Note: This article is the fifth in a series of interviews highlighting the work of interesting female investors.
After spending an award-winning career in sales, marketing and operations for one of the largest education providers, Marcia Dawood now works on making people’s dreams come true. Marcia is an investor in over 200 early stage private companies. In addition to her own investing, she is a Venture Partner in Mindshift Capital, an early stage fund focused on investing in post-seed early-stage companies in the U.S., Europe and Middle East. Marcia is also Chair of the Board of the Angel Capital Association, the largest angel professional development organization in the world and has led the ACA’s Marketing and Membership Committee and Growing Womens’ Capital group.
Marcia, thank you for participating. How long have you been investing in early stage companies and how did you first get started?
Ten years ago I was invited to an angel investing meeting in Pittsburgh where I was living at the time and I remember thinking “what is angel investing?” Once I realized that I could help early stage companies not just with dollars but also through mentorship and helping with connections, I was hooked. Over the years, I have invested in many companies directly but also several funds. So my diversification is good. It took a long time until I started to see exits coming through but it started in 2020 after 8 years. Investing with my own money is one thing but I have been the decision-maker on several funds and that is a big responsibility, so I treat it as such.
Do you have an investing thesis or a focus on any particular type of founder, business model or industry? Are there particular kinds of startup companies you steer away from?
Since 2014 when I realized that less than 5% of early stage capital goes to women, I have been on a mission to help change those numbers. Over 60% of my personal portfolio is comprised of companies led by women or POC. At first I had a list of companies I wouldn’t invest in like Pharma but I did end up with 2 Pharma companies in my portfolio and both have had partial exits already... so the thesis for my personal investments is fluid. Fund management is a different story – you need to stick to a thesis there.
Do you consider the type of investing you do to be “impact investing”?
Impact is a word with strong connotations... Many people believe “impact investing” is anything associated with social good, so investing in women-led companies would fall in that category, but I don’t like to call the investing I do “impact” because too often “impact” is associated with little or no returns. I was on an investment committee for a true impact fund where we were investing in companies changing the planet but that is not my own portfolio.
Where does your best deal flow come from?
My network. I have so much deal flow now I can’t look at all of it. It is said that you should not have more than 5% or so of your net worth in this asset class but I’m already past that. I need some more exits to keep going!!
How do you know a great entrepreneur when you see one?
The diligence process really starts at hello. In 2020 and 2021 I invested in 3 entrepreneurs that I had known for over 5 years before I invested. Investing in an early stage company is like a marriage, so you need to work on the relationship early and often! You know if it’s a good investment once you get to know the founders and the type of company they are building.
Can I ask you to speculate on what makes you good at what you do? Is there a particular experience or set of experiences in your history that you feel especially helped prepare you to be an early-stage investor?
Every single deal no matter how similar they look on the surface, is different and teaches you something. I was lucky to move around the country for the last 10 years and see big and small entrepreneurial ecosystems. I learned a lot about what NOT to invest in and hopefully picked up a few winners along the way.
Do you think your gender influences how you approach investing? If so, can you tell us a bit about how?
I could write a book on how much I’ve learned about how women make decisions versus men from being so involved in investing in women. While we should never stereotype, women do tend to be more cautious and want to have more information before making a decision. I have to include myself in that category. But I have also learned over the years, to lean on and believe in my trusted network. So for example, if you, Christopher, showed me a deal you were investing in and your group did diligence, I would be more inclined to invest based on how good I know Launchpad’s due diligence is.
Are there some portfolio companies you are especially proud to be working with or simply would like to highlight?
I have been helping a bakery in California for the last 2+ years. Not a typical angel investment but when I met the founder, he had nothing other than recipes for amazingly good gluten free and grain free baked goods. In the last 2 years, the business has grown to $1M in sales with a national presence. The founder has been super scrappy and stretched every dollar.
If you could give entrepreneurs one piece of advice about working with you, what would it be?
I have been an entrepreneur so my level of investor friendliness is high :-). I don’t take board seats anymore but I do try to help make sure the entrepreneurs I work with are surrounded by the right people to help their businesses to grow.
What tips would you pass on to someone getting started making their first investment?
I started a podcast, the Angel Next Door, for the ACA specifically on helping anyone who is interested to become involved with early stage investing. The best advice I can give is to join a group or a fund and learn from your colleagues so you don’t do this alone. I’d also advise those raring to go to wait to make a first investment until after seeing several companies and getting a little bit of a feel for how experienced investors evaluate them.
Any good war stories to share?
I made 2 investments early on. One had a successful exit after 8 years but the other went out of business early on because the founder simply didn’t care enough about the company and when the company was tight on cash, he bailed. Not that unusual of a story but the company had won a BUNCH of awards, pitch competitions and had a ‘follow the crowd’ mentality from investors. It made me look a lot differently at companies ‘winning awards’. Sometimes the founder is just a good salesperson, not a good CEO…