Alycia Doxon: [00:00:00] the devil's in the details with this particular asset class,

Nobody likes to track data. Nobody likes to track documentation.

chaos makes everyone reevaluate what we're doing. And I think that's just a healthy thing to happen.

There's billions of dollars of safes out there and those don't have to convert ever.

It's really hard to nail down a right process, like a right best practices of doing any of this.

Every single person using something different.

the whole project is not getting the data in the system.

It's finding the data is the problem.

So, if you're an investor, an angel, a VC, please track your data. Please just start tracking it. 

Andrew Kazlow: Welcome to the Diligent Observer, the first podcast exclusively focused on helping angels see what others miss. I'm your host, Andrew, and every week we explore what works, what doesn't, and why through conversations with experienced startup investors and operators.

My guest today is Alycia Doxon, CEO of Seraf, an investment management platform used by Angel Networks, family offices, and venture funds across the country. In this episode, we explore the ongoing reset in [00:01:00] venture markets, how angel networks may evolve in response to lengthy holding periods and infrequent liquidity events, and why data tracking is perhaps the most overlooked aspect of portfolio management.

With many investors unable to even locate their core investment documents. I hope you enjoy learning from Alycia as much as I did.

One quick note before we jump in. If you're an angel investor or thinking about becoming one, you need to know about the Angel Capital Association. The ACA is an incredible community for connecting with experienced investors, tapping into tons of well-documented best practices and training resources, and just generally keeping up to speed with what's happening in the angel space.

Now I've really enjoyed getting connected over the last few years and that's why I'm so excited to partner with the ACA to bring you this special series of episodes live from their annual summit in Denver. If you're serious about angel investing, you will definitely want to check them out.

Alycia, [00:02:00] thank you for being with me today. 

Alycia Doxon: It is my pleasure. I've been thinking about this for a week. 

Andrew Kazlow: Wonderful. Well, we are live here at the Angel Capital Association event in Denver, Colorado.

This is day three. And so we have had a lot of presentations, networking. We're all exhausted but thrilled to be here. And so, Alycia, I am excited to hear about you, about your work and just to learn from you because I think the product that you all offer to the market is so beneficial to so many individual angels, funds, just the whole ecosystem benefits because of the work that you do.

So thanks for coming on today. My first question is, what are you excited about right now? 

Alycia Doxon: I think, me being me, I am most excited about the shakeup that's happening here, and it's a little bit counter to what I should be hoping for just given it's shaking up what our company, like our sales are going up and down and think like very real weird things are happening from a company standpoint. But I think that the venture markets [00:03:00] are resetting themselves to a certain extent and that every once in a while, investors and founders need to be reminded that profitability and cash flow is important. And that, government subsidy of

medical device doesn't always have to be there. And so like if you're doing things that are not necessarily profitable inherently, then you need to consider how to commercialize that in a way that is not being done right now, because everybody's relying on like millions of dollars of grant funding.

And I, I just generally, I like the shakeup that's happening because it's not something, it was like a spike in venture investment in 2021 and then 2022 was like back in the slums. 2023 and 24, people were like, okay, we're a little bit optimistic. And now 2025 people are like, no, no, like rake it back in.

Right? Because everyone's in that level of like, chaos makes everyone reevaluate what we're doing. And I think that's just a healthy thing to happen. So that is what I'm excited about because I think there's a lot of different models and perspectives and learnings that's gonna come out of this period.

And so for me, just my personality, I [00:04:00] really enjoy it. Thrive on the chaos. 

Andrew Kazlow: Say a little bit more about some of these themes that you think will emerge from this season. You mentioned that there's some learnings that are starting to happen.

Alycia Doxon: Oh yeah.

Andrew Kazlow: You know, we're evolving a little bit. What are those key themes in your mind?

Alycia Doxon: Yeah. Okay. So, even during this conference, the last three days, so the first day there was a keynote and the main takeaway there was like, don't panic. I don't know if you had that one. Uh, 

Andrew Kazlow: Ron Weisman. 

Alycia Doxon: Yes. Don't panic. Right. Which is a great standard. On the second day, so I don't know who the speaker was, but again, A keynote and she was like, well, we really need to bear hug our founders and be supportive investors and invest more capital if you have to.

