The angel investor weighs in on what makes a great pitch and how to access Vancouver’s untapped source of funding for early-stage businesses
When Thealzel Lee sizes up young companies, she looks for patterns, so her scientific training—a B.Sc. in microbiology from the University of Alberta—comes in handy. Lee is co-manager of Vantec Angel Network Inc., which vets entrepreneurs looking for cash and advice and introduces them to individual and group investors. She’s also founder, director and CEO of E-Fund, a $2-million Vancouver-based angel investment vehicle that has bought stakes in 15 B.C. companies since its 2011 inception. Members of the fund with domain expertise form teams to screen and research ventures in life sciences, cleantech, and information and communications technology, selecting a few to support and advise.
Early in her career, Lee worked on policy for the now-defunct Science Council of Canada and in product marketing for a biotech firm. While raising her children in Ontario, she owned a franchise of a children’s clothing store; in the early 1990s, she joined the United Nations as head of refugee operations for the World Food Programme in Malawi. After moving to Vancouver in 1994, Lee evaluated tech companies for Canadian Imperial Bank of Commerce as an investment banker. But she was drawn to startups and the emerging angel investor community. “It’s the energy and passion of the entrepreneur,” Lee says. “They are going to change the world.”
Source: 2016 Report on Angel Investing Activity in Canada, National Angel Capital OrganizationWhere does your first name come from?
My family are Taishan speakers, from the region of southern China where the British Empire recruited railway workers. My great-grandfather was the first one to come across to work. My parents met and married in Saskatchewan, and to pay homage to that ancestral lineage, they gave my siblings and me Chinese names. They did their best to put the Roman alphabet against Chinese characters. What does it mean? Small and young. So I was destined to work with small, young enterprises.
You left a doctorate in biochemistry to earn an MBA at Western University’s Ivey School of Business. What drew you to business?
In business, I see the movement of capital enabling all these different ideas to take root and benefit society. The stuff that I was working on in the lab, I only now see entering the commercial realm. If I had stayed in academia, I would not be in the position I am now, to help it come to fruition. Not just my little building block, but everybody else’s.
What is angel investing?
First let me define venture investing. It is professional managers that take money from institutions, as well as from high-net-worth individuals, and they pool that money, and those managers are responsible for investing in ventures. Angel investing is individuals. So angel funds are much smaller because it’s our own personal money. It might be investments of hundreds of thousands or more likely tens of thousands of dollars into a company. With that size of investment, the companies tend to be early-stage.
What do you look for in a pitch?
At the angel stage, I’m looking for product/market fit. They’ve got a solution that can solve a real problem that a customer will pay for. Then they have to have a strategy, and that means the leadership team—not just the two guys in the garage, but who do they have in their inner circle advising them? Then we look at the infrastructure to support that. If their business model, according to their strategy, requires a call centre in Bangalore, do they actually have a call centre in Bangalore?
What about cash flow?
It depends. You talk about a drug development company, cash flow doesn’t even enter their business model, which is to develop their drug program to a point where it’s de-risked enough for Big Pharma to say, “I like that, and I’m going to buy the program,” and it’s usually hundreds of millions of dollars to buy it. Then all the way to SaaS [software as a service] companies, where they do have revenue and they get that pretty quickly. So it has nothing to do with revenue; it has more to do with the stage of the company and what strategy they’re using to sell their widget.
Is there anything unique about investors in Vancouver?
We have a lot of foreign money coming in. It represents an untapped source of investors in our ecosystem. So that’s one of the goals of Vantec, to attract different investors from different parts. We’re trying to get them more integrated into our economy, in which case they get more integrated into our culture. When you have segregated communities, whether they’re self-segregated or, in the bad old days, imposed by external forces like the government, it’s not healthy for economic growth. Once women got the vote, suddenly the economy bloomed.
How are you reaching out?
The easiest route is through entrepreneurs. A lot of these entrepreneurs are non-Canadians. Of course their first inner circle of investors are their immediate family and friends. And some of them might say, “This is really interesting, your software app. Are there any other people like you?” Well, come on down to Vantec.
Women are underrepresented as entrepreneurs. Do you see that changing?
Yes. I see more confidence in women. It’s a two-way street. Yes, there is systemic discrimination against people that are not white dudes. But I regularly go to undergrad courses, and I say, “I need volunteers to help me manage the Vantec meeting.” Who shows up to help? Young men. I pitched to a 50-50 crowd. You’ve got to show up.