By Marcella McCarthy
By Marcella McCarthy
Rob Delman, a managing director at Golden Seeds, an angel group based in New York, has been investing in startups since 2005 and he keeps a sharp eye on South Florida for deal flow. Golden Seeds only invests in companies that have at least one female founder, and while their investment thesis sounds “nice,” it’s actually about a better bottom line.
Research shows (Kellogg School of Management at Northwestern University, Morgan Stanley) that companies with gender-diverse teams tend to do better financially and therefore have better returns for their investors.
I caught-up with Delman to learn more about what he looks for in a company and how their investment strategy has changed as a result of COVID-19.
What’s your relationship with South Florida?
Golden Seeds is a national organization. We’re based in NY and have offices around the country, so it really doesn’t matter where a company is based. I and some of my colleagues spend winters in Miami - my family has an apartment in Miami Beach, so I’m there for about 5 months every year.
What about Golden Seeds attracted you to the organization?
When I first started doing angel investing back in 2005, I was really doing it on my own at that point. A company I had invested in was in due diligence with Golden Seeds and I saw how investing with a group could be beneficial. I thought their process was very collaborative - the majority of members at Golden Seeds are women and women tend to be more collaborative. Research shows that gender-diverse teams are more successful so [the team] can be just women or women and men, but it has to have at least one female founder.
How would you characterize the deal flow that you see coming out of South Florida?
The deal flow is becoming more sophisticated out of South Florida, and also the companies are looking to solve bigger problems, so for example, in healthcare. I think it’s because the ecosystem has grown so dramatically that it’s attracting more serious entrepreneurs. Also, the universities are focusing more on teaching entrepreneurship, so that’s creating a more dynamic ecosystem, too.
What are the things you look for in a team when you’re investing?
First of all, I like to invest in teams rather than single founders. I love diverse teams with different backgrounds, (so for example, one person is the big picture person and the other is the business person). I particularly like teams with really strong sector experience, it really helps a lot in terms of developing strategic alliances and sales partnerships.
How has COVID affected your investment strategies?
The first 6 months have been about focusing on our existing investments and keeping them afloat, and while our investing has been skewed toward existing companies, we’re also investing in new companies as well.
Can you tell me about your new investments since COVID started?
They have mainly been in the healthcare space, so drug therapies, diagnostics, that sort of thing.
In terms of COVID, how do you think that’s going to affect startups and funding in the next 12 months?
The consumer space has really changed, and it’s all very challenging, so we’ll have to see how things shake out. When we had the 2007-2008 meltdown, our investment really went down, but it’s bounced back threefold so I expect something similar this time around. But the truth is, dollar-wise, since March, we’ve put in more money than we did at this time last year. We have about 300 members at Golden Seeds and every year we see members leave and new members join.
What kind of advice would you give to an entrepreneur that has an idea for a company but is wary about the timing regarding COVID?
In the beginning, I would have said, “Wait it out,” but now I would say, “Full-steam ahead.” Get involved in the ecosystem, go to as many events as you can, you never know who you’re going to meet.
What book would you recommend to entrepreneurs who are looking for funding?
The Chairman of NY Angels - Brian Cohen - has a great book called “What Every Angel Investor Wants You to Know: An Insider Reveals How to Get Smart Funding for Your Billion Dollar Idea.”
And Alexander Wilmerding of Boston Capital Ventures has a book about valuations called Term Sheets & Valuations - A Line by Line Look at the Intricacies of Term Sheets & Valuations.
It’s really cut and dry, but it’s important because we as investors - when we talk to entrepreneurs - if they don’t know the investing lingo, it makes us wonder if they’ve done their homework in the industry as well. We like to talk to smart and sophisticated entrepreneurs.
What keeps you up at night?
Without getting too political, I’d say the current climate in our country. I’m glad I’m registered to vote in FL where my vote really counts.