A conversation with Marcia Dawood and Sue Bevan Baggott, angel investors. Marcia and Sue are both on a mission to empower and educate women to realize their potential to invest in positive change.
In this special episode, I interview two guests: Marcia Dawood and Sue Bevan Baggott.
Marcia is the author of the new book Do Good While Doing Well, a TEDx speaker, host of the Angel Next Door podcast and an early stage investor who serves on the SEC's Small Business Capital Formation Advisory Committee. She's a venture partner with Mindshift Capital and the chair emeritus of the Angel Capital Association, a global professional society for angel investors. She's also an associate producer on the award-winning documentary Show Her the Money.
Sue is Founder of Power Within Consulting, an accidental angel investor and a startup advisor. She advocates for greater inclusion in the startup world, aiming to elevate entrepreneurial success for underrepresented founders through multiple early stage funds. She invests in the change she wants to see in the world, with a diverse portfolio of innovative startups solving significant world problems at scale.
Our conversation centers on the potential for women to drive change through angel investing, a domain historically dominated by men. It highlights the challenges female and minority founders face when raising capital and how angel investing can democratize this space, particularly through platforms like equity crowdfunding. The podcast also details how local community involvement and strategic investment decisions can create meaningful societal impact.
“I think that a lot of women are socialized. You know: you have your job and you make your money, right? And then you give it away. And I was never really taught that much about how, in the way in which I invested, my money could actually drive change. And yet when I got exposed to the entrepreneurial ecosystem and I was seeing that the majority of investors were men and they were investing in things that they cared about, and the things that women cared about were getting overlooked and ignored - that's a problem for all of us. “ Sue Bevan Baggott
Key takeaways:
- The amount of money that goes to charity every year is equivalent, at least here in the US, to only about one percent of the value of the U S stock market. In other words, as Marcia pointed out, we're putting an awfully big burden on nonprofits to solve big world problems when there's all of these innovative for profit companies out there that we can all help in some way, shape or form. This is one of the realizations that attracted her to angel investing.
- Only two percent of venture capital goes to female founded companies, and even less to founders of color. Sue was hired to help develop the strategy for a newly formed angel investing group. Her original perception was, as she put it, it was “all about the money.” She became interested in becoming a member of the group when she realized that these start-ups create jobs that help the whole community to thrive, and that she could help deserving female founders and founders of color to get access to the capital and the connections and the coaching that they needed.
- Angel investing is no longer the domain of only the rich and connected; it’s something everyone can do. In 2016, the Securities and Exchange Commission changed the rules to allow pretty much anyone who has an internet connection and a bank account or credit card to invest in an early stage company through equity crowdfunding campaigns with companies such as WeFunder and others mentioned in Marcia’s new book, Do Good While Doing Well.
-Look in your own backyard first because that's where you're likely to care about what's going on, and you can have a big impact. As Marcia noted, Even one person going to the local dry cleaner that's owned by a woman or going to the restaurant or helping the startup that's in the community, those things really matter.
About the guests:
Marcia Dawood is the author of Do Good While Doing Well, TEDx speaker, Podcast host, and 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 and the chair emeritus of the Angel Capital Association (ACA), a global professional society for angel investors. She is also an associate producer on the award-winning documentary Show Her the Money, and host of The Angel Next Door podcast.
Website: www.marciadawood.com
Linkedin: https://www.linkedin.com/in/marciadawood/
Facebook: https://www.facebook.com/marcia.dawood
Instagram: https://www.instagram.com/marciadawood/
Twitter: https://twitter.com/MarciaDawood
Book: Doing Good While Doing Well
Podcast: The Angel Next Door
Movie: Show Her The Money
Sue Bevan Baggott is a human-centered Executive Advisor, passionate about accelerating life-improving innovation and driving impactful changes in our world. In her career journey from global innovation leader at Procter & Gamble (growing mega-brands from Pantene to Pampers) to Founder of Power Within Consulting to “Accidental” Angel Investor and Startup Advisor, Sue discovered the power of human-first strategies to accelerate leadership, innovation, and entrepreneurial success.
Sue strives to unleash people’s power as innovators and investors - through her speaking, consulting, and advisory/board roles - in collaboration with purpose-driven leaders and organizations.
As an Associate Producer for the award-winning documentary, Show Her the Money, Sue advocates for greater inclusion in the startup world, aiming to elevate entrepreneurial success for under-represented founders.
Through multiple early-stage funds, Sue invests in the change she wants to see in the world with a diverse portfolio of innovative startups solving significant world problems at scale.
Website: http://www.sue-bevan-baggott.com/
Linkedin: https://www.linkedin.com/in/suebaggott1/
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Sue Bevan Baggett
I think women a lot are socialized. You know, you have your job and you make your money, right? And then you give it away. And I was never really, you know, taught that much about how in the way in which I invested my money could actually drive change. And yet when I got exposed to the entrepreneurial ecosystem and I was seeing that, you know, the majority of investors were men and they were investing in things that they cared about and the things that women cared about We're getting overlooked and ignored and that's, that's a problem for all of us.
Narrator
Welcome to making change with your money, a podcast that highlights the stories and strategies of women who experienced a big life transition and overcame challenges as they redefined financial success for themselves. Now here's your host certified financial planner, Laura Rotter.
Laura Rotter
I am so excited to have two guests today.
Marcia Dawood and Sue Bevan Baggett. Marcia is the author of the new book, Do Good While Doing Well. A TEDx speaker, host of the Angel Next Door podcast, and an early stage investor who serves on the SEC's Small Business Capital Formation Advisory Committee. She's MindShift Capital and the chair emeritus of the Angel Capital Association, a global professional society for angel investors.
