😇 Angel interview #14: Andy Davis

"Part of the job that no one tells you about is communicating with other investors so that the founders can do their work."

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Here’s today’s edition:

  • Interview with Andy Davis 🔍

  • Feedback 🙏

  • Reading corner 📚

Andy Davis is the founder of 10x10, a community of Black founders and investors in the UK. His community has spawned spinoffs such as 10x10 VC and 10x10 Angels. He recently launched the 10x10 Fund with an open invitation to commit a minimum of £1,000 to invest in Black founders.

Andy is spearheading efforts to make European investing more diverse and inclusive by raising awareness of underrepresentation, and providing financial, strategic, and networking support to Black founders.

Can you give a quick introduction of yourself?

Hi, I'm Andy Davis, co-founder of 10x10, a group of early-stage black founders, black VCs, black angels. I’m a now general partner for 10x10 fund, a fund that invests in early-stage founders in London. I was also an angel investor at a venture fund called Atomico.

How much experience do you have in angel investing?

I've done 10 angel investments over the last 2.5 years, including 2 this month. As a founder, I've also brought angel investors and VCs onto my cap table. I didn't feel new to anything when I started investing myself.

It sounds like you heard about angel investing as a founder. How were you introduced to angel investors?

I've never had a job and I didn't finish university. I've been working in start-ups over the last 12 years. I was reading a lot about how businesses work and what makes enterprises tick. I learned about the origins of companies: I discovered that there were individuals or institutions such as VCs who put money into companies.

As I got going with startups in 2008-2009, I received my first angel investment in 2010. That came about when I was starting a business with my cousin and we needed £10K. We didn’t have £10k, we were poor. I said: "How about we call our friends for some money?" We were 19 years old and were expecting to get to £1-2k collectively. We decided that we could ask for £400 and give it back to them in the next 6 months. People instead were comfortable lending us upwards of £500-1k.

When we had collected £7-8k, someone said they were willing to give £2-3k, but in exchange they wanted equity. We had gotten to watching Shark Tank or the equivalent, Dragon's den, so we understood the concept but as 19 years old we weren't sure how much of the company to give in exchange for a check.

Eventually, we gave the person 2% for the £2K. Now, we had an investor. It taught me how angels can be helpful individuals and also how you should manage an angel investor. It was a small ticket but I was really young and it was my first experience in the startup ecosystem, which hadn't really been developed in the UK. It also gave me the exposure that moved me along my journey.

It taught me how angels can be helpful individuals and also how you should manage an angel investor.

I would love to take a tangent. I don't know many people who decide to start a company when they were 19. What led you to make that decision?

I don't think I'm particularly great at anything, the one thing I'm okay at is problem-solving. I went to university for a year and lived on campus. I lived in a block of apartments near the university with 40% students and 60% professionals. I was the weird guy who had this sheet of paper where I wrote down the question: "Would you pay £1 to take a quiz online where you could win £100k?"

My apartment was next to the lift. Every time I heard the lift ding in the lobby, I would jump out of my apartment and press the lift button so that it would stop on my floor and ask the person in the elevator: "Hey, can I bother you for a second to fill out a survey in my apartment"?

I ended up getting 78 responses. People eventually started saying "no" so I decided to cellotape the survey in the lift with the pen attached to it. I would still press the lift button and ask them to fill out the survey.

I was always problem-solving. There never was the intention to go and build a business, it was always "here's this problem, I should try and solve it." That's how you end up starting something at 19 years old.

What was your first business?

In football (aka soccer in the US), we've got the Premier League. We created the Premier League table, which is a table of all the results. It was simply a website, where you'd go to predict the Premier League table before the season starts. You can get in for free and the winner gets £100K for correctly predicting.

Something interesting happened. We wound up getting 2,000 people sign-ups in the first week. We didn't know where it came from and we didn't have any analytics running but we saw a bunch of messages in different languages. It was 2010, people in the UK weren't using Facebook but my suspicion is that it came through Facebook abroad.

I had access to a Premier League player so we did interviews and partnered with a big newspaper to get their sports news on the website. Now, the table is accessible through an API. Back then, hardly anyone was using APIs to access information. A big football highlight website partnered with us to show their highlights on the platform.

The week before the season ended, some guy emailed us and said, "Hey, I'm winning." We looked him up, and if the results went a certain way, this guy could win. We didn’t have £100k. We decided to watch the games live, watch his table live and if he won, delete the table [laugh]. Luckily, that didn’t happen.

We were building a platform based on competitive social gaming. I'm a big football fan. It was solving a problem. It was fun when we did it and it got attention and people started using it.

One day, I thought we shouldn't be doing this anymore. I told my cofounder and he was upset. But I realized that I should focus on big problems. What we built wasn't addressing a problem, it was a good idea, and those are a little bit different. I learned quickly at 19 years old that you can have a good idea, but good ideas need to solve problems. You want to sell a painkiller, not a vitamin.

I learned quickly at 19 years old that you can have a good idea, but good ideas need to solve problems. You want to sell a painkiller, not a vitamin.

That's a great lesson to learn earlier on. When you started angel investing what was your biggest learning?

