We were able to connect with Thealzel Lee, a well-known angel investor in Vancouver and FrontFundr shareholder.
We wanted to learn about what she seeks in companies, as an investor, so we could share it with you!
What do you look for when investing in a company?
I look to see if there is a product market fit and if the product is solving a real and valuable problem. I want to see that the widget actually works and, if it does, what is the sales, marketing and distribution plan in place.
The planning and the ability to sell to customers is most important.
The next gate is if there is a market for what they’re creating. If the product is for a specific niche market, it might not be worth investing. Some entrepreneurs don’t pursue outside funding which is great, but when they do it’s a different playing field as outside investors are seeking a return on their investment.
I’m looking to see if there is a big market. We’re looking for the next Uber, Facebook or Google. If there is a product market fit, it is important to see if they have a strategy to take on that challenge and have a team that can execute on that strategy.
The third gate is the ability of the management team to develop and execute on the business strategy. I’m looking to see if the team has the creativity to pivot if needed and are surrounded by really good people. If they’re trying to attack a market, they should know – or have advisors who know - that market really well.
What are some signs you look for as potential red flags?
When the entrepreneurs are not listening to good advice. If the sales aren’t hitting their targets. If it’s a regulatory environment, but it’s not working out. The customers aren’t buying that market or service. They don’t listen to advice about fixing the problem or changing their strategy. It is tough being an entrepreneur, it’s not easy. I’m looking at the coachability of the management team AND how helpful are their advisors. Entrepreneurs need to be open to ideas to build and grow successful businesses.
If you could change the landscape at all, what would you change?
Silos. I like to break them down. There are too many silos and most of it is unintentional.
You’re so busy working in your own area. There are just some silos that are built up and that’s very unhealthy. It is important to talk to other types of industries and products. There are a lot of transferrable skills across industries – and you can often get a fresh perspective on your own business from another unrelated business sector.
What advice would you give to female entrepreneurs just starting out?
Hang out with other entrepreneurs who have been there, done that. You can’t do it alone.
I have always looked for good advice from different sources. Just because you’re a female entrepreneur, don’t automatically look for female entrepreneurs, if that’s not what you need. Most of my influential mentors have been male. I wasn’t going to dismiss them because they were men. They were the ones who were around and they had very valuable advice to give.
What do entrepreneurs miss the first time around?
They do not do the research on the type of investors that they should be reaching. It’s a two way street. Entrepreneurs should do due diligence on investors just like investors do due diligence on entrepreneurs. It will be a long-term relationship where the entrepreneur and the investors will need to weather together the ups and downs of building a successful business enterprise.
What was the best advice you’ve been given?
Don’t fall in love with the technology. It could be really cool technology but if no one is going to pay for it, you’re sunk. Just don’t fall in love with the technology. You have to be analytical about it if it is an investment. I also have a heightened sense of responsibility in making investments because I run a fund where we have a responsibility to each other to get a good ROI on our investments