She's also an associate producer on the award winning documentary, Show Her The Money, as is Sue. Sue has had a career journey from global innovation leader at Procter Gamble, to founder of Power Within Consulting, to accidental angel investor and startup advisor. She advocates for greater inclusion in the startup world, aiming to elevate entrepreneurial success for underrepresented founders.
Through multiple early stage funds, she invests in the change she wants to see in the world with a diverse portfolio of innovative startups solving significant world problems at scale. So welcome both of you, Marcia and Sue. Welcome to the Making Change With Your Money podcast.
Marcia Dawood
Thanks for having me. Great to be here.
So I'd like to start, I guess, with Marcia. I watched your TEDx speech, and I'm hoping you can explain to our listeners or share with us how What is your why? How did you end up becoming an angel investor?
Marcia Dawood
Yeah. Well, about 12 years ago, I was invited to an angel investing meeting. And I remember my first response was, what is angel investing?
I have no idea what that is. And I went to the first meeting and I was so fascinated at all of the innovation that was happening right in my own backyard. And I was living in Pittsburgh, Pennsylvania at the time. So, uh, I really didn't think there was a whole lot of innovation happening in a place like Pittsburgh.
I thought it was happening mainly in like San Francisco or maybe New York, things like that. And I come to find out that there are amazing entrepreneurs, founders, innovators all over the country, all over the world in every city, in every town. And then I figured out, wow, I can actually help them somehow by either being an investor Money, but there's a lot of other ways that people can get involved in helping these entrepreneurial companies, expertise, networking, connections, and so I started to realize, wow, I mean, I loved doing charitable things, doing events, donating to charity, and I still do.
I think it's absolutely wonderful. But the amount of money that goes to charity every year is equivalent, at least here in the U. S., to only about 1 percent of the value of the U. S. stock market. So if you think about that, we're putting an awfully big burden on nonprofits to solve big world problems. When there's all of these innovative for profit companies out there that we can all help in some way, shape or form, which is why I went ahead and wrote the book, do good while doing well, because I really wanted to get people to see this is something that is accessible to them.
It's not just for the rich and well connected anymore. It's something that everyone can do if in fact that's something that they'd like to partake in.
Laura Rotter
Thank you for that quick summary of angel investing, and we will certainly be talking about that in depth. Finding that more, but I'm hoping also Marsha, you could actually sort of talk about what, first of all, what were the skill sets that had people address you, or was it just a friendship that said, come with me to this?
Or was there a sense that you had a background that could somehow contribute? And, and then what drew you in? I mean, I, all three of us, I'm sure are invited to join so many groups, and And we're all learning, I think, how to say no to those that don't speak to us. And this, you said yes to. And so what specifically spoke to you?
Marcia Dawood
Yeah, I did not have a background in finance, investing, anything like that. I worked for Kaplan education for over 17 years in operations, sales and marketing, all of those things. But I did not have that type of background. To your point. Yes, I was invited because I knew somebody and they said, Hey, why don't you come to this meeting?
And I said, okay. And I think it was an aha moment in my life because I just thought to myself, Wow, I had no idea that this type of innovation was happening around me, and I felt a little bit like I'd been living under a rock. So when I, after I went to this first meeting and I thought, I can get involved in this and I can see these types of companies and meet with these different founders, and I don't have to invest in every, One of them and I don't have to necessarily be a part of every one of them, but I can get a better sense of what's going on, not just in my own community, but also what's going on in the country, what's going on in the world.
What do people care about? What are the things, the problems that we're trying to solve? And then I would see some of these companies, I would think to myself, Oh, my gosh, I would have never thought that you could do that. And I mean, Sue and I talk all the time. We say, Oh my gosh, did you know this company was doing this?
It's like, it's blowing my mind. I didn't even know that was possible. So those are the types of things that kept me coming back.
Laura Rotter
Thank you. And now Sue, I'm going to ask you to answer the same question. What first drew you? How were you invited to learn about angel investing and And what keeps you interested?
Sue Bevan Baggett
Well, I do joke that I'm an accidental angel investor because becoming one was definitely not in my career plan. I grew up doing global innovation work at Procter and Gamble, and it was about, you know, improving the everyday lives of the world's consumers and working in a variety of different places there.
So most of my experience was with. Innovation inside a bigger enterprise. In fact, you know, you might have called what I did more like intrapreneurship, right? So you have the safety net of this large organization. And because that was where my career was, that's where I thought most of the innovation was happening.
So like Marsha, it was like big eyeopening experience to me once I stepped out of the, you know, the corporate innovation world and started doing consulting. Consulting in the space. Yes, I was consulting back for some large organizations, but I was also discovering that there was innovation happening in other places.
But specifically how I found out about angel investing is I was doing a strategy program at 1 of our local universities. And 1 of the people on the team that I was working with, it was a board at the interface. In academia and industry was a successfully exited entrepreneur named Tony and Tony for his, um, you know, after he sold his company, his give back to the community was to set up an angel group.
And at 1st, I'm like, what? Like, how is angel investing a give back to the community because my perceptions, I have a lot of misconceptions about angel investing. I thought it was all about the money. I thought it was just a bunch of like, rich people who were, you know, kind of Giving money to companies just to make more money.
But through Tony, I began to understand, no, there's really a huge community development component to it. Like Marsha said, you have innovation happening in all of our different communities. And if you can help these startups to grow, they create jobs, they help your whole community thrive. So that was, that made it much more interesting to me.
