In this edition of Lived It, we sit down with Fran Maier, founder and chair of TRUSTe, co-founder of match.com and board member of GE Capital Bank. This serial entrepreneur has been angel investing for about three years, and is applying the tough lessons she learned spearheading marketing and business development in her first three startups to investing in entrepreneurs – particularly women – to make an impact in B2C businesses.
We sit down with Fran to discuss investing in entrepreneurs with a clear vision, advising startups, and how her experience as an entrepreneur informs the way she invests today.
Years as an angel investor: ~3 years Number of investments: ~13
One of the things Fran likes about her lifestyle is that every day is very, very different. She could be speaking to women entrepreneurs at Women’s Startup Lab in an afternoon, then hustle to meet with one of her two advisee companies, who each have different needs. One is currently looking to improve its pitch, while the other one is figuring out how to fundraise bigger and better. It’s also a good thing that she likes to travel: Fran recently flew to Utah for a weekend for board meetings. One of her passions is women on boards, she also spends quite a bit of time preparing for her meetings, catching up on rental management work, and looking through different board registries.
I want to see these companies succeed and want to be part of the success.
Fran said she does so much public speaking that the companies usually find her. She spoke at Girls in Tech and met Denise Terry, CEO of EmbraceFamily Health, who introduced her to the EmbraceHer Health pregnancy app. Networking and getting introduced to the right people have also helped her to meet the entrepreneurs she ultimately advises or whose companies she invests in. Working with Women’s Startup Lab in Menlo Park has also proven to be an effective way to meet entrepreneurs, she added.
Despite her years of business and advising experience, investing mistakes do happen: “I’m not going to name names, but I might have really just bought into the entrepreneur and didn’t spend enough time thinking about the market opportunity.”
Fran estimates that she has invested about $150,000 across the companies she has been involved with at this point, and is confident that the eventual winners will more than compensate for the less-than-successful companies.
While there are outliers to her preferred company, Fran also tends to gravitate more to B2C investments, the consumer-oriented side of business because she believes she’s more likely to make a difference in people’s lives.
“One of the things I like about advising is it keeps me closer to some of the new trends in technology, in advertising, in the overall infrastructure of startups, and who’s doing what. It keeps me very, very fresh, which would be harder to do if I didn’t have more of a connection to some of the startups.”
“I think a lot of people liked the match.com experience because it created a marketplace as well as a privacy and security experience. I’m looking for places where I’m really going to add some value. But, for example, Ruby Ribbon is a fashion company and I’ve been approached by so many other fashion companies. And I really don’t know that much about fashion. So it’s really not one that I’ve pursued further.”
Most of the startups she is working with are also working with the firms she knows, which lessens the risk somewhat, she said. While her investments are not limited to those based in California, Fran has noticed that companies that are not based in Silicon Valley sometimes do things a little bit differently, which she finds can be a challenge. They may be on different schedules, advisers, may be paid a different amount, or there may be different expectations in terms of equity.
“It’s fun to have impact. It’s gratifying to make a suggestion or a connection or whatever and have it make a difference to the success of the company or the entrepreneur.”
SOLOMO Technology is located in Madison, Wisconsin, and VolunteerSpot is based in Austin, Texas. Fran finds Skype and Google Hangouts to be excellent tools if she needs to have a meeting with the founders. She also credits her location as a place many founders do travel through “from time to time,” and can host meetings with her out-of-town entrepreneurs in San Francisco. However, distance does take a toll to some degree, she said, and tries to, at least once a year, be in person at a board meeting or advisory group.
When doing her due diligence to decide whether to invest in a company, Fran said she generally does not invest in a company that is just an an idea-point in its inception. Instead, they are likely either in market with a beta product or service, or have a very advanced MVP, because she likes to see the opportunity to invest with them from a growth standpoint.
Fran does not go to an accountant or lawyer: “I look at it myself. It’s probably not a payout for me to have a lawyer look at all these things,” she said.
When deciding whether to invest in a company, Fran looks at a few key variables, and says, most importantly, that an angel is investing in the entrepreneur and their vision.
“If you’re going to be an angel investor, you are really investing in just a few things. You’re investing in the entrepreneur. Does he or she have the experience, the passion, the perseverance, the ability to be coached? Are they on the ball?”
Angel investors also have to be knowledgeable about the market category.
