Daehee Park and JT Marino are no strangers to the world of high pressure venture capital and million dollar valuations. The SV veterans have a personal history in startups, with lived experience inside the ecosystem giving them a unique insight into the pros and cons of traditional funding.
Park and Marino’s company, Tuft & Needle, is a mattress and sleep startup with an estimated value in the hundreds of millions; but the company was built without a commitment to major funding or the backing of institutional investment. Tuft & Needle has surpassed $100M in sales, using profits to fuel their growth, alongside just $6,000 in seed capital.
That seems like a minuscule amount. A four figure investment almost seems meaningless, when you’re used to throwing around numbers big enough to buy a house for every member of your family.
But the truth is, micro capital can sometimes solve the initial, road blocking obstacles that prevent founders from taking their first leaps, from pushing into the unknown. In truth, it doesn’t take a million dollars to start a million dollar company. That’s a ludicrous idea. All it takes is enough funding to pay for your own living expenses, product development and time. Those costs, minimised through prudence and frugality, can easily be met by the funding available from Microangels.
Micro Angels Are 100% A Real Thing
The traditional concept of an angel investor is normally a former founder, with a multimillion dollar exit behind them, or a wealthy individual with a large personal fortune who can afford to embrace risk as an independent.
But there is room in investing for smaller scale crowdfunders, investment squads and individuals to back companies they love as micro angels. People who have enough cash flow to back ideas with a 4 figure check and become a thriving part of a startup’s journey.
This is particularly relevant for marginalised founders, founders of colour and queer/trans entrepreneurs.
We face massive hurdles to gaining traditional funding that can prevent us from using that route to build and scale a business; where we might have a much stronger network of individuals able to invest as micro angels.
Prof Panayiotis Ketikidis puts the role of a micro angel well:
“Support structures for startups such as acceleration programs and incubators may offer funding and mentoring, but this is limited in scope and duration. Venture capitalists can cherry-pick the best teams to invest in, yet there are many worthy startups left behind. The resulting gap in the investment landscape provides an opportunity for small investors to reap large gains — think ‘micro-Angels’ writing average cheques of €10,000 to €50,000. Veryearly stage company valuations are by necessity quite low, and ‘first money in’ Angel Investors can leverage this to their advantage — taking a larger amount of equity at a lower price, along with other advantages, such as discounted follow-on, preferred options, and non-dilution terms.”
There are thousands of investors who put in $1k checks; it’s not a new concept, and you can see it happening in every single startup ecosystem, whether it’s in Sydney or Silicon Valley.
My own journey into startup investing has been colourful, to say the least. I don’t come from a finance background. I don’t come from privilege. I don’t come from money. I’m one of the only transgender angel investors in the world, and I’ve built that my own way.
I haven’t let a lack of access to mainstream capital stand in my way. My job isn’t to put the biggest check into any round. My job is to find founders I love, founders I believe in, provide the funding I have access to, and back that up.
As A Microangel, I Invest Mostly $1,000 — $5,000 Checks.
AKA, enough to seed the next Tuft & Needle.
With that, comes my network, my comms expertise and guidance and my investor relations work.
What I bring to the table is extremely valuable, and I know it. Once I’ve written a check, I’m incredibly involved. Not dragging founders’ attention away from their work, but actively being a part of that work. I work with founders on their communications and PR, and offer the full weight of my own comms consulting firm, Studio Self. I guide their messaging and take part in the real-world growth and success of their vision.
It goes well beyond throwing money at a startup and pretending that it’s lost money; it’s about recognising that the chance of the investment paying off is slim to none, but that my personal belief in the company’s mission is meaningful and it requires blood, sweat and — if not tears — time.
Why Become a Microangel?
We exist in an ecosystem that prides itself on seeing opportunities yet consistently fails to respond to statistical and systematic inequalities within its ranks. That’s my somewhat indignant way of saying: only 10% of all startup investment goes to women, and an estimated 1% goes to founders who are black, while 37% of queer founders have not felt comfortable disclosing their identities to their investors and the ones who have, have raised over 10% less funding, and the statistics around transgender people in the startup ecosystem very simply do not exist.
That data shows that there are vast numbers of us who are outsiders.
