The CC Team Asks: How Do I Make My First Investment?
Nothing ventured, nothing gained.
Written by: Camilla Marcus, Co-Founder of TechTable and Partner of Pound for Pound Consulting
The start of a new year is often when we take stock of our lives, think about new opportunities we can pursue that will enrich our day-to-day, and look for ways we can give back. Investing is an incredibly rewarding experience, and a smart way to accomplish both of those goals. By investing, not only do you get to help entrepreneurs realize their dreams (and maybe change the world) but you’ll often see worthwhile returns yourself.
Yet I constantly hear reasons why people don’t invest. I get it, investing can seem daunting. But getting started is often the hardest part. As a female investor, I especially want to encourage other women to leverage whatever success they have to pay it forward and support female-led startups. So, if you’re interested to kick off your investment portfolio, here are six tips for how to make an investment and ensure your first steps as an investor are less intimidating.
START WITH WHO YOU KNOW
For the first few investments you make, it can be helpful to invest in a friend’s company or alongside another friend with experience. If you’re investing in the venture of a friend, ideally you already know their work ethic and if they are a fit for the idea, so you can have faith they will put your hard-earned money to good use and (hopefully) yield a solid return. Additionally, investing alongside people you know—a business savvy friend or a colleague in your network whom you trust and respect—is a helpful way to learn the ropes and can often lead to more opportunities in the future.
ONLY INVEST WHAT YOU CAN STAND TO LOSE
This sounds self-explanatory, but it’s still worth saying (and reminding yourself over and over): “Don’t bet the house.” As a general rule, your total portfolio shouldn’t be more than 10% of your income or net worth, so don’t invest what you need, such as rent.
"Your total portfolio shouldn’t be more than 10% of your income or net worth."
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Sometimes even the best sounding deals don’t go anywhere, and you may never see a return on some investments, especially in the early or seed stages. Before signing on the dotted line, ask yourself, “If I lost this, would I be okay?”
DON'T SELL YOURSELF SHORT
A common misconception is that because you might not have a large amount of capital to work with, you can’t or shouldn’t invest. “I don’t have a lot of money” isn’t a good reason not to invest at all. You may not have unlimited funds, but you likely have a unique skill set or valuable network. Perhaps you’re a marketing savant or a talented writer or work for an exciting company, and you can be a strategic asset to the venture in other ways, even if you can’t cut a big check. You won’t know until you show interest and ask the founder—nothing ventured, nothing gained. Another option is to create an informal syndicate with other friends interested in investing, pooling together what you each have to spend in order to satisfy the minimum investment requirement.
KNOW WHAT YOU DON'T KNOW
In the beginning, it’s easier to learn to swim in familiar waters, so invest in products, companies, or industries that you’re passionate about and have at least some level of expertise in. No matter how appealing or attractive an opportunity appears, it’s important to be able to have a pulse on that specific market and the competitive landscape so you can properly evaluate the business with context. I personally prefer to be a more hands-on, strategic partner rather than a passive capital provider, so I find it most valuable to invest in products that I would use or in businesses where my specific background and experience can be useful to the founders. There are a lot of resources out there for beginners, such as Joanne Wilson’s blog Gotham Gal and Charlie O’Donnell’s #newtovc, which hosts monthly classes and workshops for people new to the investing community. And if there’s any part of the process that you don’t understand, it’s important to be thoughtful and humble about asking for help.
“'I don’t have a lot of money' isn’t a good reason not to invest."
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HONESTY IS THE BEST POLICY
Along the same lines, you have to be truthful with yourself about what kind of investor you are and want to be. Are you willing to invest long term? Do you need cash flow right away? What is the maximum check size you’re willing to contribute? Do you have any other special requirements or restrictions? Deciding what your investor profile is will help attract the right kind of opportunities, guide you through the evaluation process, and help you filter through deals more efficiently.
PASS IS NOT A FOUR-LETTER WORD
Be realistic about what opportunities are a good fit and be confident to know that not every company or investment is right for you. Sometimes people who’ve never invested before begin to feel obligated to complete a transaction during due diligence because they feel they’ve put too much time and energy into the investment already. Even if you’ve taken a few meetings with an entrepreneur and you’ve seen their term sheet, it’s okay to pass at any point before signing final documents as long as you do it politely and while maintaining an earnest and thoughtful reputation (this world is small, after all).
