😇 Angel interview #13: Ellen DaSilva
"I suspect there will be a democratization of angel investing. I think there will be an increased ability to be able to write smaller checks into start-ups."
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Ellen is Head of Strategic Partnerships at hims & hers. A graduate of Harvard Business School, Ellen has spent time working at Barclays Capital and Twitter. Ellen currently serves as a scout for Sequoia, and was also a Partner at Rough Draft Ventures while in business school. She also co-authored the book “Pitching & Closing: Everything You Need To Know About Business Development, Partnerships, and Making Deals that Matter.”
Can you give a quick introduction of yourself?
I'm Ellen DaSilva. In my day job, I'm the head of strategic partnerships for hims & hers, a direct to consumer telemedicine company. I started my career in investment banking and then I worked at Twitter, where I oversaw the expansion of the business operations team and served as an internal consultant for our revenue organization. I've also done small internship-style stints at VC firms. I participated in the Rough Draft Fellows program while I was at Harvard Business School. Being part of that program got me hooked on angel investing and I've been angel investing now for the better part of the last five years, most recently through the Sequoia Scout program.
It's great to hear how long you've been investing. Can you tell me more about when you started angel investing?
I noticed many people in my networking were starting companies and raising money. My angel investing philosophy began by investing in my friends. In particular, I co-authored a book with a friend of mine on partnerships and business development at tech companies. He went on to start a company, and I wrote my first angel check into his business. I recognized that I enjoyed the aspect of speaking with early-stage entrepreneurs who were starting out in their product development, learning about what they were working on, and writing a really small personal check if my thesis applied to their start-up. I did that throughout business school.
Given my interest in investing, I participated in the Rough Draft program at HBS. While I was there, I led investments in five or six companies, which is substantial for a nine-month program. I went on to oversee Rough Draft's expansion to the West Coast because I was back in the Bay Area working at hims & hers. I oversaw the team of student investors who were looking for investments, providing them guidance on investing strategies but not making any investments myself. Most recently, I've been writing both personal checks, and writing checks through the Sequoia scout program.
My angel investing philosophy began by investing in my friends. […] I recognized that I enjoyed the aspect of speaking with early-stage entrepreneurs who were starting out in their product development, learning about what they were working on, and writing a really small personal check if my thesis applied to their start-up.
What do you think the next generation of angel investors will look like?
It's funny to think about the next generation because we still have a lot of kinks to work out. The obvious trend we're seeing right now are these microfunds, solo LP funds with $5 million or less in fund size. Those are driven by individuals who have specific industry knowledge that will get investors access that you wouldn't otherwise have access to.
There's also the rise of the operator angel: operator networks and syndicates led by leaders at operating companies. Hashtag angels were the first best example of this, but there are others. There's one called the Operator Collective. These syndicates add value because you get the benefit of a large network of individual knowledge, and the investing power is higher while individuals can invest much smaller checks.
I suspect there will be a democratization of angel investing. Right now, it's viewed as an upper-echelon stratosphere. I think there will be an increased ability to write checks and smaller checks into start-ups.
I suspect there will be a democratization of angel investing. [...] I think there will be an increased ability to write checks and smaller checks into start-ups.
You started investing in 2015. How many investments have you made so far? Do you generally have an aim for number of investments?
I have invested in about 15 companies to date. I don't set a numeric goal for myself because it's not my full-time job. I'm currently doing about 4-5 financial investments a year and an additional 3 investments (advisory work) annually, but I'm constantly assessing businesses. I speak to at least 30-40 companies a year. I'm very discerning about my investments because for me, investing is not just money. It's also the time. I want to be an active participant in the business where they need me and where applicable, and I consider myself to be on call for the founders should they need to access my expertise or network.
As an angel investor, would you say your contribution to the founder is time?
I do give money. But I also give access to my time and network. This is where having a specific set of experiences on the operating side becomes valuable.
I want to invest in someone I would be proud to introduce to my network and proud to hustle to make them successful. Once I've given money, I want to see a return on that investment and I'm willing to put in the time and the energy to make that business a success.
I want to invest in someone I would be proud to introduce to my network and proud to hustle to make them successful.
Do you have a certain investment strategy in mind?
Strategy may be a misnomer. I try to invest in women and underrepresented founders. Pretty much all of my investments have a female co-founder, or a person of color. That's very important to me. I've got this perch that not everybody has and I should use it for good.
I also focus on businesses where I would use the product. Typically, I look at consumer social and consumer health. Generally, the bet is on a founder who's magical, especially because I come in at the pre-seed or seed round.
You mentioned that this is something you do on the side. How do you balance your day job and angel investing?
As the head of strategic partnerships, I see a lot of early stage health tech companies. They come across my desk because they either want to partner with us or want to emulate us. I've got this increasingly growing spreadsheet of competitors. As I think about the businesses that I would invest in, sometimes I'm actually seeing them at work. It's easier to understand who the competition is since I've already got a thesis around what I would be looking for.
When I'm not working, I spend early mornings and late nights speaking to founders. My extracurricular hours are spent on this, whether it's meeting with the teams or researching categories.
