiple investments, I aim to have 25%+ IRR in my portfolio.
You were named one of the “25 Angel Investors in New York You Need to Know” by AlleyWatch. Why do we need to know you and don’t be modest!
This is my full time gig … so you can’t miss me if you’re spending a lot of time in the NYC ecosystem! I serve on the Board of NY Angels and am active in the group. You can catch me on TV as a recurring panelist on CNBC’s PowerPitch, and I’ve also been on MSNBC and Fox. I try to give back as a mentor to schools (e.g. Columbia, Wharton, NYU, CUNY, Yale, etc.) and also serve as a mentor for several accelerators. I’m a member of Women Corporate Directors, and I’m passionate about increasing the numbers and exposure of women entrepreneurs and investors. I’m constantly meeting people, speaking at events, and thinking of how I can connect people I know. I read voraciously, and you can often find some of my favorite articles and life activities on my Twitter feed, @aliciasyrett. You can also check out my website (www.pantegrion.com) where I’ve shared more about my activities as well as included some links to recordings and posts which might be helpful to you. I’m still learning about this industry myself, and I’m trying to share what I learn as I progress. I’m having a lot of fun, and I hope my enthusiasm inspires you to do the same!
You can also Follow Alicia on LinkedIn where she posts excellent resources for entrepreneurs.