I think there are a few things I learned along the way.

Advice #1. Manage expectations. As founders, we often have a conversation with an angel and founders get excited. This is something that happens in London quite a bit for various reasons. I get calls where someone says: "Hey I heard you invested in this company". However, I didn't invest in that company and just had a conversation. Whether it's miscommunication or founders playing things up a little bit, my name ends up in several decks and advisor documents. I personally think it's just miscommunication. 100% let a founder know that just because you like the company doesn't mean you're in.

Advice #2. When you invest, understand what the founder needs. You have to listening. Angel investors happen to be individuals who are operators or founders or full-time investors and everyone wants to be hands-on. That's great. But we have to do a lot of listening to understand. Be patient, it's okay not to make a difference immediately. Listen and understand how they operate, how they like to work with you, and how they do or don't ask for help, and how you can deliver that. You can see how the results go.

Advice #3. Work with others. As an angel, you're going to encounter other angels and VCs. Part of the job that no one tells you about is communicating with other investors so that the founders can do their work. Sometimes, other investors are overbearing, some investors don't do enough, or others don't do what they said they will, and everyone's busy.

I've been involved several times with founders who have been bothered by other investors, especially first-time founders. Investors have all the best intentions at heart. They want to move the company forward, but they believe in their judgment when they're from the industry. It's your job as a good angel to let your fellow investors and your team know how your CEO can do the best job possible. That's one of the secret jobs of the angel investors.

Part of the job that no one tells you about is communicating with other investors so that the founders can do their work.

You mentioned earlier that you founded 10x10. Can you tell me more about 10x10 and how you decided to start it?

10x10 is a group of UK's early-stage black founders and black VCs, black angels. We are also forming a full fund with retail funds. There's going to be a few hundred LPs to get more people into angel investing. 10x10 started 5.5 years ago. When you grow up black, you're told you need to work 10x harder in the world. In start-ups, your product needs to be 10x better than the others. Hence, 10x10.

10x10 is something that I kept quiet for many years until last year when we had the first 10x10 VC meetup. Someone tweeted about it and then people found out. The mission is to fast forward black founders and investors. For founders, this means getting funded. For black VCs, it's getting them VC jobs and helping them progress in those roles.

Every day, I spend time with founders and investors, helping them with events or monthly workshops. I hang out with black founders every Friday. This gives them a chance to ask me fundraising questions. I schedule another hangout for anyone that wants to get into VC.

I’ve been doing them for 1 year and I'll probably be doing them forever. I think that for a lot of these things, as long as you focus on the value and you're just consistent, there's no reason why you shouldn't do it forever.

I think that for a lot of these things, as long as you focus on the value and you're just consistent, there's no reason why you shouldn't do it forever.

You started angel investing more than 5 years ago, how have you seen it change over time?

When I started many years ago, I was by myself in London, or wherever I went. I was just known as the black guy in tech. I identify as black as I grew up with my black single mother, and if you're dark-skinned, you're black. I'm mixed.

What's changed is the number of black founders. This makes me happy because today's black founders have a community, they have these resources to find each other. It's different from when I was coming up. You can share war stories and victories.

What's different also are the solutions that they're working on. Previously they were working on more easily accessible markets, like hair and beauty, things that play a strong part in black culture. Now we see many more founders using their academic backgrounds, their experience in the workplace, and their experiences to solve problems that they have come across. They are learning the rules of the venture game every single day to build a more scalable business.

Over the last few years, what has been consistent is how caring black founders are for each other. They just care for each other and support each other. That hasn't changed. There is this strand of DNA, which is care, it's the most important strand, and all the black founders have that.

What's changed is the number of black founders. This makes me happy because today's black founders have a community, they have these resources to find each other.

You recently wrote the Black Report, which is the first report on black startup founders in the UK. What motivated you to write it?

I thought about writing this report for 2 years. I didn't want to start it because there wasn't any data on black founders and there weren’t insights and realistic perspectives.

For the last 1.5 years, I have hosted this session called Safe Space. It was a session with 4 to 6 black founders where they could discuss things that are personal to them. Everything discussed stays in the room. We discussed where things sometimes go wrong and the majority of the time, founders realize that they're going through the same experiences. They never knew that beforehand.

There's all this insight and perspective on who black founders are for the current batch. For the current batch, everything is over-glorified. People look up to us and think we're doing great work and we're changing the world. It makes it seem so inaccessible and it shouldn't be. So how can we make it more accessible? What if everyone knew that others are like them?

I think the report was well received and I was really appreciative. It was obviously the first report on black founders in the UK and the second report on black people, ever.

We discussed where things sometimes go wrong and the majority of the time, founders realize that they're going through the same experiences. They never knew that beforehand.

Do you have a specific investing strategy?

I invest pretty early. My friends joke and say I should get a t-shirt that says "I would invest in a spreadsheet." I will literally invest in a spreadsheet, an email service, an Instagram or Twitter page. All I want to see is validation, show me good and bad data, good data for obvious reasons, and bad data because everyone hates surprises. I like founders who have been in the market for at least two quarters (6 months) so that you've got at least some solid data.

