Do Good While Doing Well

When I was first learning, I automatically equated investing with financial returns. I had no idea how many other rewards there were. Now I group intrinsic rewards into five buckets. Creating jobs, networking with people outside your career or social circles, personal growth, the good feelings from paying it forward, and getting a first look at some of the cool stuff being created. These are all reasons why people become and continue to be angels. All these reasons matter to me.

Job Creation

One of my reasons for starting and continuing to be an angel investor is to contribute to job creation—jobs that people enjoy and allow them to contribute to making the world a better place. While we don’t have a lot of data around how many jobs are created because of angel investors, Desert Angels, an angel group in Tucson, Arizona, did a study over a ten-year period showing the economic contribution the investors made. Collectively they invested $47.3 million in ninety-five different companies. The study concluded that “for every $100,000 of investment, these portfolio companies produce 5.8 direct jobs, $458,000 in wages and $2.1 million in economic output.” If we do the math, this one angel group over ten years contributed roughly $1 billion to the local economy. This is a real-life example of the old adage about giving someone a fish and feeding them for a day or teaching them to fish and feeding them for a lifetime. This is like creating an entire fishing conglomerate!

At one point, I tried to add up how many jobs got created from the companies I was invested in. It was hard to measure an exact number, but conservatively, I contributed to hundreds if not thousands of jobs being created. I might have been a tiny percent of a percent of the investments into those companies, but I still played a role.

Networking

I had no idea how many people from different industries I would meet as an angel. I have met people through local meetings, larger events, and collaborative decision-making about investing in a start-up. Having a shared goal of deciding to invest in a company is an interesting way to get to know people. You analyze and strategize about the company, the team, the product, or service; who would pay for it; and how much the company could grow, just to name a few. These types of conversations allow you to get to know someone pretty well after just a few weeks. And you work in groups, so no part of the work or decision is left to just one person. Plus, angels get to network with entrepreneurs and all the other investors that invest in a company. I am a co-investor in a company with Mark Cuban. I’ve co-invested alongside big venture capital firms and other strategic companies like Constellation Brands. I knew of an angel group that was started because the leader of that group was friends with a professional football player. She started an angel group for professional athletes, giving her access to a whole new world of people. While there are stories of angels getting to interact with celebrities, which can be interesting, every angel makes new friends and builds relationships with like-minded people each time they look at a new company for investment.

The network effect also comes when entrepreneurs become serial entrepreneurs after doing well their first time, and they go on to build more companies. If you are an investor at the beginning, you are usually allowed to participate in their later companies, which may be closed off to other investors.

Some people end up becoming angel investors because of their network. Here are a few random examples. A local investor, Quinn, had a sister, Stella, who started a business and was raising what is called a “friends and family” round. This is the very first money raised by a new company. Since Stella knew the founder, she could invest, and likely several other family members and friends would too.

Having a network whose members have attained a certain level of expertise is another way angels get introduced to start-ups. Will is a doctor in gastroenterology, and a company made a product to help doctors during a colonoscopy procedure. Since angels like solving big problems and Will knows firsthand how much this new product could help, he decides to be an investor and back the company.

Personal Growth

Learning about all kinds of industries and innovations was one unexpected benefit that I gained from my involvement in angel investing, which has made it worth my investment of time, talent, and resources. Start-ups and entrepreneurs need the expertise and mentorship of angels, but this goes both ways. In my journey, I have learned about different industries I would have never known about. I’ve seen and experienced the inner workings of a start-up, and I’ve served on boards of start-ups and helped to navigate their growth. My ability to make decisions and evaluate situations has improved because of the vast amount of exposure I have had to the entrepreneurial environment. Not to mention, start-ups are great cocktail-party conversation; people always like to hear about new and exciting companies or products and services.

I remember seeing a presentation from a company working on enhancing the technology used in the fishing industry. I have no interest in fishing, so I was ready to move on and look at the next company. However, I ended up having several conversations with the founder, and I learned a lot about an industry I knew nothing about, including the large number of people who truly love to fish—from those who do it for a living to the occasional hobbyist. On a few occasions after this experience, I found this knowledge useful in conversations with others. Basically, I was able to hold my own in a fishing conversation.

Paying It Forward

The reason I hear most often for why people become angel investors is that they want to contribute to the change they want to see in the world, including the kind of change affecting climates, politics, and racism. Watching the news has become a barrage of horrible things happening out in the world. We feel bad, but we are unsure what to do or how to help. So what do we change? The channel.

Change is hard. Big life changes, like changing jobs or relationships, are identified as some of the most stressful events ever to take place in a person’s life. Changing our behavior, such as exercising more or eating better, could take weeks to months to years to accomplish—or at least twenty-one days, as some say. We even hesitate with things as simple as relocating to another seat during a meeting or engaging with new people at events.