And when you have that data it becomes impossible to ignore the cold reality that we are not backing and we are not funding and we are not supporting folks who don’t look, act and talk like the Silicon Valley cliche; a white dude in a hoodie. When you have that data, you have to recognize the potential risks of missing out on the next brilliant idea, simply because we aren’t listening to folks who are far enough removed from the bubble of homogeneity to recognize a path to it.
With the protests happening in the United States right now, protests that are echoing around the world as communities hear the call to rise up against racism, it’s impossible to write anything about outsiders and incumbent power structures without specifically recognizing the inherent biases that prohibit the inclusion of non-white founders and startup players across the board. And it behooves me to recognize that even my own marginalization as a white transgender woman pales in comparison to the marginalization of black and native voices in the tech ecosystem. But it all plays on the same wavelength, and it all plays the same tune — one of exclusion based on a system that won’t support what they view, either consciously or subconsciously as non-compatible identities.
When I called myself an opportunity you don’t want to miss — that’s not arrogance. That’s recognizing that I can see and communicate with a world that I understand through a lens that isn’t influenced by one single paradigm. That’s a strength. And it’s a strength that so many of the folks I know share, because we are the outsiders who are done looking in.
We are done waiting for the gatekeepers. We are done waiting for permission.
Permission isn’t coming. Permission isn’t happening. Nobody, as it turns out, is going to pull up and announce that they will actively and tangibly back a transgender woman in tech. But that isn’t my approach, and it isn’t my style to wait for that to happen. I’ve never played that game, and I don’t intend to start now. I don’t look at being transgender as being a liability, a flaw, an obstacle, a hurdle or a challenge. I see it as my competitive edge, the one thing that shapes my creativity and my perspective in ways that differentiate me in a sea of similar faces. Being trans, and being an outsider means I don’t have the blind spots that other folks in the ecosystem work with. I can see untapped opportunities, because I am an untapped opportunity.
I have begun working with promising founders — founders who also lack the insider background of their peers — who are creating technology products and platforms that I believe in. I have begun working with teams raising millions, communicating what they do, and helping to design their pitch and find their investors.
How To Become A Microangel
Want to be a Microangel?
- Start as small as you want.
- Start as small as you can.
- Set a goal of putting in a $1,000 investment into a startup idea that you love, within the next 12 months. One path to do that is through an equity crowdfunding campaign, via platforms like Birchal, Equitise or VentureCrowd:
Birchal - Invest in the brands you love - Equity Crowdfunding Australia
Well we're back after a much needed rest over the holiday period. How are you feeling as you ease into this new year? I…
Crowdfunding equity investment platform in Australia - VentureCrowd
VentureCrowd is Australia's leading equity crowdfunding investment platform for startups, property development &…
Equitise: The Leading Investment Platform in Australia & New Zealand
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When you make your investments, reach out directly to the teams you’re funding. Don’t just throw down some money and walk away — be proactive, and offer your help. Make a case for whatever you can do to help in the mission that you now share with them. If there is a way to help? Dedicate yourself to that.
P**ed Off That You Aren’t An Accredited Investor?
Accredited investor rules were supposedly designed to prevent businesses from ripping off Mums and Dads from the suburbs and taking their savings. In practice, those rules actually just maintain the divide between rich and poor, access to capital and no access to capital.
The rules are basically this:
The Corporations Regulations prescribe the asset and income criteria which must be met before you can issue a certificate. A person is only eligible to be the subject of a certificate if they have:
a gross income of $250,000 or more per annum in each of the previous two years or
net assets of at least $2.5 million (reg 6D.2.03 and reg 7.1.28).
The rationale is that people meeting one of these criteria are more likely to be able to evaluate offers of securities and some financial products (such as interests in managed investment schemes) without needing the protections of a regulated disclosure document.
If that’s not you, you’re probably right in the marginalised demographic who are prevented from accessing capital in the first f**king place. Want to get around it? You can be an active, effective and badass Microangel investing solely through the above equity crowdfunding platforms.
Don’t let the system hold you back.
Before You Do That? Decide On Your Themes.
I am firm about my investment themes. I know that I want to be backing companies that will actually have a chance at making a difference, through founders who want to make a difference.