And also. I generally agree. That's a great methodology, and then today I was at a session with Keiretsu Forum and Keiretsu Forum's approach is like, I don't wanna say aggressive, but be an activist. So they have turned, they like redid their model recently to be more activist investors. And so they're looking at companies and saying, I want a board [00:05:00] seat.

And then replacing the CEOs with their own CEOs if you've hit a rut and trying to like really force their portfolio towards exits, because they're trying to push back towards getting liquidity. 'Cause everyone's kind of got a crunch. And so the responses to the environment I think are really interesting and the way that people are going about continuing to support their startups or well, support them in a different way. I wouldn't say or not, it's just kind of support because you can like support and you can mentor and you can try to make those connections without taking over the company to do that. There's frustration and everyone's kind of tired of waiting for exits right now.

And so I think those are the things like, the model of angel investing too, in that when you haven't seen exits for so long and then the group members start to trickle off, and then you find out like, it does this model of angel groups, angel networks as it stands, does that actually work? And I think that is a question to ask. Because they've been around for 20-ish years now, and I think it's somewhat time to like, and [00:06:00] again, why I'm excited is like it's a, an evaluation, just like a reevaluation point of that model. Does it make sense to not set up SPVs? Does it make sense to have volunteers running groups? Does it make sense to like, be staking your whole portfolio on one strong exit to return, return the capital and then some.

And so I think it's really just, there are some of those learnings that are starting to rear their heads, which is great, but I think by like Q2, end of Q2, Q3, depending on what the market does, you may see a reformatting of like how the angel groups actually work and how it functions.

Andrew Kazlow: Well, I certainly agree. I mean being in the trenches, helping run a couple different communities. I mean, we see a significant amount of reevaluation across an individual's portfolio. We talked at the conference about this denominator effect where the total exposure to early stage venture when the public portfolio drops precipitously.

Actually increases. And so, So an angel could go from having 5 or 10% exposure to [00:07:00] 14 or 20% overnight. I wanna do a thought exercise with you, and I'm curious, as you think about the world of angel investing in five years. What looks different?

What's changed? What are the things that, if we continue on this course and we continue to more thoughtfully evolve in response to this current economic situation, which is new and different, what does angel investing look like in five years that's different from how it looks today? 

Alycia Doxon: I think that I have a little bit more of a pessimistic answer for you in that the capital is starting to consolidate quite a bit and it was already concentrated to Silicon Valley, New York, like certain hubs. But at this point we are 50% concentrated to AI companies, quote unquote. And the biggest AI company is gonna be like the one that's eating all of that capital.

It's already starting to happen. And I think the consolidation of that is gonna be in Silicon Valley for wherever the center would be in China or like, those are the different centers kind of. And so I think the angels [00:08:00] largely are gonna lose out on strong returning deals. And so the model is gonna have to change.

Andrew Kazlow: Hmm. 

Alycia Doxon: I don't see how we can, right now, the, the groups are trying to like, Keiretsu Forum that I mentioned, like they're trying to manufacture returns. And that is what the people in Silicon Valley are able to do on a very regular basis, right? Because they've got a lot of capital. They can funnel it, funnel, funnel it, IPO, and then the public market takes a like this.

If you look at the stock after the IPO, it's like drop right back down. Right? Or you're excited. And now we have foisted it on the

Andrew Kazlow: Sure

Alycia Doxon: public. And so I think, the opportunity to invest in companies that will eventually exit for a strong multiple. For angels, that opportunity is gonna keep dwindling and dwindling unless there's like a refocus to the centers where the AI is kind of, the AI technology is being massively deployed and funded.

And I think that also with five years from now we're like out of the current administration, I know the grant funding and the NIH funding is huge for all the healthcare companies, the ones that are in the Carolinas.

Andrew Kazlow: Sure. And

Alycia Doxon: just the research

Andrew Kazlow: we've got 7 or 10 healthcare companies here [00:09:00] at ACA sponsored or supported by the NIH programs. 

Alycia Doxon: Yeah. Well, I was astounded at their presentations that they were like, we have gotten, so our total round is 10 million, but we've raised 5 million in non-dilutive funding. And I'm like, the government gave you $5 million, is what you're saying. And it's the taxpayer that's funding the innovation for you then to capitalize,

commercialize and make money off of. And then does the taxpayer necessarily benefit from that? Like, yes, if I get this very unique, it depends on the technology, right?