When I'm not working, I spend early mornings and late nights speaking to founders. My extracurricular hours are spent on this, whether it's meeting with the teams or researching categories.
Has there been a time you wanted to invest in a start-up and how did you convince them to take your check over someone else's?
It does happen. For example, there's a company called Levels Health - a telemedicine business specializing in continuous glucose monitoring. They had a hot round and the founder is the most passionate, organized, running-through-walls kind of founder I've ever met. My ultimate litmus test for investing is always whether I would want to work for this founder. Sam was off the charts. Although I write small checks, I explained to him that I know exactly what he needs to do to build the business. I also have a big network in consumer health. If he were to include me in his round, he's not just getting my money, he's also getting the relevant experience that I bear.
My lived experiences can help prevent others from making certain mistakes or from pursuing certain paths. That often helps persuade founders. The other thing is showing a genuine interest and passion for what they're doing: being a user of the product is table stakes for investing. If you can demonstrate that you care about them and their product, you are passionate about it, that's a great reason why they should take your money over somebody else's.
Being a user of the product is table stakes for investing.
For the companies that you've invested in, has there been any impact from COVID?
Fortunately, consumer social and consumer health happen to be two categories that have been COVID winners. For consumer social, we're spending so much time behind our screens now and we're craving human connection. I wrote a small personal check into Clubhouse, which has been a popular new way to interact with people. I also invested in a distributed networking app called Upstream that was well-timed.
Health has also experienced a boom in the past 12 months because wellness is top of mind for people. In terms of people staying at home, I'm thinking of how founders can capitalize on this momentum to ensure that they stay winners and that their competitive advantage is sustained.
How did you get started finding deals? I feel like you need to build your deal flow to then have a sustainable flywheel.
You're right on the flywheel. I am fortunate that I worked at Twitter for a long time. A lot of my early deal flow came from people I had worked with who went on to start companies. I also broadcast to connected individuals in my network that I was beginning to invest.
Once you have done a couple of deals, you're on people's radar. Friends who invest full time but later stage will share deals with me that are either too early for them or out of their specific knowledge set. That's been very helpful to be on the radar of people who I know invest full time who can pass deals off to me.
Once you have done a couple deals, you're on people's radar.
What's the one investment you're proudest of?
I just did an investment in a company that I believe will revolutionize and democratize the internet. The company is called SomewhereGood. It's a community for everyone but is trying to recreate the internet for people of color starting with content and a digital platform for creativity and for your well-being. I'm extremely proud because of this company because I think the online community should be recreated for everyone. It's a massive opportunity to give voice to people who deserve it and it feels like it's doing good for the world.
What are some challenges that you found with angel investing?
You don't really know if you're good at it for a while. I'm an instant gratification kind of gal and the tough thing with investing, is that it takes a long time to know if your investments are successful. Fortunately, almost every single investment I've made is either still alive, or had an up round. I've had one exit. I've had a couple companies go through Y Combinator.
What exit was this?
It was an investment I did through Rough Draft in a company called Meetingbird. They got acquired by Front about 1.5 years ago.
I started investing this year and was curious how much signal you can get in terms of your investment judgment five years later?
There's some signal you can get from pattern recognition around founders. It's a testament to founders when the company has nine lives. It's a testament to the fortitude of the founder. I have invested in founders who care enough that they're going to keep this company afloat no matter what. They have to be people who I think will run through walls to do anything for the company. I've had companies almost die a bunch of times and come back with a vengeance.
There's been an evolution for how companies grow and scale and sometimes it can be hard to tell if it's a macro impact, the economy is doing certain things, or if it's something specific about the founder.
What is the #1 piece of advice you want to share with aspiring angel investors?
Don't let not having money get in the way of investing. I know that sounds silly but a lot of times, if you are genuinely interested in angel investing, the first thing to do is to prove that you have access to founders. Somebody may be able to give you the capital if you really know the founder. She will want you for you, even if you're giving a $1,000 check, which I know is a lot of money so I don't want to be flippant about even that, but it's more a signal that you've got access to a founder.
If you've already made a few investments, people will let you into their rounds, even for really tiny check amounts because they want you and you're a bigger signal to the market.
Where can people reach out?
People can reach me on Twitter at @ellenjdasilva.
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Reading corner 📚
Voices Around The Table by Wendy Xiao Schadeck
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How to encourage founders to get angels on their cap table (Tweet) by Alex Cohen
As we see a democratization of early-stage investment, I believe we’re seeing more and more operators wanting to invest in founders. However, each small check a founder accepts makes for a crowded cap table and a tedious process to hunt signatures. Alex shares a solution for founders: you can lead a syndicate to get all angels under one entity on the cap table.
We only have 100 points of equity to split up by Charles Hudson
I’ve shared a previous article on this (link) about this previously however it’s a recurring problem for early-stage VC investors and how founders bring them along the journey. Charles brings to attention the hard balance between founder dilution and investor ownership for early-stage and late-stage investors. I don’t think there’s a solution at this point but I think it’s a good conversation topic that should be further explored.