BONUS—HAVE FUN WITH IT
Finally, investing should be something you enjoy and have a passion for. It’s okay if you find out it’s not a great fit for you, but if you’re going to be investing your hard-earned (and post-tax) money, you should definitely embrace the adventure. Remember to live by the golden rule: don’t invest just to invest.
Camilla Marcus is the co-founder of TechTable, a hospitality technology thought leadership platform, an active angel investor, and a partner of Pound for Pound Consulting. She brings a broad base of experience across business development, hospitality ideation, culinary operations, and real estate. She received a JD/MBA from New York University, an AA from the International Culinary Center, and a BS from The Wharton School. She is also a mentor in residence for TechStars New York and a board member for Wellness in the Schools in New York City.
This post was originally published on December 11, 2017, and has since been updated.
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Create & Cultivate 100: Entrepreneur: Soraya Darabi
THE TRAIL BLAZER.
THE TRAIL BLAZER.
Soraya Darabi is the kind of Cover Girl every young woman should aspire to be.
She covered Fast Company’s “Most Creative People in Business” issue, then showed up on Inc. Magazine’s “30 Under 30” list in 2012, only to land on Fortune’s “40 under 40” list three years later.
Her business train moves as fast as her brain and as such, some have dubbed her a serial entrepreneur. But that doesn't bother Soraya-- not in the slightest. She began her career as the Digital Marketing and Social Media Manager at The New York Times at 23. She moved into entrepreneurship with the launch of Foodspotting, which she co-founded in 2011 and was acquired by OpenTable for $10 million, and then Zady, anti-fast-fashion e-commerce destination described as "The Whole Foods of fashion," in 2013.
Through all of her ventures she's never glamorized startup life.
Rather, she's crystal clear on the romanticized version of startup life the media likes to play up. She says entrepreneurs need to be stern if they want to see their idea succeed. At present, she's General Partner and founder at New York-based venture firm, Trail Mix, which invests in "the future of living well.” Investments include The Wing and Parsley Health.
More from Soraya below.
Name: Soraya Darabi
Instagram Handle: @soraya
Business Instagram Handle: @trailmixvc
We think hybrid models in all areas of business are the future. As someone who has been voted "most creative" by Fast Company. What does it mean to be "creative" in business?
To be creative in business you have to live in both the present and the future. In the present you should create an environment for yourself, whether you work for yourself or a company, that is your own personal culture. Imagine starting a business from scratch and writing a memo that at first only you can read, called "MY COMPANY CULTURE." What would go on that memo? Personally, I would write down words like flexibility, reflection, movement, excitement, dynamic conversations, brainstorming, imagining, gut-instinct. These are words that guide how I operate in business, but the words may be very different for you. Creativity is about inventing a system for yourself, that ultimately allows you to flourish within a larger construct.
What would you say has been the through-line of companies that you've founded and invested in?
Honestly, I'm not sure there is a tight soundbite or perfect through-line of the companies I've worked for, founded or invested in. Generally speaking I am drawn to work whereby I can learn from a mentor or colleagues, when the work is purpose-driven and design driven. I like pushing the envelope of what is expected in business and in life, and I believe the companies I align closely with - especially now at TMV - are edgy and bold. Beyond that, my mother the professor, always reminded me growing up that people change professions frequently. College students change their majors at least 2 times on average. Change is a word we embraced in my household because change leads to growth. Now, as an investor, I gravitate toward founders who relish in the new and push boundaries.
"Change is a word we embraced in my household because change leads to growth."
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For our reader, she's young, entrepreneurial, but at times fearful of the next step. As someone who has shifted roles and founded new businesses, how have you decided when it's time to step down and/or move on?
There is absolutely nothing more terrifying than leaving a role. It takes conviction, thoughtfulness, and time to make that plunge. I suggest before making a move formally, to ask a few friends to join your 'personal board' and to meet with them once a week or once a month to help prepare you for that next step with a detailed plan that you can be held accountable to. Love and support is the best way to get out of a rough professional patch and into the clear.
How do you feel about the characterization of "serial entrepreneur?"