You have to be obsessed. This has to be the problem you want to solve for the next 10 years. I'm sector agnostic. I like product-focused people. I'm conviction driven, it's about the founders and who they are.

There are 3 things I want to see:

One, I want founders who are obsessed.

Two, I want founders who can run through walls. The game goes, you start a company and a wall finds its way to you.

Three, you have to care deeply because then you might have some special insight about this problem and the industry that will enable you to be able to solve it in a different way.

The game goes, you start a company and a wall finds its way to you.

What was your last angel investment and what made you decide to invest?

My last angel investment was in a company called Hutch. It's a new logistics company for e-commerce brands. I've known the founder for some years, I invested super early. This is his third startup. Of his last two, I helped build their deck, with hiring, clients, and product offering.

For their first company many many years ago, I wasn't in the position to invest and I didn't. The last one, I was in the position to invest and I didn't because I didn't think it was quite right. He stopped doing it after 6 to 9 months and landed on something which had the perfect founder-market fit.

All the logistics experience he had over many years at many companies, one which he exited where he was the head of operations there. I trust him and he's incredible. He does things the right way. I just want to back him, Hutch has proven that it's going to be the company for these small e-commerce brands as they grow to cover their logistics.

For the other companies that you currently support, what if any effect did the pandemic have on them?

Good and bad.

Afrocentrix, a haircare brand for curly hair, thankfully had a lot of the logistics and supply in-house. When other e-commerce bands were ordering packaging from China and couldn't get orders delivered and fulfilled, they were getting a massive surge in customers and were able to serve them. They went from £20-50k a month of recurring revenue to £60-70k.

A company that was impacted by the pandemic but is pivoting and finding its way around is a called BeautyStack, founded by an incredible founder, Sharmadean Reid. It's a product where you book sessions with beauticians. Nail and beauty stores had to shut down their businesses because of COVID and lockdown and she pivoted to offering online tutorials. Sharmadean is so good at always keeping customers informed. People trust her so much that she closed a small round in a week or two, and it was oversubscribed. We're super optimistic about the future of that business. The lockdown just has an impact in both ways.

Since you've been angel investing for quite a while, what returns do you expect from it?

As an angel, what's most important is growing a business. I ask myself these questions:

  • What do I believe about the future of the world?

  • What are the companies that should be in that world?

  • Do I believe this founder can build a company that will exist in the future?

If that's the case, then I'm in. That's how I look at it. I also ask myself: "Can this business get to £100M in value in 5 to 7 years?" As an angel, I think a 10x return will be great because you're coming in early at £1-5 million valuations. I'm just supporting founders to getting to those big exits because however you choose to exit your company, or not, is up to you and I'm just here to support you on the way.

Out of all the companies that you have invested in, how many of them have done follow-on rounds, how many have you exited or have gone bankrupt?

No one's gone bankrupt. Of the 6 investments in 2020, 1 has done a follow-on round and they should all be on the course to raise next year. I've invested £100k and I want to return 1.5 million. That's my aim. 10 to 15x return.

Where do you expect to be in your angel investing career in five years?

Happy. I want to forever angel invest. I expect to be doing follow-on rounds along the way. I always want to do preseed, because I know black founders need help the most there. But as time goes on, they'll need additional support further upstream so I want to be able to cover bases there. Hopefully, I can always do 2-3 deals a quarter. I'm a bit of an extended co-founder and I'm here to be supportive in any way that I can.

What's the number #1 piece of advice you want to share with aspiring angel investors?

To do right by founders because if you prioritize that every single day, the result will be right for you.

To do right by founders because if you prioritize that every single day, the result will be right for you.

Where can people follow you or reach out?

They can reach me on Twitter or Instagram @MrAndyDavis.


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Reading corner 📚

FTTea with Cokie: So You Wanna Angel Invest... by Cokie Hasiotis

Cokie wrote a great article after making her first angel investment. To sum it up, 1. back people, not ideas, 2. secure your own bag first (max your 401k, have a solid emergency fund, etc), 3. get to the root of what your goals are for angel investing and make sure you’re getting that out of the experience.

Aspiring operator-investor VCs by Lolita Taub (Twitter)

How to Get Started as a Microangel investor in startups? by Elizabeth Yin (Twitter)

Elizabeth Yin has been a game-changer in pre-seed rounds and I’ve loved listening to her advice on the Pitch. In this tweet, she shares the lower barrier to entry (you can write a check as small as $1k), but to always assume $0 and weight towards a good portfolio construction.

Investing in Public: Non-Obvious Lessons from 100+ Angel Investments by Tod Sacerdoti

This is a great in-depth essay about angel investment from a founder who has made over 100 angel investments. I will say he probably could find other founders who had the potential to succeed because he was a successful founder himself as the CEO of BrightRoll however I think the lessons still generally apply.

Operator-Investors: The Future of Venture Capital by Pathway Ventures

They share the three waves of operator-investors: the 1st wave of vertical-specific former operators (e.g. a16z, Greylock, Sequoia), the 2ns wave operator angels and the 3rd wave of operator fund managers. I continue to see a rise in emerging fund managers and I don’t see this stopping anytime soon.