So when Tony invited me to, um, well, he, he actually. First hired me to help them with the strategy process, and then later invited me to join. But the second thing that really put me over the edge was when I found out that only 2 percent of venture capital goes to female founded companies and even less to founders of color.
And, you know, I'm a female engineer. I grew up in a state where there are not, you know, not a lot of, there was, you know, challenges for women. And I've worked around trying to create a more equitable system. Space, but this was crazy. You know, this was a playing field. It was very much not equitable. And I realized that, you know, like Marsha, I could get on the playing field here.
I may be able to help to get more of these deserving founders to get access to the capital and the connections and the coaching and all the things that they needed. So that was the thing that put me on the edge. So when Tony invited me to join the group that I had just helped with the Strategy refresh, he then introduced me to some national efforts to bring more women into angel investing.
And that's how Marsha and I, you know, got connected. So I went from, you know, zero involvement to, you know, a learning curve and, you know, becoming a part of a network of folks that were really interested in, you know, helping more of these startups succeed.
Laura Rotter
Thank you. And I was going to ask how the two of you got connected.
Sue Bevan Baggott
And Marcia, Marcia started in angel investing a little bit before I did, but she is the one who really encouraged me. I call her one of my early angel mentors. So Marcia, Tony, and then another woman, Alicia, because Marcia encouraged me. She said, because I didn't have a finance background either. And that was another one of my misconceptions, but What i learned is really you don't want people with only one kind of background to make decisions about which companies to invest in the best decisions are made by people with different backgrounds and experiences that kind of look at a company and look at what its potential could be and so i said to marsha well if i get more involved will you help train me and she said yes.
Laura Rotter
I love that. And I see how important it is given the statistics you've just shared about the small percentage of funding of capital that actually goes to women entrepreneurs that I can see that that would be a real draw.
Sue Bevan Baggott
It makes no sense, Laura, who can believe that 50 percent of our population has less than, you know, only 2 percent of the ideas worth funding, of the good business ideas worth funding.
It's just crazy.
Laura Rotter
So please explain for our listeners, and you can each tag team each other if you want, but we have listeners here who may, you know, be very much like some of my clients who don't know what a bond is and don't know what a stock is, let alone What's the difference between venture investing and angel investing?
And so if you could do a short primer. It would really be appreciated. Go ahead,
Marsha. You start. I'll do it.
Marcia Dawood
Okay. So, the biggest difference between angel investing and venture capital is that angel investors write checks from their own checkbook. And venture capital managers really manage other people's money.
There's usually investors that will invest into a venture capital fund and then that money gets deployed to a variety of companies. Now, Sue and I are a pretty big fan of funds. Thanks. And back in the day, you did have to have quite a bit of money to invest in a venture fund, sometimes as much as a quarter of a million, up to a million dollars.
But that is just not the case anymore. Now there are funds at the angel group level, some of which you can get involved with for much less money and still get a diversified portfolio. So one of the things in angel world, because investing does come with risk. And angel investing is the same way. It's a private investment.
It's illiquid, meaning that you cannot trade it, your shares or your ownership, just like you would on the U S stock market. But having a diversified portfolio is really important. And so, you know, Sue and I have done a lot of work together on funds and we've encouraged other people to become members of funds.
And we just really believe in that. ability to write one check and be able to get that diversified portfolio. So that's really the biggest difference as an angel. You are writing your own check and then getting involved either with a fund or directly with a company.
Sue Bevan Baggott
Yeah. And, um, Laura, you know, many of your clients may be familiar with in the public markets, right?
You have a mutual kind of fund, right? And then you have the stocks. And so, you know, Angel and Venture is the private markets and you have the same kinds of vehicles that Marsha was just explaining.
Laura Rotter
Thank you. And I'm just going to add for those. I don't want to take anything for granted. Diversified means that you own a number because as Marsha said, Pointed out it's illiquid.
You're not going to be able to sell it when you suddenly realize you need cash and it's risky. I would say on the continuum of risk. A bond is when you lend money to a company and get interest payments while you're a buyer. A lender and then you get your principal back at the end when you invest in stock that trade on the stock market.
There's more risk involved. A company can go under, it can lose value. And of course, with I would assume angel investments are too much smaller, newer. Unproven, often not yet profitable companies. And so the risk of loss is that much greater. And if you buy a fund, which holds a lot of these investments, some will go up a lot, some will go down and over time.
You should get a return commensurate with the risk you're taking.
Marcia Dawood
The other thing I'll just add is at the Angel Capital Association, we often say that you really only want to invest in these alternative assets, as we call angel investing. Alternative assets could even be include art or other things like that, but you would really only want to invest maybe five, 10 percent at most of your investable assets into an asset class like this.
Laura Rotter
Yes, I would, I guess, say, add my opinion, which is closer to one to five percent, because at the end of the day, this may be quite conservative to the extent that, again, we're talking about a diversified fund, but you could lose all your money, you know, it's, it's a possibility. You have to be prepared.
Sue Bevan Baggott
Absolutely. And a lot of it will depend on what life stage you're in and, you know, how you're trying to manage your overall portfolio. But a number of people go into angel investing too, just because it is different than the public markets. And so, you know, it responds to that.
And there's also vehicles for doing angel investing that a lot of people don't know about, but Marcia talks in her book. You can use donor advised fund dollars to do angel investing. You can use IRA dollars portions of your self directed IRA to do angel investing. There's a lot of different strategies that people are using to get into this asset class in a different way.