I don't mind it, I think entrepreneurs who begin many companies are eager to make a dent in the world. It's an earnest desire to build a business with lasting impact. I would rather be known as a serial entrepreneur than Sally from HR.
What are the common challenges you've seen among female business owners and entrepreneurs?
I see women in business having difficulty pitching their idea and their mission effectively, economically and confidently. Once I feel like I am a black belt in pitching myself (Im not!) I would like to offer free coaching for women entrepreneurs specific to public speaking and presenting. I'm not alone in wanting to help women in this way. The newly launched Female Founder Office Hours will be a great way for women to practice their pitch in front of some of the most senior women in venture in a supportive environment with the goal of helping them present beautifully to the outside world.
With Trail Mix Ventures what was the turning point that convinced you, it's time to take matters into my own hands?
I knew that incredible companies in New York and Los Angeles were being overlooked by venture capitalists and saw that as an opportunity to launch my own fund to invest smartly, and sincerely, in purposeful businesses. That's it.
Where do your drive and passion come from?
I am a child of an immigrant. My passion comes from the pursuit of the American Dream.
"I am a child of an immigrant. My passion comes from the pursuit of the American Dream."
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When you run into a career obstacle, what drives you forward?
A night out with my friends who put work into perspective and remind me to let loose and to have some fun. Dancing drives me forward.
What is your biggest pet peeve?
Unanswered emails and texts.
What are your biggest fears about running a business?
I'd rather answer that question with this quote: "'You gain strength, courage, and confidence by every experience in which you really stop to look fear in the face. You must do the thing which you think you cannot do." - Eleanor Roosevelt
What's something you'd like people to know about your job that they probably don’t?
Investing isn't only for MBAs and left-brained. My line of work is both creative and intuitive, and some of the best investors in silicon valley began as journalists (as I did) because of their innate curiosity and love of truth. So if you feel like a futurist and you want to be on the pulse of what is next, please consider a job in venture.
Every day there is someone in your shadow. How can we stay original when we are so saturated by other people's work?
I think you get momentum from competition but keep your eye on the prize and stay focused and calm. That's all any of us can do. That, and, deleting Facebook from our smart phones.
What about your career makes you feel the most complete?
I feel complete in my career when I push myself - or our team pushes itself - to a finish line we never thought we would get to. I feel complete when I learn and then master a new skill (like pitching institutional LPs). It feels wonderful to be in a position to learn new things on a daily basis.
If you had to trade jobs with anyone else in the world, who would it be and why?
I would trade jobs with a popular playwright. As a teenager I wrote plays in my downtown and once had a play quasi-produced. It is a great hope that I will go back to those early works and workshop them to life again, with an adult vocabulary and prospective. So I think I would trade jobs with Neil Simon.
At what point in your career did you find the confidence to really take charge and become the woman you are today?
The woman I am today is purely because of my Grandmother, Elizabeth Fennelly, a great early influence, a true philanthropist and a very kind soul, and my brilliant mother, Katherine Fennelly, who raised my sister and me on her own terms while pursuing work that was not only meaningful to her but to the world. I think without them supporting my dreams and ambitions I would be without the confidence and resilience I have at this moment in life.
What's the best advice you've ever been given? Or your favorite piece of #realtalk?
Just to remember breathe and sleep. My mother always says "Everything will be better in the morning, but only if you've had a good night's sleep."
What song do you sing in the shower when you’ve had a bad day?
After a bad day, If I'm in the mood to sing, I would go with Everybody Hurts by REM.
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Need to Read Now: ABC Shark & Investor Calls Out Men Big Time
Send this to your dad. Tell him to thank you later.
What else do women have to do to be taken seriously?
Seriously.
We're still battling egregious sexism in tech and finance. This week made the blatantly clear. And earlier today, Chris Sacca, a former American venture investor (he was an early investor in Twitter and Uber), and ABC Shark Tanker with a front-seat to the happenings in Silicon Valley published the following essay on Medium. (We encourage everyone to click and read the whole thing.)
A crucial except reads:
“In my mind, because I hadn’t acted in a way that exploited an imbalance of power or vulnerability in a VC-founder relationship, I’ve generally considered myself one of the “good guys.