Andrew Kazlow: Sure, sure.

Alycia Doxon: But I think in this current administration, a lot of that might be clawed back. And so five years from now, we'll be back in the other swing, ideally, unless we get a third term.

And that could be a thing. right now it's, it should be, yeah, a swing back to like that's 

a whole separate podcast for the show. We don't need 

to, we don't need to touch on that one. Although I could see have an end for the, um, lovely watchers here. It is not unprecedented. We didn't have term limits for the president until, uh.

I dunno. 1950s or something. 

Not that long ago. Yeah. Not that long ago ago. Not long ago. So like, 

it seems weird, but it's actually not that weird. Not that I'm in support.

Andrew Kazlow: So this is an interesting concept and I think, the massive pooling of capital around AI over the last year. I mean, it's just like you 50%.

Alycia Doxon: Yeah.

Andrew Kazlow: You have the numbers. 

Alycia Doxon: Yeah. It was 51% in 2024. And then Q1, I got that stat from the first keynote. Like 50% of the capital that was deployed was deployed into OpenAI in [00:10:00] Q1. And that's why the numbers, otherwise, it's like AI is inflating, like I think we're in a slump. We're certainly in a slump and everybody can feel that, but the numbers don't reflect it as heavily as they would if we did not have all these millions of dollars being billions of dollars actually at this point, being funneled into quote unquote AI companies, which is also not the development of new AI structures and new LLMs.

It's like companies who are utilizing the same AI to apply to like different niche, like new AI marketing tool sales, SDRs. Like that's kind of what's being funded right now, in my opinion? 

Andrew Kazlow: Well, and I think the regional element that you touched on is interesting as well, because I think there's also a trend or a story, especially since COVID of No, no, no, no, no, no, no.

You can build these great companies outside of Silicon Valley, you're not trapped here anymore. We have this new technology and so you can build anywhere. And so we see it, we see this emergence of more rural, entrepreneurship ecosystems and, cities that never would've thought about this

Alycia Doxon: mm-hmm.

Andrew Kazlow: Before, and they would've just traditionally focused on [00:11:00] small business development, are now thinking about how do we support startup development in our ecosystem. And there's several investor communities here today representing this kind of a background. And so how do you think this tension between kind of the, I don't know, the diaspora of entrepreneurship, paired with this re-aggregation that you're pointing towards, how do you see those like working in tandem over the next few years? 

Alycia Doxon: I don't know if they're gonna work in tandem. And there is a reason that things consolidate in certain places, and that's because the people are there. And so with COVID it was like, oh, everything can be remote and as angels start investing farther away from home, but the reason that we are all here in person at this conference is because that's where the most impact is made.

Andrew Kazlow: Mm.

Alycia Doxon: And I think that if the technology centers are consolidated in certain places, it's all gonna gravitate back to those places because that's where the human bodies are.

But, like no matter what you say about remote work and what you can do remotely, like you can't do things, [00:12:00] but if you're raising funding, like as a startup, you're still to do it effectively, going on a little bit of a road show 'cause you have to meet people in person and there's still a lack of trust.

You could say, millennials might be a little bit more trusting via Zoom meeting or phone call. We don't have phone calls, but Zoom meeting.

Andrew Kazlow: But nobody does phone calls anymore. 

Alycia Doxon: Zoom calls. but the boomers, right? The people who are angels are actually angels and deploying capital are not necessarily comfortable with that.

I think that it's, we had a swap at COVID that it was all generally acceptable. I think it's gonna revert to, you gotta be in the room or around the room, and if the room is like only in Silicon Valley, because that's where all the capital is and that's where people who are developing and basing their headquarters. With the technology? I think the best one of, again, my opinion, I just think that is, I don't know how it's gonna jive with the rest of the country. I don't know. 

Andrew Kazlow: I think it makes a lot of sense and time will tell right? If this continues or if there is, 

Alycia Doxon: yeah. I'll find this in five years and be like, 

Andrew Kazlow: I mean, there could be another pandemic, there could be another, any number of things could happen that could affect [00:13:00] this. 

Alycia Doxon: . Well, and people are like optimistic and I think the work that people are doing to facilitate investment in startups that are in non-traditional locations is wonderful. My undergrad was in Milwaukee, and they have a small but really tight-knit startup community there that I loved.

