Angels in the Commonwealth: Q&A with Ignacio Castro and Siobhan Dullea
1st Mar 2023 • Investors
How does this programming relate to the Fintech Ecosystem? A 2019 survey of the Massachusetts fintech ecosystem done by E&Y found that MA based fintech founders would benefit from: additional fintech investors, greater interconnectivity, start-up focused market making activities, and greater risk tolerance from investors.
Industry leaders including Mark Cassady of Vestigo Ventures, Sean Belka of Fidelity, Ashley Eknaian of Eastern Bank, Andrew Medema of Commonwealth Financial Group, Mohammed Dastigir of MassMutual and Mass Fintech Hub Program Director Elizabeth Thomas have been working on building out programming to bring new angels into the fold.
As part of a suite of programming, Mass Fintech Hub recently launched an Angel Investor Education Series, including an Angel 101 course, a virtual LinkedIn network, and a series of Community Meetups which has brought together a community of leading and new angel investors and startups to share knowledge about founding a business, attracting capital and the decision making necessary along the way. The educational programming is sponsoring prospective angel investors from the regional fintech community to go through an external education course offered by ClassRebel. Since the first in-person Angel 101 class at Boston Fintech Week 2022, monthly cohorts of budding angel investors have joined the course. This initiative is sponsored by a grant from the Mass Tech Collaborative, also a founding Mass Fintech Hub member.
Mass Fintech Hub recently sat down with Ignacio Castro, managing partner at 128vc and Siobhan Dullea, founding member of Mass Fintech Hub to discuss their recent experience as part of our Angel Investor Education Series. They attended ClassRebel’s Angels 101 course taught by its founder Brooke Harley and share their perspective on what they learned and the outlook for angel investing in the Commonwealth.
Tell us why an Angel Investor Education Series is needed right now in the Massachusetts fintech ecosystem.
Ignacio: Our ecosystem is quite dynamic, and we have a steady flow of new startups and founders working on interesting concepts and ideas coming to the region. To support these new companies, it’s necessary to develop the next generation of angel investors. This way -- collectively and collaboratively -- we can contribute more to this asset class -- not only with a capital allocation, but also with bring greater expertise and knowledge to the process of building new startups. Massachusetts benefits from having more investors because if there aren’t enough local opportunities for investment, startups will look elsewhere to access available capital.
Siobhan: Angels are the investors who get the very early-stage startups going. They are critical to create a pipeline for VC and other investors. Any ecosystem without enough angel investors suffers -- early startups simply move to another location or give up altogether.
What are the most important things an early-stage investor needs to know?
Ignacio: There is no room for generalists in the venture capital industry anymore and that includes early-stage investors – fintech is no exception. The early-stage investors that are most successful specialize in an industry or technology in which they have expertise or are passionate about. It’s important to find an area where you can make the most impact given your experience, so you can find the best ways to provide guidance. It's also important to diversify the available capital through a portfolio approach. This means making as many bets as possible to minimize the risk and maximize the impact.
Siobhan: Fintech is a great place to specialize because it has a wide-ranging impact on every industry from healthcare to banking and more. I also think that new angels can be successful even without industry expertise, they can learn and acquire it along the way.
What were some of the key lessons shared from this Angel Investor Education Series and in the first 101 class with Class Rebel?
Ignacio: ClassRebel has a very practical approach by providing students with clear guidance on what they need to know, and a good overview of what angel investing is all about. It also emphasizes the pros and cons of working as an investor, foundational concepts every investor needs to know and best practices. Also, ditto response from question #2!
Siobhan: ClassRebel is not a theoretical course – it’s practical and hands on. It provides tools to help you understand equity value even before valuation. Also, attendees learn very specific advice on how to create an investment thesis and negotiate for equity in exchange for advice.
What are some of the challenges that angel investors face in this market? How can they stay resilient and focused on their goals?
Ignacio: I can think of no significant challenges that exist in this market for angel investors. It’s the best time to invest since valuations have decreased and it’s easier to do proper due diligence. If anything, there’s probably going to be much more supply for potential deals. In our current market, it’s very important for new angels to stay focused on their investment thesis and portfolio approach to avoid going into more risky bets.
Siobhan: I disagree that there are no challenges for angel investors, but I will say that it is a great time to be an angel investor. The market has corrected itself from inflated valuations of a few years ago, so angel investors can get in at reasonable rates. Angel investing is risky -- riskier than in later stages. But the benefits -- when an investment pays off -- are significant. A key point Class Rebel emphasized is that it’s important for angel investors in order to diversify to balance their risk.
Why is Massachusetts a favorable place for angel investing right now?
Ignacio: Historically, Massachusetts has been a top five destination worldwide for venture capital. The entrepreneurial ecosystem is very solid, dynamic and very attractive for founders to build their company in this area given all the resources available to them to be successful.
Siobhan: Many parties are invested -- financially or with other resources -- to make startups successful in Massachusetts – it’s not just the angel. State and local government provide resources, such as Mass Tech Collaborative, that make the Commonwealth attractive to startups. Private industry looks to startups to help drive their company innovation and growth, and world class academia is constantly bringing new technologies and extraordinary talent to the region.
What does success look like for this program in the future?
Ignacio: From an alumni perspective, I would like to see continued efforts as part of Mass Fintech Hub to support existing early-stage investors and continue providing resources for this activity in a collaborative way.
Siobhan: Mass Fintech Hub and other parties in the ecosystem should continue to promote Angel 101 to drive attendance and should consider sponsoring individuals who are curious about becoming angel investor.
To learn more:
Get involved in Mass Fintech Hub’s Angel Education Series. Join the Mass Fintech Angels virtual community. Apply to join a monthly Angel 101 virtual cohort.
Join our mailing list to learn about upcoming programming developments and dates.
And join our upcoming Angel Community Meetup where one of Boston’s leading angel investor David Chang will share his experience on becoming an angel investor on Tuesday, May 23 at Fidelity Investments at 245 Summer Street in Boston. Register here.
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