Conduit’s Masterclass Roundup with Kat Orekhova
We’re thrilled to have hosted Kat Orekhova on July 1st for a Masterclass through Conduit’s Office Hours initiative. Among the range of topics she covered, here are three specific takeaways for new angel investors.
For a bit of background, Kat is the CEO and co-founder of Vara, an early stage B2B SaaS startup that is transforming how companies operate. Previously, she was the Head of Product at Ironclad, a series C legal SaaS business backed by Sequoia, Accel, and YC. Prior to that, she was at Facebook for 7 years where she built and led teams across Product, Data Science, and Finance.
Through her deep experience in product and GTM, Kat actively invests in and advises early-stage companies across different industries and sectors including SaaS, marketplaces, fintech, and ML/AI.
1) Leveraging Community & Learning Together
Kat got her start as an angel investor when a former colleague invited her to YC Demo Day. As it was her first time seeing pitches, she notes, “There were so many great companies there! It was hard to classify them, hard to decide which ones to invest in.”
As with any new endeavor, there’s a learning curve to angel investing. Kat’s recommendation for this early phase is three-fold: (1) leverage the angel community, (2) invest in a startup where you can immediately add value, (3) embrace learning and make it an explicit goal.
On the first point, Kat notes that the startup community is fairly tight knit. Experienced investors are happy to pay it forward and help new angels get their wings. Just reach out.
On (2), Kat notes that her initial strategy “was to find a company whose product I understood and one which I could actually add value to.” So in the early days, she chose startups where product and user experience played an important role and where her strengths and knowledge could be leveraged. This enabled her to learn about other aspects of seed stage startups while adding value as an angel from day 1.
Finally, on (3), Kat notes that it can be beneficial to take on a bit more “risk” in the first year by investing in industries and business models that are outside your comfort zone. In addition to learning about different spaces, this helps you clarify and separate what you look for in a founder vs the market/problem. To keep the risk contained while you experiment, coinvest with more experienced, knowledgable folks.
2) Setting Intentions
There are thousands of great companies out there and angel investing is not always about identifying the ones you think will be “successful.” Kat points out that while VCs are responsible to their LPs for financial outcomes, individual angels can have a variety of reasons for investing. A few examples include impact investing (“change the world”), supporting diverse founders, or getting a front-row seat to a new technology, All are legitimate.
Just be clear with yourself — and the founders you work with — about your intentions.
Kat prefers to do this directly and transparently, noting, “I like to be upfront with founders and let them know why I’m investing and the exact areas I can help them with, while at the same time being honest about any knowledge gaps or other limitations.”
When making the decision to wire an investment, setting your intention with the founders you’re working with is massively important.
Making it clear why you’re investing, what your end goal, and how you can help are all essential to the investment relationship from both parties.
3) Aligning Expectations
To be a top angel investor, it comes down to understanding what the company’s expectations are of you and how you can best serve them. As Kat says, “Every founder-investor relationship is different.
Some companies will want to chat with you weekly. Others prefer to constrain conversations to quarterly emails or responses to direct requests. Ask your founders what works best for them, and work together to form reasonable guidelines.” Sometimes it’s formal, but not always.
Kat adds, “being that trusted angel that founders can text or call for emotional support can be just as valuable.”
Kat also notes that it’s the founder’s job to make good use of investors. Investors genuinely want to be helpful, but often founders don’t know how to unlock all of that value and leverage it.
To overcome this, Kat recommends that founders proactively think about what they need and include specific requests in their investor updates.
Kat closes this discussion by noting that it can sometimes be overwhelming for founders to choose who gets space on the cap table. When there’s more demand than allocation, hard decisions need to be made.
“The key for founders is to identify company needs and put together a group of investors who can add incremental and unique value.” For investors, the exercise is similar. Show the founder that you understand what they’re doing, you’re excited about it, and there’s a differentiated way you can help.