If you want to go down the Microangel route, it’s important that you’re looking carefully and what you’re doing and why. You aren’t here to look for the biggest, quickest return. You’re here to find companies you believe in. So you’ve got to know what you believe in.
These are my themes…
I want to invest in startups that will contribute to building a better world for my partner’s son. I want to invest in companies that will re-imagine the way we live, together as a community, in a way that will enable him to inherit a world that is stronger and kinder than mine.
I’m a former DIY punk rock musician. I have a soft spot for companies who have the guts to build something and sell it to a live customer, instead of waiting around for free money.
Democratisation & Diversity
I want to see an internet and an ecosystem that are equal, where opportunities are open to everyone, no matter who we are, where we are, or what we do. Companies that back concepts like Zero Code, working from home and open access are important to me.
As an indie author and creative, I want to help creator focused tools, social selling platforms, communities and channels that enable individual makers to build growing, scaling companies of one.
Every one of those themes is about levelling the playing field. It’s about taking the opportunities that only exist for a select few today, and offering them to wider subsets of people.
I have a lot of strength in content, from podcasting to video creation to finding that perfect turn of phrase that can persuade the right people to care about the right things. I know how to educate, inform, entertain and intrigue. I want to do that now, more than ever.
- Smaller companies stay indie. Indie is always leaner. Leaner is always more profitable.
- I won’t invest in startups that do not demonstrate diversity and inclusion at the founder level.
- Bootstrapped, profitable and proud founders are worth it
- Content is Queen
- I will only invest in companies that need my help, specifically
- I will invest through services as well as finance
- I will invest in tech’s blindspots, both in people and in products
For me, that compass is not only the reason I look at certain companies, it’s my whole reason to exist as a Microangel. It’s a sense of purpose that separates me from the crowd, and it’s one that I think will resonate with so many other people in tech.
Want To Be A Better Microangel? Be A Better Reader.
I’ve put together a 6 month reading list that I honestly believe will make you better at what you do, whatever you do. These are books that are designed to incite and inspire passion, and allow you to unlock a path of meaning.
Month 1. Courage.
Courage is the hardest thing to cultivate, and the hardest thing to lose once you have it. Courage makes the world go around a lot more than money every has, ever will, ever could. Courage is what makes great things happen, and stops terrible things from destroying everything else that we’ve built.
This month’s book — The Fellowship of the Ring, by J.R.R Tolkien
This was my first ever introduction to the truly inspiring power of courage. The courage that everyone shows in this book is breathtaking, and the words are so beautifully written. I couldn’t think of a better place to start.
The Fellowship of the Ring (The Lord of the Rings, Part 1)
The prequel to The Lord of the Rings-The Hobbit-is now a major motion picture directed by Peter Jackson THE GREATEST…
Month 2. Productivity.
Being productive, wow that’s a real rabbit hole. You can spend so much time trying to be productive that you become less productive than ever before. But if you really want to do stuff, accomplish anything, make changes, shake the foundations, you’ll need to look at the tools and systems you use to get there.
This month’s book — Tools of Titans by Tim Ferris
This one is incredible. You can dive in just about anywhere, without trying to drag yourself through the whole book, and just find value on almost every single page. Mine used to have normal paper pages. It now has fluoro yellow pages because of how much of the book I’ve highlighted.
Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class…
Month 3. Love.
Love is the most important part of your life. Don’t believe me? Wait until your life is almost over. Then we’ll talk. I’ve spent a lot of time worrying about a lot of things that don’t matter too much, and I’m only now working on spending more time and energy on love. Love for my family, my friends, the people who matter.
This month’s book — On Living, by Kerry Egan
Kerry Egan is a hospice chaplain, and in this book, she talks about the stories that her patients told her about their lives and values when they were at the end of the journeys. It’s about the importance of family and — yes — the vital importance of love.
Named a Best Book of 2016 by Real Simple and Southern Living”Illuminating, unflinching and ultimately inspiring… A…
Month 4. Your space.
We often fail to think about the way our own personal space affects our lives, but it does. The space we live in affects the decisions we make, the actions we take, the people we spend time with, the food we eat, the businesses we start, the jobs we take and turn down, the way we feel, the way we sleep, the time we wake up…its impact is truly massive.