“Is this a market that’s going to grow? Does it make it sense? Does the entrepreneur have a sense of how to grow it?
“You want to see how the entrepreneur presents themself and their vision and you want to be able to know that they will listen to you. That doesn’t mean they have to take and act on everything that you say to do. I don’t expect that. But to some extent, I expect them to be able to be coached.”
Fran has found that it is a challenge to handle all the requests she gets from companies and wishes that her thesis was as seasoned as some of her friends who are venture capitalists. Cultivating a more robust thesis, or even understanding their theses better could allow her to send startups their way, which may actually help companies get funding that may otherwise be overlooked.
“Everybody is trying to invest in the companies that have traction, but the problem is that the companies can’t get traction if they don’t have money to invest. Viral growth is good to see, but from an investment standpoint, I’d like to see whether this team knows how to spike that viral growth. Do they know to spend in a particular marketplace? Or do they have a handle on return on investment? They can’t get where they want to be without the money.”
Fran offers straightforward advice that lays the investment foundation for aspiring angel investors: “Find an entrepreneur that you love, that you believe in, and invest in her. Not just your time, but also your advice if you think it’s relevant to her marketplace.”
Fran also recommends using resources like Portfolia, joining investment groups or funds for more guidance, and to talk to your financial advisor if you have one. Portfolia in particular is aimed at getting wealthy women to invest in the startups that they love, and even offers mircofunds focused on a particular sector, like health, food, or a specific type of company geared towards women, like EmbraceHer Health, and Magpie, a private membership club for female travellers.
“I would be wary if you have significant assets and your financial advisor says not to do this, then I’d almost be wary about your financial advisor,” she said. “My financial advisor was like, ‘Yeah, you could do a little bit of this. You know these companies and you’ve been successful. You probably have the judgment to discriminate which ones to pick.’ He was actually kind of encouraging.”
Fran has learned hard lessons in business that not only informed her deal flow and thesis, but also characterized her passion to support women in business and entrepreneurship.
It all started when she sold match.com for less than $10 million in 1998.
“Shortly after I sold it, I realized what a very big mistake I made and I recognized that I probably could have led the investment round, and brought in the investor, and led it, and enjoyed the success that it had. A year after we sold it, it was sold again for $70 million. Of course I didn’t get any of that. But I had built the brand, I had built the team, I had built the business model, and I had two realizations. The first was that had I been a guy I think other people would have been more likely to encourage me to take the reins and take it the next step. I also think that had I had more confidence and was like a guy, I might have asked for help and then I’m fairly confident probably somebody would have said, ‘Why don’t you do it yourself?’”
Her passion for helping women entrepreneurs focused on the issues that we need more role models, and have to encourage people to do it.
“Find an entrepreneur that you love, that you believe in, and invest in her. Not just your time, but also your advice if you think it’s relevant to her marketplace.”
“Young women and girls are always told to be careful. That message inundates too much of the way you look at things. To be a successful entrepreneur, you have to be accountable and agile. You have to be comfortable with risk and be willing to pivot and change and be persistent and go with it. And we need to develop more of those skills.”
Fran’s position as an advisor to multiple companies has shown her that the entrepreneurial ecosystem has changed, and advises trying to get accepted into an accelerators or Techstars.
“It gives you credibility, it gives you coaching, and you interact with some other founders. You get more exposure to potential advisors and investors. I do think, even though they are competitive, they are worth going to and spending some time on.”
Fran said entrepreneurs should try to find some good advisors, but shouldn’t bank on the strategy of, “I’ll get advisors and they’ll all invest later.”
“Get a few advisors that you think really deliver in terms of both advice and connections and potentially invest,” she said. “You’ve got to work on your networks really, really hard. Be professional about the terms and the paperwork, because that will show how you operate your company. Be prepared to spend your own sweat equity, as well as your savings until you get to the point that you really get the money. If you don’t have a technical team, or a technical cofounder, go get one.”
Entrepreneurs also need to know how to pitch, but must also be able to adequately explain their financials. For women entrepreneurs, it can be more difficult to balance a convincing pitch deck without packing in financial information, qualifications, or past wins, yet she said they almost have to, since they are often not regarded with as much trust as a “guy in a hoodie.”
Fran recommends Lean Startup by Eric Ries as well as following the work of people in the investing world like Brad Feld, and that you can find the answers to just about any question online.