Where to start: advice for aspiring Angels and NEDs

There are many things early-stage CEOs and founders need. More funds, more access to talent and always more hours in the day. But I think there’s a strong case to be made that one of the highest-leverage additions to a founder can make to their arsenal is support from an expert angel investor at the right time, or a world-class non-executive director (NED) to help them work through gnarly puzzles.

An experienced executive or CEO, joining on to offer guidance rooted in the lessons they learned across their own leadership journeys. What’s not to like?

The role of angel or NED also has a lot to going for those CEOs and executives whose companies have already found market fit and reached growth stages. For these individuals, interested in making a commitment to supporting a younger business through its earliest stages, the key question is – where do you start?

To answer this, and learn more about these roles, we gathered a group of 25 senior execs largely from growth-stage, healthtech companies, and drawn from across Europe. Our audience was comprised of curious individuals, interested in angel investing and non-executive positions but unsure about how to action that curiosity.

In collaboration with Linsay Trueman at True Search, a top-tier, executive recruitment firm with deep expertise in filling exactly these positions, we invited three expert speakers, each of whom have done all this, successfully, many times before, to share their learnings, observations and cautionary tales. And, crucially, to stir the audience into actioning their curiosities – to the advantage of all.

The experts

We kept things punchy, with a half-hour panel discussion followed by questions from the audience. Each of our panellists has distinguished themselves both as an operator, leading businesses themselves, and for the contributions they’ve made in the role of angel or NED.

Claire Davenport’s CV includes time as Chief of Staff at Skype, as well as CEO at VoucherCodes and HelloFresh UK. She’s also an experienced NED and the co-founder of WITSEND, a network for women in tech leadership with an angel investor syndicate.

Formerly the founding CEO at Octopus Ventures-backed company, Trouva, Mandeep Singh has gone on to carve out a position as a leading angel investor. He’s backed more than 40 businesses, spanning B2B SaaS, marketplaces, consumer tech and more. Mandeep brought another, valuable perspective to the morning, through his work in the not-for-profit sector, in the role of NED on the Global Board of Directors at Amnesty International. Throughout his career, he’s experimented with different modes of engagement with the companies he’s excited by.

Last but not least, we welcomed Sneh Khemka. A trained surgeon, Sneh is the former Chief Executive at Simplyhealth. He’s also held the role of VP of Population Health and vHealth at Aetna, the US health payer/provider, and he’s a prolific angel investor. Like Mandeep, Sneh also brought experience from outside the private sector, through his work on the board of trust for a number of different NHS groups.

The basics

Where executive directors are internal company employees, working hard on day-to-day operations, NEDs are external, with the distance (and expertise) to step back and offer more objective advice and guidance.

Angel investors offer financial support at the very early stages in return for equity in the business. With a vested interest in the success of the start-up, they enjoy opportunities to make a real, impactful difference to a business as it starts to take flight.

It’s easy to think (I was guilty of it!) that these are two, distinct categories or pathways. One of the key learnings of the morning, reinforced by each of our experts, was that they aren’t. It’s not a question of angel or NED. In fact, both roles sit on a continuum, with one offering valuable lessons in doing the other, well.

Claire, Sneh and Mandeep agreed that exploring how you work with and help other companies, rather than just the one you’re employed by, is easier when you’re the CEO: you’re in control of your time, and you have a clear sense of your schedule.

Its also easier assume the role from a later-stage company. At early stages you’re more likely to need support than be in a position to offer it, as you work eight days a week getting your own enterprise off the ground.

By the time you’ve successfully navigated the challenging early stages, however, it’s almost an inevitability that founders will be hunting you out for advice and support. Offering angel investment, or taking on the role of a NED, each offer a highly rewarding way of delivering this support, engaging with world-changing businesses in a far deeper way than ad hoc coffees generally afford.

Still, it’s not to be taken lightly. As I’ve written, it’s a continuum. One of the key takeaways from the morning was that, for CEOs without experience in either camp, angel investing is the right place to start.

