Directing the Deal Team: Investor Academe Talks Leading Deals
Angel Academe writer-in-residence Jodie O’Keeffe writes…
At our recent Investor Academe session, three experienced deal leads shared insights into what the role entails, how it works at Angel Academe and why they recommend giving it a try. We strive to introduce more women to angel investing and our deal leads are crucial to making new investors feel comfortable while maintaining momentum throughout due diligence. They also act as the liaison between the founder, the deal team and other investors, sometimes providing support in a non-executive director capacity upon deal completion.
Alexander Hirsch has a background in global equity research and portfolio management spanning over 20 years, for firms including UBP, ACMI and GO Investment Partners. He gravitated towards the start-up sector in 2015, joining Angel Academe for our collaborative approach and the benefits of AA’s ‘hive mind’. He first became deal lead after ticking the wrong box on a feedback form. Investments include ScaleXP (NED), Nuggets, Fiskl, Doppel.
Co-lead on: Behaviour Lab
Jodie O’Keeffe is director at NW3 Ventures, her family business for investment and philanthropic activities, in the UK and Australia. Moonlights as Angel Academe writer-in-residence and advisory board member. Previous careers as SAP software developer and journalist. Investments include ImproveWell, Bewica, Salve, Forte, Applied, Nix and Kix, EnterpriseAlumni. Co-lead on: YEO Messaging
Emma Maslen has a long career in the technology sector, with senior leadership experience in businesses such as Sun Microsystems, BMC Software and SAP Concur. Her current role is Head of EMEA and APAC for Ping Identity. She became an angel investor to diversify her investment portfolio and has made eight investments since 2018, including
EnterpriseAlumni, ImproveWell, Forte, Nuggets, Nix and Kix.
To kick off proceedings, each panellist provided their top five highlights and insights into the role of deal lead according to their own experience:
Alex Hirsch
• Coordinator — you’re leading a team of like-minded professionals. You are NOT a sell-side service provider
• Learning experience — dive deeper into angel investing and different sectors
• Support — the AA network & many of the other angels are able & willing to help
• Team effort — lean on your co-lead and members of your deal team
• Exposure — to founders & investors & potential new opportunities
Jodie O’Keeffe
• Next step in your angel investor journey — from investor, to deal lead to advisor
• Inspire others — demystify investment, help a first-time investor/co-lead, encourage contributions
• Front row seat — get closer to the business, help set the terms, make more informed decisions
• Every deal is different — pauses and restarts, twists and turns
• Network — strengthen & expand your connections within the investor & startup community
Emma Maslen
• If you lead, you aren’t committed — it’s your DD too
• Lead when you are excited about the opportunity — you don’t have to be the expert
• Leading is an extra 10% commitment — you do DD to invest anyway
• You aren’t an imposter — you’re here because you’ve been successful
• Leading gets you closer to founders & the network
Introductions and highlights were followed by Q&A, with questions from Chair Simon Hopkins, as well as the audience:
Q: What is the deal lead role for Angel Academe?
• Coordination, making sure everyone knows which swim lane they’re in, in terms of due diligence roles
• Knowing whether enough information has been shared
• Being a buffer between the founder and the deal team
• Coaching the team to accept a level of insecurity around the investment decision
• Knowing the appropriate time to call an end to due diligence
Q. How do you manage the differences between investors in terms of how much information they require?
• Those from professional backgrounds with a lot of data and forecasts available can fall into the ‘availability trap’ of wanting too much information
• Everyone has to decide for themselves whether they’re comfortable with the amount of due diligence the group has done
• Sometimes the founder does not have the answers, or there is no answer
• Either take the risk or try to find out more — if the founder does not cooperate, you have an answer of sorts
• There’s a level of insecurity people have to live with, hence the higher returns when it works
Q. How much time does it take to be a deal lead on an Angel Academe deal?
• Aim for a 10% uplift on the usual due diligence time
• Duration of deal approximately 6–12 weeks, spending 4–8 hours/week on due diligence as a team
• Try not to get tied up in diary knots, set a regular time aside for calls and try to minimise the time needed to organise the team
Q. What is the ongoing commitment after the deal is done?
• You may become a non-executive director, but often only until Series A
• Deal lead remains first point of contact, unless you decide not to invest
• If a nominee structure is used to invest there’s extra administration as trustee, but this is not the usual case
• There is often opportunity to consult, advise or be a board observer, or possibly provide a sounding board, depending on how much interaction the founders want
Q. How do you resolve conflict among deal team members?
• All opinions are welcome, sometimes team members disagree, leading to a healthy debate
• In cases of conflict, the person with the negative argument often bows out or invests less
• Sometimes the deal lead acts as referee between deal team and founder
• Often deal leads and angels have more experience in fundraising than the founder, so it may be a case of educating and explaining for the founder’s benefit
Q. What is difficult about leading a deal?
• Keeping the momentum going, on both sides
• Final negotiations like salary or valuation can be sensitive, more so at the end of what has probably been a largely cooperative process
• Keeping everyone in their swim lane, with the same standard of analysis, nudging members who might not be able to contribute at the same pace as others
Q. What do you do when a deal team member wants to press the founder about a red flag that you don’t think is an issue?
• Try to see the person’s point of view
• Ask what is the expertise of the person with the issue? Have they clearly expressed their position? Is it logical?
• Group dynamics come into play, each person uses their own judgement about the issue
• Sometimes there’s a fundamental misunderstanding about the business, often the person with the issue will drop out of the deal
Q. Does Angel Academe ever lead a fundraising round, drafting terms and negotiating valuation?
• A big part of the due diligence is understanding how they came up with the valuation
• If we can’t agree on that, the deal may fall down
• We often add terms to the contract, our investors often note points that are missing or need to be changed
• Angel Academe may lead the round if the lead investor drops out and the deal team wants to continue
• Our bargaining power depends on the amount we intend to invest as a percentage of the overall round
Q. How do you know when you’re ready to lead a deal?
• You want to develop a new skill or learn more about an industry
• Having focussed on one or two areas in past deals, it’s time to see the overall picture and take more responsibility
• You may intuitively understand the pain point the company is trying to address
• You feel you can add value to the business, with your network or background
• You’ve been through the process of due diligence several times and have the project management skills required
• You feel passion for the cause, you like what the business is trying to achieve, you like the founder
Q. What is the usual size of a deal team and what can they do to help the lead?
• Usually around 10–15, with a few notable exceptions such as Enterprise Alumni which was a bigger opportunity
• Engage in the process — respond to communications, offer a soft commitment to give the founder an idea of where things stand
• Be realistic about time commitments, take the assigned actions and work on them, contribute to the deal team
Want to know more?
We have plenty more in our blog series on Becoming a Business Angel, covering the FAQs for potential angels, including: How much does it cost? What returns can I expect to achieve? How long will it take? How likely am I to be successful?
Becoming a Business Angel:
- Am I ready?
- Where Do I Start?
- Doing Your First Deal
The Angel Academe Investor Academe webinar is a free webinar hosted as part of our ongoing commitment to making angel investing more accessible. If you’d like to view the webinar, or find out how to become an angel investor, visit www.angelacademe.com.