Marcia Dawood
And one other thing I'll add is the SEC changed a lot of the rules back in 2016 to allow pretty much anyone who has an internet connection and a bank account or credit card to invest in an early stage company through equity crowdfunding for as little as 50. So now there's a way that people who are who do not fall under the accredited investor definition, which that basically means that you have a certain amount of wealth or income in the U.
S. Right now, it's. 200, 000 if you are single, 300, 000 if you include a partner, or a million dollars in net worth minus your home. So if you don't meet that definition, that's totally fine in equity crowdfunding, anyone can invest and build up a portfolio, maybe just making 100 investment here or 200 investment there or something like that.
Laura Rotter
Oh, I'm, I'm understanding Marcia that your book will be released soon, Do Good While Doing Well. Can you share again with our listeners? Perhaps some names of crowdfunding sites that they might look at if they, if this is piquing their interest.
Marcia Dawood
Sure. So there are three main players in the equity crowdfunding space right now, and that is WeFunder, StartEngine, and WeFounder.
And republic dot com. I talk about all of them in the book. In fact, I've had somebody from each of those entities come onto my podcast, the angel next door. You can go in here from the CEO of start engine. One of the executives from we funder came to talk about revenue based financing, which is instead of getting an equity investment, you would actually get paid back.
Based on the revenues of the company. It's a little bit like a loan, but a tiny bit different. And then soon to be released is going to be an episode with the CEO of republic. com where he's talking not just about the equity crowdfunding space, but also about how we are pretty much at the very early stages, but we are trying very hard to democratize the private markets and make it much more accessible so that it's more transparent and that more people can participate and know that they can participate.
Laura Rotter
And can you share the name of where people can turn, listeners can turn, if they'd like specifically to direct their monies towards women or other under served communities?
Marcia Dawood
So first of all, for something specific that people are interested in learning about, I would say that you want to start to look in your local community first.
Go to the places that you know are Women owned owned by people of color. Find out about the startup events that are happening in your area. Learn about the local entrepreneurs. That's where you're going to start to find the things that people are working on that you could be potentially interested in helping in some way.
Maybe it's financially and maybe it's with your time or expertise, but really it's When I say that we're trying to democratize this private market industry and make it more transparent, unfortunately, there isn't like a directory where you could just go and say, Hey, I'm going to invest in a female led company.
There are some lists out there and there's definitely awards that have been won and pitch competitions and things like that. But I always encourage people look in your own backyard first because that's probably where you're going to really care about what's going on and you can make a big impact.
Even one person going to the local dry cleaner that's owned by a woman or going to the restaurant or helping the startup, you know, that's in the community, those things really, really matter. Plus, you're right there and you're able to meet with them in person. You could potentially lend, you know, a hand here or there or get more involved in what they're doing.
So I just really think the local community is the place to start.
Sue Bevan Baggott
Another great place building on what Marcia said is also local universities. So a lot of universities now are setting up programs for entrepreneurship and they have students. And what they want to do is have those students have real life experiences.
So the students create their own ideas for startups and businesses and people can get involved with that as well. So there are a lot of things that you can do on a local level.
Laura Rotter
Thank you. And you mentioned the ability actually to create a donor advised fund that might be using charitable dollars for funding angel investments.
Can you say a bit more about that?
Marcia Dawood
Sure. So, philanthropic dollars, you know, traditionally are donated directly to a 501c3. Uh, and some people do use What's known as a donor advised fund, meaning that you'll put these philanthropic dollars into an account, and then they can be dispersed to a 501 C3 at a later time.
A lot of those donor advised funds that are out there are, in the meantime, before it is actually donated to a 501 C3, they are sometimes invested in the stock market, maybe a mutual fund, things like that. Well, a self directed donor advised fund can actually take those dollars and invest in a for profit.
Start up and there are several groups out there, including impact assets that are helping people to set up those types of donor advised funds. So what happens is the donor immediately gets their tax deduction that, you know, whatever they've donated, it gets put into an account called a donor advised fund or DAF, as we call it, and then it can be deployed to an early stage company.
Let's say that that early stage company then has a successful exit, which of course we're all hoping for. And there's money then that goes back into the donor advised fund. At that point, the donor of course does not get to take back any of that money for their own personal use. However, let's say that they originally put in 100 and now they have 200.
Well, now that's 200 that they can now give to a 501c3 as opposed to the hundred that they originally put in. So that's the idea. It's kind of like the win win win. Can you Donate to charity, can you have it help a for profit company and hopefully maybe even an underrepresented founder in the meantime to do something that's really for good, that money then multiplies and can be used for even more charitable donations.
Laura Rotter
Thank you and I think it's also. As you said, a win, win, win, because of something you pointed out, it's probably in your book. It was certainly in your TEDx talk, which is there's people are willing to give their money to philanthropy. That's generally part of someone's budget. This is how much I'm giving.
It's a lot harder to write a check that, as we discussed earlier, to a risky startup that may or may not. Make money that may be harder to include it as part of your investment core portfolio than it is with your philanthropic dollars, so That may be an attractive choice. Is there for example with impact assets a minimum?
Sue Bevan Baggott
That needs to be put in as opposed to any donor advised fund, but one that's specifically they have a couple of they have a couple of different models and impact assets. So, so you can have your donor advised fund with them and then they can help select the things that you invest in, or you can do a self direction.