But’s that’s the crucial lesson I am learning right now in real-time: It’s the unrelenting, day-to-day culture of dismissiveness that creates a continually bleak environment for women and other underrepresented groups. I contributed to that, and am thus responsible for the unfairly harder road that everyone other than white men must travel in our industry.
I am sorry.
It’s also become clear to me that I didn’t consistently use my power and influence to call out bad behavior by industry peers. The passive acceptance of exclusionary words and deeds is not okay.”
To this we say YES, but we also want to know why? Is it something we said? Or wore? Or didn’t. Does misogyny and gender-biased investing really run that deep? Yeah, it does and a vital element of what Sacca is saying is that even well-meaning men are part of the sexist hamster wheel. To this we say: work harder. The investor is going on record that “As a white guy, even before I made any money, I benefitted from extensive privilege.”
A privilege not afforded to women or any minority.
"Even well-meaning men are part of the sexist hamster wheel."
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Outspoken entrepreneur, founder and CEO of MakeLoveNotPorn and self-professed “Michael Bay of Business,” (she blows shit up) Cindy Gallop took to her Twitter in praise of Sacca’s words. Gallup tweeted: “Tech world has missed out on many female-founded potential unicorns bc of systemic bias + sexual harassment.”
It’s a bias that runs through almost every single meeting. Even though, as Austin mayor Steve Adler pointed out at the beginning of June in response to an angry letter about a female-only screening of Wonder Woman, “What if someone thought you didn’t know that women invented medical syringes, life rafts, fire escapes, central and solar heating, a war-time communications system for radio-controlling torpedoes that laid the technological foundations for everything from Wi-Fi to GPS, and beer?”
Yeah, what if. Again, is there something else we need to do to be taken seriously? More beer? Better GPS to steer you away from your sexism?
Earlier this month, Neil Blumenthal, co-founder and CEO of Warby Parker, told the crowd at inaugural Vanity Fair Summit that as his wife, Rachel Blumenthal, was securing funding for her company Rockets of Awesome her experience was vastly different than his. “When my wife was raising money,” the CEO shared with the crowd, “every male VC would ask, ‘How do you spend your time?’ She would say, ‘What do you mean?’ What they meant was, ‘You have kids.’” This was always a deterrent for male investors. Neil went on to say, “When I raised money VCs would use kids as a reason to bond with me. ‘Oh I have a great nanny recommendation.’ It’s insanity.”
Here’s ONE of the many problems woman face: it’s the every damn day micro-aggression (like those that Sacca refers to) that make women question their own competence. Micro-aggressions grind slow, but they grind fine. And they make us wonder if we truly do deserve a seat a the table. Or the money. Or the position. (Yes, we do.) But it’s hard to continually pump yourself up, when the world around you wants to bring you down. Or when we have a sitting President calling out a woman’s supposed freakin’ facelift on his Twitter. Talk matters.
"Micro-aggressions grind slow, but they grind fine."
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So does putting your money where your mouth is. Investing in female-led and diversified companies IS the future. Those who aren't on board are welcome to fall off the ship. Men aren’t owed a life-preserver at this point.
Women like 52-year-old former Wall Street maven, Sallie Krawcheck know this. Krawcheck who once ran such elite institutions as Merrill Lynch, Bank of America, and Smith Barney, is leveraging her 30 plus years of professional expertise to help women build and invest wealth and “unleash women’s financial power.” With Ellevest, Krawcheck is on a mission to close what she calls the “gender investment gap,” an extension of better-known disparities such as the gender pay gap and the gender debt gap. “I have become truly convinced that getting more money into the hands of women is a positive for everyone,” explains Krawcheck, asserting that the “gender investment gap” costs professional women hundreds of thousands of dollars, if not more, over their lifetimes. “Closing this gap helps the women themselves, but also their families, society, and businesses. It also solves a lot of society's problems: for example, the retirement savings crisis is actually a women's crisis, given how much longer we live then men (and that we retire with less money than they do).”
Cindy Whitehead, CEO and founder of the Pink Ceiling is on the same mission. “What rips the sheets off in the morning for me is fighting injustices," the CEO shares. "It is an injustice that women get 2% of funding. It’s a ridiculous idea that half of the population only has 2% of the good ideas.”
They say a woman’s work is never done. But not this time. This time men should heed the words of Sacca and put in the work.