Elizabeth is a partner and co-founder at Hustle Fund, where she invests in early stage-startups and coaches portfolio companies. Previously she was a partner at 500 Startups, former CEO/Co-founder of LaunchBit and a marketer at Google. An enthusiast for her industry, Elizabeth hosts a blog called Bringing Transparency to Seed Investing, where she writes about, among other things, Silicon Valley, investing and entrepreneurship. Growing up in a suburb of San Francisco, where she still lives, she has always had a drive for business, tech and investing, which is obvious from her impressive resume. She spoke with Female Funders about her experience and advice for new angels.
Current job: General Partner & Co-Founder at Hustle Fund
Hometown: Mountain View, California
Education: Electrical Engineering Bachelor Degree from Stanford and an MBA from MIT.
First job: She started a web design company with her best friend in high school. “I went to high school during the dotcom boom in the bay area, so that was the thing to do.”
Work attire: Jeans and usually a dark sweater.
Currently reading: “Oh wow, to be honest I haven’t really read a book in several months, maybe a year,” says Elizabeth, who was looking forward to reading over the holidays when her schedule slowed down.
Hobbies: She loves being in the water, whether it’s swimming, snorkeling or scuba diving. “I’ve been trying to learn how to surf for the last decade.”
Angel investor she admires: David Hauser, an entrepreneur and active angel investor who started a company called Grasshopper, a voice-over IP phone platform that he sold to Citrix a couple of years ago. “He just looks at everything from an operational perspective,” Elizabeth says of her mentor.
“I never thought about being an investor actually. I had always thought about being an entrepreneur ever since I grew up [in California] so my company, LaunchBit, was kind of the start of all of this.” says Elizabeth. “LaunchBit was the company that I started with my best friend from high school. Several years ago, we went through the 500 Startups Accelerator Program, in batch number 2. We sold the company in 2014. t was a modest exit, and then from there I started doing a very, very small amount of angel investing. Shortly after, I actually went back to 500 Startups to be an EIR (Entrepreneur in Residence) to mentor companies and one thing sort of led to the next, where instead of starting another company I got more and more sucked into investing.”
Hustle Fund, and its name, was founded on one core value: hustle. “The biggest question is whether you can execute quickly before you run out of runway,” Elizabeth says. “What we look for in our founders is speed of execution on whatever your priority item is. So, if it’s revenue, we’re looking for founders who, even pre-product, will start selling and just have no fear about it.” Elizabeth suggests that angel investors should look for the same in their entrepreneurs.
“One thing that I’ve noticed and this is a little bit of a stereotype, but it definitely has grains of truth is that as a vast generalization, I’ve noticed that female founders tend to be a little bit more understated than male founders. Even some of the best entrepreneurs I’ve backed don’t exude confidence; they don’t sell the dream. They sell things matter-of-factly,” says Elizabeth.
“I think one of the challenges is that because there isn’t a lot of traction in the early stages of a company, investors see these investments as high risk and so in order to compensate for that, you have to sell the dream that the upside will be amazing. You have to sell investors on everything it could be if everything goes well in the next five to ten years, and I think that’s just really hard for a lot of people to do. It’s not natural. A lot of people are very down-to-earth and modest and they may be very good executors, but that doesn’t go far in fundraising. And I’ve noticed that in female founders a lot more than in male founders. Part of it is also cultural as well.”
“I also think that if we increase the number of female investors, I think the top thing that will achieve is in increasing investment dollars into certain verticals. So, for example, I’ve had entrepreneurs who have been in, let’s say, call them women spaces, where they just can’t raise money. It’s been so difficult for them no matter how well they’re executing, because investors will just say, ‘I don’t understand anything about this space,’ and they just pass without even bothering to dive in,” according to Elizabeth.
A lot of people, new investors included, think that angel investing is a huge risk. “I actually think that now is a great time to angel invest and there are a lot of methods you can use to de-risk your angel investments.,” Elizabeth says.
“For example, you can invest smaller dollar amounts in a way that you couldn’t five years ago. Part of that has been driven by AngelList and part of that has been driven by all the crowdfunding sites. A lot of people think that in order to become an angel investor you need to be writing a $25k check, if not larger. But now I am seeing a lot of angel investors start getting in the game by investing even just $5k, $10k, or even a thousand dollars, just to kind of test the waters. By starting small with small increments in many startups, you also learn a lot. You get to meet with lots and lots of companies and you get a feedback loop where you can see whether your portfolio companies were truly good investments or not and then that helps you become a better investor,” says Elizabeth.
People are not born with investing skills and you do not just learn overnight. “Everybody’s going to be terrible at it in the beginning, so you start with small investments of what you can afford to lose and write a lot of those checks and then learn from that process. Over time, like everything else, you get better at it.”
“I think a second piece of advice would be, if you are not from this field – not in startups or tech – it’s helpful to piggyback on deal flow that other seasoned angel investors who are in the industry are providing, rather than trying to, as an outsider, get in the game.”
Elizabeth gets a lot out of angel investing and enjoys being able to help others with their goals. “Angel investing is a little bit different from my VC investments, because there are other reasons to invest in companies beyond ROI as an angel. For example, I have invested (as an angel) sometimes because the companies were run by friends. In other cases, it’s because I really believed that a given problem was so big that it needed solving regardless of the market. And in other cases, it was just that I felt a really good connection with the entrepreneur and felt like they were really hustling. You do it more for the people. There is something about wanting to help the people achieve what it is they set out to achieve.”