Even now, I still reach back to my contacts that I made there because the startup community was so tight and so supportive. And I think that is wonderful. But if you're looking for a hundred x return kind of company, it's hard to find. I think they're kind of hard to find outside of the centers.

And the centers are gonna be where the people are. So, 

Andrew Kazlow: totally makes sense. 

Alycia Doxon: Yeah.

Andrew Kazlow: Okay, so let's move on to a little bit more about you. I mean, for those of our listeners that aren't familiar with the Seraf platform, I'd love to hear more about the current state of product, what you guys offer, what you do, who uses your product, and then I'd love you to just tell the story of the company and how you got involved.

'cause I think this is a really interesting evolution of the product and of the company. And so walk us through. Quick overview of [00:14:00] what Seraf is for those of us who may not be familiar, and then your story and how the company got to where it's today. 

Alycia Doxon: Yeah, so Seraf is a deal flow and portfolio management software for early stage investors primarily.

Originally it was early stage investors. We have since expanded to kind of all private market investors and so we have individual angel investors, angel groups, venture funds and family offices or customer base pretty much at this point. And the tool was built so by two guys that were actually heavily involved with the ACA, Christopher and Ham, who you probably know at this point.

And a lot of people I should probably know. They founded the company in 2014. And then started commercializing it and then built out a originally it was just for their angel group, Launchpad Venture Group. And then started commercializing for funds and then rolled out the deal flow add-on.

And then in 2023, mid July-ish, sold the company to me. And so now I own it and run it. And that was actually, have you heard of search funds? 

Andrew Kazlow: I [00:15:00] have, but for those of us maybe that haven't, what is search funds? 

Alycia Doxon: Okay, so search funds is like an MBA phenomenon, where MBAs, it's other people too, but primarily MBAs.

They're going to the MBA program. Typically the higher level schools, so like Harvard, Yale, Wharton, Oxford, where I went from MBA, has a focus on search funds and you are more or less pooling investor capital to then go acquire a company and then take over that company as CEO. So you're buying your way into a CEO seat and it's entrepreneurship through acquisition, quote unquote, is the term that you would be looking for.

So, when I was doing my MBA, I either wanted to found a company or acquire a company because I was just kind of, before that, I had worked in a couple different high growth tech companies as COO of a company. We raised 27 million or so, and then scaled nationally and did the whole thing.

And then like, I'm tired of this and so what did my MBA and today I was like, I need an English vacation. Yes. But then it wasn't, so I went to do my MBA and then. I found the opportunity to acquire Seraf before I had [00:16:00] an idea that I thought was like venture backable or worthy of doing at that time.

So I bought it not, not via search funds, but the search fund was like the model under which I learned about all of this kind of stuff in terms of acquiring businesses. So, I acquired Seraf via holding company called Harriet Ventures. And Harriet Ventures is going to be a multi acquisition kind of company.

Most search funds are just like one entrepreneur, maybe two. They raise one fund and then they acquire one company and then they scale that and eventually, you know, try to flip it, sell it, whatever. And that's not the model that I wanted to employ just because I'm a multifaceted person and I, so I wanted to acquire multiple companies under a holding company and then either do Boltons, which is kind of half what we're looking at, it at Seraf right now, or just continue to acquire companies that compliment each other within the portfolio and grow that as a portfolio of cash flowing profitable companies.

So that is my background and how I got here. I really, when I was looking for something to buy as far as companies go, I really wanted to be in the entrepreneurship ecosystem and you're very limited on things that [00:17:00] you could like feasibly buy. Especially because a lot of companies in the space, the software companies, they're raising funding.

And very quickly I found that the private equity valuation that I would probably come in at is very different than the venture valuations. And it's hard to find common ground when, like you have a founder who's raised a million dollars or $2 million at like a 10 or $20 million valuation. And I'm like, this supports no cash.

No debt service at all. So I can't really do anything with it. And so anyway, it found Seraf we're doing great, we're profitable, and that's the story there. 

And so. 

Andrew Kazlow: Talk about some of your vision for evolving company. Chris and Ham built a fantastic product and many of the communities here rely on heavily for portfolio tracking, monitoring and more.