This month’s book — Creative Space by Francesca Gavin
I bought this book years ago, when I was going through one of my poorer stages. Buying this book was going to cost me food money for a week, so I sold a bunch of my CDs to pay for it — largely because I knew I needed to change my living space and the energy that existed in it. It’s a book touring the studios and apartments of artists, designers, innovators and creative people, and it will inspire you to change your living space.
Creative Space: Urban Homes of Artists and Innovators
Creative Space: Urban Homes of Artists and Innovators [Gavin, Francesca] on Amazon.com. *FREE* shipping on qualifying…
Month 5. Complications.
I know you won’t have to be told that life is complicated. But it’s worth remembering, all the same. Life is so full of grey areas, things we don’t understand, things we can’t understand, things that seem to exist outside of our reality in some way. The best example of this is often family. Your family will never be straight down the line, in black and white. There are shades of your past, and your sorrows and your joys that would exhaust the entire pantone collection of greys.
This month’s book — Fun Home by Alison Bechdel
This is my favourite graphic novel of all time. It’s Bechdel’s work about her Father and her family growing up, about his sexuality and how it impacted hers, about his choices and what they meant. It’s heartbreaking, funny, and a thorough exploration of the grey areas and complications of life.
Month 6. Business.
C’mon. I wouldn’t be me, if I wasn’t talking about entrepreneurship. I believe that starting a business — even a tiny little side business that just makes enough money every month to cover your social life or save a little extra — is something everyone should do.
This month’s book — The $100 Startup by Chris Guillebeau
I recommend this book all the time. I recommend it so much, I don’t even have to Google how to spell Chris’ last name anymore (sorry Chris Guillebeau). It’s a book about how to start a small business. A small business that can grow, or stay small, and can make money and make you feel empowered. It’s an incredible book.
When I started out in tech, I was building MySpace processes, workflows and content for brands who were still unsure about what the fuck social media was. I’m talking pre-Facebook, when I was just a teen with a dream who wanted to make my own way. I was a young queer kid, searching for a place to belong, and forging my own path. I didn’t want a traditional job. I wanted independence, I wanted creativity, and I wanted the freedom to follow my passions.
That was over 10 years ago. And It’s been an interesting ride over the past decade and a half. I’ve run comms for some of the fastest growing tech companies in the country, won awards for comms and PR, and founded my own agency and startup studio. Looking back on everything I’ve done, it’s a lot easier now to pick out the threads of what I’ve truly enjoyed doing, and who I’ve loved doing it with. I can see how fraught my own path into tech has been, and how inaccessible so many of my passions were.
I hacked my way in, everywhere I could. I taught myself to code. I taught myself to build. I taught myself to make. I taught myself how to get better at content, and I made myself into an API, communicating between tech and humans. I’ve been told I don’t belong in tech. I’ve been told transgender people like myself aren’t a culture fit. I’ve been told that “soft skills” like communications and brand are less than “hard skills” like engineering. I’ve been told you aren’t a real founder if you don’t meet X number of arbitrary requirements. Along the way, I’ve recognised that my obstacles shouldn’t be anyone else’s obstacles.
As a transgender woman in tech, and now as one of the few transgender angels in the world, I am in a unique position to identify paradigms, products and people who have been overlooked.
If you want to chat about what you’re working on, and how I could help you out, or what your startup is doing to shape the next 10 years of our lives in tech, I’d love to chat. You can reach out to firstname.lastname@example.org
Joan Westenberg is an award winning Australian contemporary writer, designer and creative director. She is the founder of branding and advertising firm Studio Self. Her approach to messaging, communication and semiotics has built her reputation as a writer, and she has been named as one of the leading startup voices in Australia by SmartCompany.
Her writing has appeared in The SF Chronicle, Wired, The AFR, The Observer, ABC, Junkee, SBS, Crikey and over 40+ publications. Her regular work can be found on Pizza Party, a blog about creativity, culture and technology. Joan is the creator Transgenderinclusion.com, an open-source workplace inclusion hack, and the author of the book #DIY, a manifesto for indie creativity.