You can bring an entity into them and suggest that and they do have some minimums associated. Okay. With if they have to, if it's not something they'd already researched, if it's something they need to research for you, then they do have a minimum of about 25, 000. but for things that they've already researched that you can select from, then the minimums are lower.
So, it's nice because it gives a lot of flexibility in the ways that that people can use their general advice funds.
Laura Rotter
Thank you. That's really helpful. I'm curious, I'm going to shift, I guess, to a little bit of a different kind of question, which is, Is there sort of some accepted wisdom in the angel community that you both disagree with or each of you separately might have different views about?
Marcia Dawood
Oh, I can talk about that. The angel group model and how, how angels kind of get together and, and work together, I think is, a great thing. And we need to have that happen more often because I as one person, I don't know a lot of, you know, the, all of the various things, especially because like good example, I love healthcare startups, love them.
I have no science background. So I am not the person to evaluate or do any kind of diligence on a healthcare company. I need all the experts around me to be able to do that. So I believe that angel groups are very, very important so that you can kind of pull all of that expertise together. However, the model around an angel group can be unsustainable just from the fact that you might have somebody in the community.
We mentioned Tony earlier, and he was, he's a credible champion, and he's had his angel group for many, many years. But then what happens after that? Tony, because this is like a passion of his. This is something he doesn't get paid for. So how can we make that more sustainable? And I think as we start to democratize this private investing market space, we're going to see that there can be a better solution.
And that's something that I think a lot of people are trying to work on so that we can make this more sustainable for everybody.
Laura Rotter
And just to follow that line of thinking, is that specifically, you're specifically referring Marsha to again, online access and crowdfunding that doesn't require one to be an accredited investor or are there other things you're referring to as well?
Marcia Dawood
I'm mainly referring to the traditional angel investing model of A group in a community or a group focused on some specific sector that has gotten together in order to invest. And those are the things I actually am happy to see companies like Republic dot com forming platforms that started as an equity crowdfunding platform, but now have gone on to give a both investors and entrepreneurs a place like almost like a marketplace where they can come together and pull that expertise and pull that learning in a much kind of easier and more accessible way.
Now, I will say that COVID was our friend when it came to how we started to interact with each other through angel groups. And we were able where we were really forced To take things more online and, and that made it more accessible to people. So for example, I don't live in Cincinnati, but I did become an, a member of queen city angels because I really liked the people.
I liked the companies that they were investing in and I wanted to become a part of that group. And that was really not that accessible to me prior to 2020. But after that, when people were saying, Hey, you know what? Live next door to each other. We still can't meet. So how are we going to make this happen?
All of a sudden, zoom became the place that people were meeting. And then it really opened up to not just national people, but international too.
Laura Rotter
And did you both meet through Queen City investing?
Sue Bevan Baggott
No, we actually met well, we met through some mutual friends, but where we really got to know each other was actually through us.
It's going to build on Marsha's point. What I love is now it doesn't have to be just where you live. It can be groups that start to form on aligned values. So where we got to know each other really well was being on the investment committee together for something called the next wave impact fund. And so this was a, they were looking for high growth companies.
But with a positive social environmental impact at the core, the companies had to have a mission that it was aligned with at least one, if not multiple of the 17, you know, UN sustainable global goals. And, and, you know, those are powerful kinds of groups that can form. So people are looking to, you know, advance certain aspects of global change, things like that.
And so, again, I like the idea that you can start to do this in virtual groups. Forming around some of those investment themes or thesis, Marsha and I in or Marsha in her book talks a lot about, you know, she and I both went into angel investing without a very clear initially, you know, without a very clear, like, which companies am I going to invest in, you know, and they all look really exciting and interesting at the beginning.
And so what we encourage people to do now is if you're going to be stepping in, you know, explore first. Don't invest too soon. Invest in the context of, you know, a knowledgeable group, you know, helping you, but also think about what's important to you. I think this is one of the things that, you know, that people need to do more of is consider what are the changes I really want to see in the world and how might I help find solutions to those big problems?
And amongst these startups that are figuring out how to solve those problems and how to use that combination of purpose and a sustainable business model to to solve those things at scale. So, so I really hope that that more people are going to take that sort of an approach. Marsha, you may want to say a few more things about the halo strategy.
Marcia Dawood
Yes, I, when I first started, I felt a little bit like I had, I call it in the book, shiny halo syndrome. It was like that shiny object syndrome, like, Oh, look at that. Oh, that looks so cool. And, oh, wait a minute, here's another one. And you know, I kind of was like a little bit all over the place. I didn't actually like sat myself down and thought, okay, what do I care about?
What is it I really want to invest in? And I think that's really one of the. things I thought about when I was writing the book is, what do I wish I had when I started? And I wish somebody would have said to me, hey, hey, wait, why don't you slow down a little bit and take a minute because you're going to run out of that, you know, little chunk of investable assets I was allocating to this asset class.
You're going to run out of that pretty fast if you don't, you know, take a minute and. And so Sue and I worked together to create this Halo strategy worksheet, where in one page, you can kind of think to yourself, okay, what are the things I care about? What are the things I'm good at? And I might be able to help a company with maybe I'm an expert in bookkeeping, or maybe I have have HR experience or something like that.
And then where What kind of time do I have? What type of how much money do I have? Or maybe I don't have much of either, you know, so I, I then would want to direct my time or my efforts to helping the companies that I care about, but in a way that doesn't overwhelm me or burden, you know, my overall life or what I'm working on right now.
Sue Bevan Baggott
Yeah, even a simple introduction or connection between a startup and a key customer that they'd like to serve can make a huge difference. In in helping that that company begin their growth process.
