A karmic convo with an angel named Ariel
My career as an investor has been a never ending learning journey. Investing at the seed stage, I often look to angels for lessons in early stage company building. My Signia partners, Ed, Rick, and Zaw had all been angels before we started the fund in 2012 and Rick often says to me ‘Sunny, we’re in the service business. In service to our entrepreneurs.’ Having been former entrepreneurs ourselves, we try to help founders in the way we would have wanted to be helped — i.e. with good karma. This is something I found in common with angel heavyweight, Ariel Poler, from what I’d heard, so I invited him to lunch. He’s invested in over 100 companies, founded/co-founded 3, and has taken 15 board seats across his portfolio to date. Among the flock include winners: AdMob (acq. by Google), Bright Roll (acq. by Yahoo), NexTag (acq. for $1.3b), and Flixster (acq. by Warner Bros.). In his own words, helping entrepreneurs and building good karma has been the key to his success.
Ariel started off as an entrepreneur. After graduating from Stanford Business School, he spent the next 15 years co-founding three start-ups: I/PRO, Topica, and TextMarks. After his decade-and-a-half long stint as a founder and investor, he decided he was having more fun helping entrepreneurs than actually being one himself. So, he jumped to the Dark Side, became a Sith Lord and full time investor. (Star Wars emphasis, mine)
I asked him for advice on how VC’s could better work with angel investors, just like I did with my buddy, Justin Kan, a few months ago as part of my ongoing interview series with investors I find inspiring. Ariel’s been in the Valley for 24 years and has worked with most of Sand Hill and San Francisco’s investment community in that time. He talked about co-investing with Mike Maples (Floodgate) and Jeff Clavier (SoftTech) before they went institutional, about other VC’s who invested in his own companies when he was a founder, and others whom he got to know from the boards he joined, such as Mike Moritz (Sequoia) and Josh Koppelman (First Round Capital). That all made sense. The really cool gem I uncovered was that Ariel found some of the most helpful ‘nodes’ in his network to be the entrepreneurs he’d turned down for investment in the past, which says a lot. Investors see hundreds of companies a month and pass on 99% of them. Doing so with grace and helpful feedback isn’t easy as it takes a lot of time and sometimes founders don’t want to hear a negative critique. In other words, some people don’t want to hear why their baby is ugly. This results in ‘polite passing’ — something I think is a total waste of time and doesn’t involve any helpful feedback — or just plain old rude investor non-responsiveness. Giving helpful feedback and continuing to be helpful with no immediate, transactional self-interest — this take away is a great example of good karma in Silicon Valley and something I’m going to try and do a better job at after having spent time with Ariel.
I’ve previously talked about my ‘intro waterfall’ — i.e. how investors share deals with one another. Ariel prefers to co-invest alongside VC’s he knows and trusts at the same time / terms as they do though he’ll definitely consider deals that might be too early or late for others, judging each investment on its own merit. Occasionally in my experience however, later stage VC’s can sometimes haphazardly kick the can upstream and say ‘it’s too early for us, but you should invest’. This gives these investors optionality on a greater field of controlled leads that may turn into appropriate stage investments down the line. If it’s a great investment opportunity however, folks will find a way to put money in, and that’s when Ariel (and I) want to invest!
Besides just straight up deal flow, I asked for advice on how best to work with him and Ariel put it simply: ‘be helpful’. Every discussion can be ‘win-win’. Requests for casual coffee chats come in all the time and they’re usually not the most helpful (for either party). Before reaching out with a healthcare deal, know that Ariel doesn’t do healthcare investing, for example. He’s been public with his interest in human augmentation though and, so, prospective outreach could be targeted value add around this new field of interest.
It was refreshing to see this guy’s simultaneous humility and hunger. Seeing his enthusiasm when talking about human augmentation was visceral. He told me about all the conferences, conversations with domain experts, meetings with body hacking entrepreneurs on Twitter, etc. He’s fighting in the trenches and getting smarter himself. He’s not sending a team of analysts or associates to do it for him as some of the larger funds do in order to develop a sector investment thesis. He’s also set up an AngelList Syndicate focused on Human Augmentation which has attracted fellow sector enthusiasts to the the cause, generating deal flow, sector insights, and recruitment opportunities.
As I continue my path of apprenticeship as a venture investor, conversations with certain luminaries along the way, enlighten my path forward. Call these people Yoda, Deckard Cain, Mr. Miyagi, or whatever you will, but drawing down on their collective wisdom will certainly make for a better marketplace of dollars finding opportunity. I learned from Ariel that these transactions needn’t be so transactional in nature and good karma always finds a way back to the bottom line. Something to keep in mind with every meeting ahead.
Sunny Dhillon is a founding partner at Signia Ventures, an early stage venture capital fund in the Bay Area. Follow him on Medium, Twitter (@ sundhillon), and Snapchat (@sunnydhillon25) for more musings on tech & investing.