The number of days between March 15 and March 31, 2020, felt like a hundred! Hearing “shelter in place” for the first time was daunting, and going to the grocery store on March 16 with so many empty shelves was terrifying. I was glued to the television. I was trying to find any semblance of hope during this new pandemic, or at least where to get some toilet paper! During this time, actor John Krasinski aired his first episode of Some Good News, showcasing people all over the world cheering and celebrating their local health-care workers on the front lines of the pandemic. We were all craving a way to feel happier during this scary time.

In my own search, I stumbled upon a happiness class, a free, ten-week, online Yale course taught by Dr. Laurie Santos, called The Science of Well-Being. Maybe I was influenced by the events of the world around me, but I was engrossed in the learnings. The research showed that subjects would rate themselves on their level of happiness based on a variety of factors. Winning the lottery was among events that brought a short-term spike in happiness, but after a period of time, the winners were no more or less happy than they had been prior to the event. In contrast, the course also included the happiness level of people with quadriplegia who reported their happiness levels were not that far off from those of nondisabled people.

What Dr. Santos came to uncover is that we tend to overestimate external factors, such as material possessions and wealth, and underestimate internal factors, such as health, relationships, and mindset. The other thing the course teaches is that happiness requires intentional effort. Practicing gratitude, building and engaging in strong social connections, and maintaining vibrant physical and mental health are all ways to increase one’s happiness.

One of the exercises Dr. Santos gives during weeks seven through ten is practicing random acts of kindness. This could be anything from holding the door for someone, giving a stranger a compliment, or, in an example from Krasinski’s first episode, a man mowed his neighbor’s grass while the neighbor was deployed overseas. Dr. Santos showed that generosity and giving increase our overall happiness. The pay-it-forward mentality!

Prior to angel investing, I would hear the term “random acts of kindness” or “pay it forward” and think, I’d like to do more of that, but it seemed in the periphery of my thinking—not necessarily on my weekly to-do list. After becoming angels, the desire to pay it forward shifted more into focus for Izzy and me. Some acts are things like tipping 25 percent or more to a server instead of the standard 15 percent or going out of our way to shop at a local business.

My good friend and neighbor, Katie Weeks, started doing “birthday givebacks” with her kids from a very young age. In lieu of traditional toys and games as birthday gifts, the children pick a charity or school to donate to and find out what they need. One year, it was supplies such as coloring pencils, notebooks, and calculators for a local school. Instilling these values as Katie is in her children when they are so young warms my heart, thinking about what they will give back as they grow up.

We don’t usually see if the effect of paying it forward made someone else act, but we believe that putting good out into the world is what matters. While living in Pittsburgh, Izzy and I knew Jason, the chef at a local restaurant. Jason invited a group of about eight students from a nearby high school culinary program to look behind the scenes one night when he knew the restaurant would not be overly busy. As the students were all aspiring chefs themselves, they were excited to see the kitchen of a restaurant they knew in action. Jason talked to the students about how he became a chef, gave them a tour of the kitchen, and even allowed them to do some prep work with staff members. Later that week, Jason got several letters from the students expressing their gratitude, but one letter, from student John, stood out. John said this opportunity provided him with clarity on his decision to pursue a culinary career.

Angel investing is a great way to pay it forward. With the goal in mind of getting a financial return while making positive changes, this could lead to a cycle of investing where returns from one investment fund the next.

Now, if we put this all together, we want to be happy, and there are issues or causes in the world where we want to see change. We can be intentional about how we do this. Imagine if everyone created a way to be just a little bit happier, and the changes we want to see in the world started happening bit by bit. It might not be Peace on Earth, but it’s a start!

People want change. They say they want to do things to make change, but they don’t know how to go about it. People want to be happy, but happiness doesn’t happen by accumulating material things; happiness comes from within us. By intentionally forming a “be-the-change plan,” you will derive satisfaction by helping the causes you care about, since this level of intentionality is itself part of the wiring in our brains that makes us happier. The be-the-change plan = happiness.

First Look

Early access to innovation is another reason to be an investor. I remember watching the first few companies pitch early on and thinking, How cool that I get to learn about all this before everyone else. Over the years I’ve been given the opportunity to try all kinds of new products and services. Everything from different foods, vitamins, skincare, and makeup to human-resources and email software—all before it was offered to a broader market. Heather Henyon, founder of Mindshift Capital, became an investor in Rebel Girls, a book, podcast, and app company highlighting stories of extraordinary women of the past. Their target market is girls between the ages of seven and fourteen, as they want to be the new Girl Scouts of modern times. When Heather first invested, the company only had a few books. She got an inside look at all the new products being worked on before Rebel Girls ended up on “Oprah’s Favorite Things.”