Marcia Dawood
So that might take 5 minutes, you know, so people don't have to get so involved, become a board member, you know, do all these things, you know, you can really ease your way in with both time and money and then figure out what it is that you care about.
What what do you like? You know, maybe you thought you figure out that really. You love being on board. You really want to be an advisor. You know, it's something that jazzes you up and you really want to help this company. And as you see them grow, you get even more jazzed. So it's a, it's a really fun process.
It's just a matter of figuring out what you like.
Laura Rotter
It sounds like a wonderful exercise to really think about, you know, where your skills are needed, where your resources are needed and what's calling to you.
Sue Baven Baggott
One of the other things that, you know, Laura. You probably have seen this too. I think there's also for me, it was really an awakening process to think of myself as having my money, having power from an investment standpoint, because I wasn't thinking about that before.
I think women a lot are socialized. You know, you have your job and you make your money, right? And then you give it away. And I was never really taught that much about how in the way in which I invested my money could actually drive change. Yeah. And yet, when I got exposed to the entrepreneurial ecosystem, and I was seeing that the majority of investors were men, and they were investing in things that they cared about, and the things that women cared about were getting overlooked and ignored.
And that's, that's a problem for all of us, right? To be missing these innovations that are being led by female founders, by founders of color, and a lot of them are pretty amazing, as Marsha was saying. And suddenly to realize that, like, I could be part of that, of that, that process of deciding who gets funding and who gets that chance to advance their innovation and advance their ideas.
And that really became exciting. And I didn't, as Marcia said before, I didn't have to personally have all the answers. I just had to have the interest and then, you know, associate with others to help me decide how I wanted to proceed with that. So, you know, I think it was, it was definitely a shift in my thinking when I discovered.
When I discovered this asset class and when I discovered the impact this asset class has on what innovations advanced, I mean, why is women's health care so far behind? It's because it was not getting early funding. And now, finally, we're starting to see a shift. We're starting to see more women coming into this asset classes investors.
The number of women getting involved in angel investing is growing and we're starting to see more innovation. In the spaces that women care about, and I think that's really powerful.
Laura Rotter
Oh, Marsha, I assume you've elected to spend most of your time now on this, is that correct? You've given a talk about it, and I know Sue, and we've spoken before, is this now how you're spending the majority of your time?
Work related time the question. I'll just
Marcia Dawood
yeah, I can go first on that. I've been on the board of the Angel Capital Association now for several years. I chaired the board 2021 through 2023 and when I was ending my term as chair, I was asked to be an advisor to the Securities and Exchange Commission for small business capital formation.
And, and. That's been a really wonderful experience because I've gotten to meet a lot of people working on other pieces and other ways to help founders get funding. So it isn't always just angel investing. There are so many small businesses, and these small businesses create an immense number of jobs. So they're so important to our economy.
And I'm, I'm, I'm, Always a huge fan of getting Congress people to talk about this because we need to have more and more and more innovation happening in our country. And we need those small businesses really all over country to get the backing, the funding that they need. And so that's really been my focus now.
And really after spending quite a bit of time helping Founders and seeing how hard it is to fundraise no matter, you know what you're trying to work on, but especially how hard it is for women and people of color and underrepresented founders. So this whole process of demystifying is something that Sue and I have really worked on.
You know, I've been thinking about a lot, really trying to work on, because when you talk to people, it's not like they don't want to do things, it's not like they don't want to help a founders out there. They just don't even know that it's something that's accessible to them. So we have an awareness problem, and I just, I'm really on a mission to try to change that awareness.
Laura Rotter
That's great. So what would you say? I know, Marsha, you mentioned that in crowdfunding, you can put a dollar in, but what would you say is sort of a minimum number perhaps listeners should have in mind if they want to start tipping, dipping their toe into the water?
Marcia Dawood
I think that is completely dependent on what they want to.
But in no amount is too small to get started, especially the younger generation. I would love to see them start to make a portfolio, even if it's with just a couple hundred dollars a year, just being able to kind of get their feet wet, learn about it. Figure out is this something that I like as I, you know, as I grow in my career as I make more money.
Is this a place I'd like to put it because by the time if I had known about this when I was like 25 years old, and I could have started to just learn with a tiny bit of money being able to say, hey, you You know, maybe every year I'm just going to put 100 in and just, you know, pick a company and I'm going to build a portfolio that way.
If I could have been doing that for a while, I would have learned so much just by watching what was going on, watching the companies grow, figuring out all of the different things that I could potentially be involved with so that then once I did have maybe a little bit more money as my career grew, I could have, you know, done a lot, a lot more.
Laura Rotter
And I guess that's why you wrote the book specifically to help educate. Yeah, people out there who don't really know that it's possible to put small amounts. And what fees are associated then with investing in funds as opposed to your entrepreneur down the block?
Marcia Dawood
Yeah, that also is a big, it depends kind of thing.
There are definitely, you know, I always say that you get what you pay for, you know, if you are investing into a fund with a fund manager who's basically doing all the work and, and you're just a passive investor, then there are fees associated. And then on crowdfunding sites, there are usually fees there as well.
Sometimes they get charged through the amount of money that's raised. It just, you know, it kind of depends on, on the situation and how the entrepreneur is raising the money.
Laura Rotter
And I guess I have another question before we start to wind this down, which is, have either of you experienced. You know, some failures through this process and what have you learned from them?
I guess I know we started out the conversation by you saying Marcia diversify, right? So that's, I'm sure a learning, but anything else both of you would like to share?