The cautions

Why? Because the fact is, a non-exec role carries serious responsibilities, often including fiduciary responsibilities. You are, after all, the named director of a company. If it’s going through a challenging period and funding isn’t straightforward, you can find yourself in the mix on some fairly hairy puzzles.

Mandeep, Sneh and Claire advised that, as an angel investor who’s proven themselves useful, opportunities to formalise a position as a non-exec often emerge organically.

We also spoke at length about not-for-profit board membership. With his experiences working for the NHS, Sneh was well positioned to comment on how the public sector differs, while Mandeep’s NED role at Amnesty has given him up-close experience of the demands, expectations and challenges of the sector.

Working for a not-for-profit, the most culturally direct form of ‘giving something back’ is surely an attractive prospect. But our experts cautioned that following the continuum through angel, non-exec and Chair in the private sector first was important – even essential – for CEOs to build up the experience needed to be truly useful, and meet the considerable demands of the not-for-profit and public sectors.

The benefits

Through this event we hoped to help execs action a step they’d long been considering. Each of our experts had plenty of to say about the benefits angel investment and NED roles offer.

First and foremost, CEOs face lots of opportunity, in the form of advice-seeking entrepreneurs and high-quality dealflow. Putting yourself in the position of an angel and making one or two investments a year into those inspiring new businesses doesn’t just align you with them – it offers an opportunity for financial reward when they thrive.

A non-executive directorship is a paid role. Angel investing, meanwhile, offers attractive returns – and doesn’t always require a major outlay of capital from the outset. I’ve written before about the limitations of too many investors on your board. In my experience, the value from investor directors will spike throughout a company’s genesis, but often the value of an NED will be more consistent.

On top of that, while it’s likely investor directors will be operating in goodwill, with a shared goal of success, they don’t always understand the operational challenges of actually executing a plan or overcoming an obstacle.

Our panel highlighted other key benefits: satisfaction, variety and the chance to put skills and experience to the test, pushing them further in the face of fresh challenges. It’s a way of finding a new perspective and encountering different team configurations.

A growth-stage company might have the same senior team for five years or more. As an angel investor or NED you get to see different team and people dynamics at play in another context, de-institutionalise and hold up a mirror to your own company.

Our panellists also emphasised that the benefits aren’t confined to an angel/NED’s relationship with the company they’re supporting. In fact, it’s an ecosystem play. Sneh, Claire and Mandeep are all part of angel investment groups or other, related networks. These communities tend to form around individuals pursuing these opportunities – or already exist for them to join. Beyond building an incredible relationship with a bright, ambitious young founder and their team, these roles offer the chance to find broader connections across the ecosystem.

In conclusion

Angel investing, or assuming non-executive roles, is often something CEOs want to explore. In the face of a busy executive’s workload, it can slip down the priorities list. It’s also not a short-term commitment. Where CEOs and execs might be used to making decisions that unfold in hours, or days, payback as an angel or NED gets measured in months or years.

Still, as I hope our 25 attendees found – and as I hope I highlighted in this blog – it’s well-worth it. For early-stage founders, advice from someone who’s been around the block, and the opportunity to learn from their mistakes, can make all the difference. For those seasoned operators, meanwhile, the chance to support a world-changing idea as it comes to market – and recoup some financial reward into the equation – shouldn’t be sniffed at.

Finding businesses to work with is something you can do for yourselves, although, as our co-hosts True Search exemplify, search firms can offer invaluable leverage. If you have any questions, thoughts or experiences about angel investing or working as an NED you’d like to share, please get in touch.

At Octopus Ventures we put all our resources to work supporting the founders we back – including our networks. If you think there is an opportunity for our portfolio to benefit from your insights and experiences then we would love to hear from you. You can write to me at [email protected], or learn more about pitching to us and get in touch here.

Will Gibbs

Health