Marcia Dawood
Well, I would say that there's a saying out there that if you're going to fail, fail fast. And so in a lot of cases, when you become an investor, it's not uncommon that you will have failures before you'll have wins.
So just to tell you a little personal story, I. Had two companies that I invested in very early during my shiny halo syndrome, you know, Oh, and I like that. And I probably don't have any business investing in either of these things because I had no idea what I was doing, but that's okay. One of them went out of business quite fast.
So I think within maybe a year or something, they, the founder just decided that he'd kind of had enough and he walked away from the company. Now. In all of the other companies I've seen, looked at, I have never seen anybody really do that before. That's not common. Okay, it's not common that the CEO just throws in the towel, but that happened on the first company within a year or two.
So I was kind of like, Oh, I don't know about this. However, I'd seen some enough other people have successes that I thought, you know what? I'm just going to. Hold tight and see what happens. So a couple years into it, I remember having a conversation with one of my other ACA board member friends. And I said, you know what, come on, like, when am I going to get to have an exit?
Like you've had exits and this other people had exits. Like, how come I haven't had any positive wins? And he just kind of like chuckled at me a little bit and said, you know what, you just need to wait. Well, I'll tell you what, he was right. Because within about three months of that conversation, I get an email that the other company that I invested in it.
At the very beginning, had an exit for three times the money that we put in. And the best part about it was we had held the stock for over five years. And I do have a podcast episode on this at where I go into a lot of detail about the tax advantages, but what happened was because we held the stock for over five years, and there was a couple other caveats there, I did not have to pay.
any taxes on the game. Now, the reason why Congress set that up is because they wanted to encourage investors, if they had such an exit, to then take that money and put it back into the economy and invest in yet another startup. And of course, I was so excited that I had this exit and I was like, Oh, this is so wonderful that this company did so well and they got bought by another company is so great.
I, of course, turned around and invested it into other companies. So exactly what Congress wanted me to do is what I did. And so, you know, that's like kind of a good and a bad story all wrapped into one.
Laura Rotter
Thank you. Sue, do you have any? Any stories to share?
Sue Bevan Baggott
Well, of course, you know, of course, there are failures, but I guess from having an innovation background, even in the context of, you know, the corporate world, many innovations fail and and so I was definitely expecting, you know, that there would be some failures, as Marcia said, you know, but there also have been enough, enough upward trends or, you know, positive things, some exits within the funds and the other thing that's really exciting is, you know, there's also the emotional rewards.
When you're able to help some of these founders get over some challenging patches or, you know, hit a growth phase or do all that, you know, that's, that's really exciting too. You can see that, you know, they're really making a difference with their company. You met, you helped them and then they're making a difference with their company.
So, you know, there's other off offsetting things, you know, I mean, I'm really proud. Like I think the fund that Marsha and I met in is probably, which was. So there was a myth that you could not have, you know, the types of high growth along with positive impact and that, you know, they would be attention against each other.
And we have found exactly the opposite that purpose driven founders have a lot of resilience and grit and drive. And I would say, you know, 1 of the funds that we're a part of, that's probably doing as well, if not better than some of the others. Combines those two, you know, those two factors, there are very few companies in that fund that have gone under and there's most of them that are still going and several that are growing really well.
So, you know, that's very encouraging to to see.
Marcia Dawood
With several positive exits already.
Sue Bevan Baggott
Yeah, with several positive exits already, yes.
Laura Rotter
And about how many investments are in the fund? Fifteen. That particular one, fifteen. Yeah, fifteen investments. And, and do you find sometimes that, that the companies might turn to you for additional funding?
Marcia Dawood
Yes. Is that part of, and, and maybe Yes, that's very common. Yes, it's very common and usually a fund manager will set aside as we did with our investment committee. We set aside a portion of the funding to invest in those companies that were doing well, and we wanted to continue to follow on with
Laura Rotter
And is that this is, you know, I'm sort of curious.
Is there a chance that if you didn't set aside the funding that you would be diluted? So, or is it similar?
Marcia Dawood
Yes, it's pretty common. But very similar to that. Yes, you would be diluted. But in some cases, let's say that a fund did deploy all their capital and they didn't have any capital left those pro rata rights, and now we're getting into like a little bit 2.
0, but the, the ability, your, your ability to continue to invest and not be diluted could actually be passed to the individuals that were a part of the fund if they wanted to participate as well. So there's kind of ways, there's ways around it if, if in fact that particular fund has deployed all their capital.
Laura Rotter
Thank you for defining that. And just to, to say to our listeners, diluting means that if you don't add on, you own less of the company than you did before they raised additional capital. And so it's In your interest, if you believe in the company to continue to invest and give them additional capital. So please share how they could learn more.
I will of course put everything in the show notes, but where's a good place to turn to learn more about this.
Marcia Dawood
Sure, people can reach out to me through my website. It's just Marsha Dawood dot com. We can put the information in the show notes on there. You'll find everything about my podcast, the book. There is a workbook that's coming out with the book, which Sue was instrumental in helping me figure out how to put that together.
I thought we would just take a couple exercises and maybe the worksheet that we discussed earlier and put it into a workbook. And now it's turned into a hundred and. 40 page Wow workbook. Really helping people think through all of the things that might be able to help them get started. So we're pretty excited about that.
And I will just mention, you know, Sue made a comment about emotional rewards. And I tell this story a lot about how my husband's a big golfer and I always wondered like, why can't golf just take the same amount of time as a yoga class? I just really don't get it . But I finally realized, you know, I'm not annoyed that you're playing golf, I'm more annoyed that you come home and you say to me, Oh, I just got to play golf with X, Y, Z person, dah, dah, dah. And I'm realizing, you know, I'm kind of jealous of the network that you get. And I come to find out that, you know, angel investing has become my golf course.
And so I got to meet people like Sue who I would have never met before. And, you know, we have now an army of friends that we've met through angel investing. And it's just really an interesting. Reward that you wouldn't necessarily think would be part of something like this.
Laura Rotter
Thank you And i'm going to put a plug in for invest for better Which is an organization i've gotten involved with I led a circle last year invest for better is geared towards Teaching women about how they can use their wealth to change the world.
Exactly. As we're talking about today, I'm going to be leading another circle starting in about a week or so, and within invest for better, which again, talks about a lot of the elemental, like what's a bond and what's a stock and how you might direct your assets. And there's also sub courses. I did lead a course.
On angel investing as well, though, it's, I have nowhere near the knowledge that you have, but given my background as an institutional investor, and so looking at balance sheets and income statements and management site, you know, I figured I would co lead.
Sue Baven Baggott
Yeah, no, it's wonderful. And in fact, um, the founder of invest for better is a good friend of Marsha's and mine.
We all met. On that next wave impact fund, and so it's as part of what Marcia said, a wonderful community of people that are involved and and just to build on what Marcia said, you know, in order to to follow the work that we're doing sign up on Marsha's website now, because that'll be an email list. That will be using to, you know, communicate with people what's happening with the book, the workbook, hopefully some education that we're working on that will come a little bit later.
But 1 of the things we didn't talk about very much that you mentioned in the beginning that I'll encourage people to check out, which is the show her the money movie. So it's a really fun way. I'm sure you'll put in the show notes, show her the money movie dot com. We have been doing a. A national tour where the documentary has been screened has won numerous awards and it's a really great way to learn about an angel investing and a really kind of fun way.
There's stories of a variety of different female entrepreneurs, female investors, all together, you know, a really fun, fun thing. And if you follow both Marsha and I on LinkedIn, you'll see us posting about various screenings that are coming up and we're hoping for the year ahead. That there will be additional organizations, corporations that will want to continue the screening process.
And so there will hopefully be other opportunities for people to access that movie. And I think that will, you know, people who are curious, it's a great 1st way to start to see the film, you know, learn a little bit more in a in a fun way.
Marcia Dawood
Yes, if people go to my website, they can get a free chapter of the book.
Laura Rotter
So, ah, wonderful. So is there anything else you, you'd like to share before we close our conversation?
Marcia Dawood
Just know that everyone can be a part of this if with as little or as much as they would like to, and it is accessible to everyone.
Sue Baven Baggott
And I would just say, you know, I know a number of your listeners, Laura, are women and women make incredible investors.
Women are very, especially It's kind of one of those things, you know, we may have been, we may have not grown up being socialized to realize that we are excellent investors, but really we are. We are. And so we, you know, we hope everyone discovers their, their power to, you know, invest for the change they want to see in the world.
Laura Rotter
Thank you.
I hope you enjoyed my conversation with angel investors, Marsha Dawood and Sue Bevan Baggett. I'm going to share some of my takeaways. First takeaway is that the amount of money that goes to charity every year is equivalent, at least here in the U. S. to only about 1 percent of the value of the U. S. stock market.
In other words, as Marsha pointed out, we're putting an awfully big burden on bond profits to solve big world problems when there's all of these innovative for profit companies out there that we can help in some way, shape, or form. This is one of the realizations that attracted Marsha to Angel Investing.
Second takeaway, only 2 percent of venture capital goes to female founded companies, and even less to founders of color. Stu was hired to help develop the strategy for a newly formed angel investing group. Her original perception was, as she put it, it was all about the money. She became interested in becoming a member of the group, however, when she realized that these startups create jobs that help the whole community to thrive and that she could help deserving female founders and founders of color.
Get access to the capital and connections and coaching that they needed. Third takeaway, angel investing is no longer the domain of only the rich and connected. It's something everyone can do. In 2016, the Securities and Exchange Commission The SEC changed the rules to allow pretty much anyone who has an internet connection and a bank account or credit card to invest in early stage companies through equity crowdfunding campaigns run by companies such as WeFunder and others mentioned in Marsha's new book Do Good While Doing Well.
I do want to tell you to remember while doing this to only invest a small percentage of your money, maybe 1 percent to 5%. Money you are prepared to lose in these early stage, often unprofitable companies, and make sure to diversify among a number of them. My final takeaway, look in your own backyard first.
Because that's where you're likely to care about what's going on and you can have a big impact. As Marsha noted, even one person going to the local dry cleaner that's owned by a woman or going to the restaurant or helping the startup that's in the community, those things. Are you enjoying this podcast?
If you are, please don't forget to subscribe so you'll be alerted when the next episode comes out. And if you leave a rating and review, first of all, I'd of course really appreciate it. And it'll also help others just like you to find it. Thank you so much.
Narrator
Thanks for listening to making change with your money. Certified Financial Planner, Laura Rotter, specializes in helping people just like you, organized, clarify, and invest their money in order to support a life of purpose and meaning. Go to www.trueabundanceadvisors.com/workbook For a free resource to help you on your journey.
Disclaimer, please remember that the information shared by this podcast does not constitute accounting, legal, tax, investment, or financial advice. It's for information purposes only. You should seek appropriate professional advice for your specific information.