I know you're working with a lot of venture funds as well, but the angel ecosystem in many ways is leveraging the work that they have done and you have continued. What is your vision for the company? Like where do you see kinda growth here and specifically [00:18:00] maybe for the angel segment? How do you see the future of Seraf evolving?

Alycia Doxon: That's a great question. And that's the constant struggle,

Andrew Kazlow: constant question right?

Alycia Doxon: like where do you resource allocation, right? Where are we allocating resources to develop the product? And so our biggest thing right now is I am really probably too influenced by my own biases, and I am an operator first.

So coming from the COO seat, have done a lot growing team, scaling teams, just like managing KPIs, managing how companies run. And I think that, our tool right now, I wanna take it in the direction of an operations tool. Right now, you can track your deal flow to a certain extent.

It's not anything fancy, right? It's not that bells and whistles on it. Like it's effective, but it's not fancy. I think that there's a lot you could do with deal flow in that you can bring in, like you can do, what I really wanna do is like build an overlay for email that you can take inbound and you can take applications.

Because right now the inbound is like, so even I get emails like with Harriet Ventures, they're like, oh, we're raising funding for X, Y, Z. And I'm like, I don't [00:19:00] gonna do with this because I can't. but also I think those are worth, depending on the case, that could be worth looking at. I know it's not traditional to the angel investment space to look at cold emails, but I don't think you should discard them.

So there's that part, but also the core software to manage your portfolio. we're gonna build out a portfolio monitor, which is gonna scrape the internet for updates because I talked to a lot of our angel group customers and it's a really hard thing for them. I'm sure you see it too, just monitoring, like getting updates is one thing.

and then if you don't get the updates, what do you do if you don't have a board seat? If you don't have information, information rights. Like what do you do with that? 

Andrew Kazlow: Oh, you get amazing information when, uh. You're about to close. You get tons of updates.

Alycia Doxon: Yeah.

Andrew Kazlow: You get everything.

Alycia Doxon: Yeah.

Andrew Kazlow: The entrepreneur is so responsive and engaged and Oh, that's for sure gonna continue.

But uh, yeah. And then after, after the close,

Alycia Doxon: well, it's also, I've been on the founding side of things and founders stop communicating when things go bad. And it's like one of those really hard. like, I cannot stress enough that if they're like a founder [00:20:00] and you're having a down quarter, year, whatever. like You need to over communicate.

Andrew Kazlow: Yeah.

Alycia Doxon: and you might get beat up for that a little bit, honestly, because it's never fun and it's always like emotionally draining to communicate bad updates. But it's one of those things that as soon as you start having a bad time, founders just, they pull back and they don't wanna talk to anyone.

And that is the opposite thing that you should be doing. Anyway, all that to say, our portfolio monitor, I think is gonna be a way for like, at the very least, to pull in information from, like LinkedIn, from news articles, like is headcount going up or down in the last 60 days? is this company alive?

Are they posting on LinkedIn? Is the founder posting on LinkedIn? Is it just completely dead in the water? They're a zombie. Like I think a lot of this information, you can find it now, but you still have to go pull it as a group manager, as someone who cares. And so I'm interested in doing that, building out what are the monitoring functions look like.

And then from there, there's always the AI discussion of what you want to do or don't wanna do with AI. That's a difficult one because people want to be able to monitor or model out. They wanna see the insights from the [00:21:00] companies first. And so first you need the data, right?

Is our sales going up or down? where's your churn at? What's your cac? So you need the data first, which most people don't have. And then you need to apply the data to that investment in that particular industry and say, is this gonna go like overall, what's gonna happen here? I think,

there's a push to go in that direction, but I think the underlying data is probably not there to be able to do that. Especially because as an angel, you're so early that if you get to series A or series B, you don't have a lot of insights. So you're seeing what comes in from TechCrunch when they raise their next round, and that's helpful, but it's not really that helpful in terms of feeding into a model that says.

But with a mass amount of data, you could do it. And so we would have to pull from external sources like LinkedIn with PitchBook link in with Crunchbase, all of those kinds of things. But I think people really want to be able to look at and be able to pick and choose what do I double down on, based on the data that's in the system.

And I think we're probably a little bit far from being able to actually do that effectively. Although that's something that I think would be greatly useful for the ecosystem. so anyway, AI considerations both in [00:22:00] reporting, pulling out insights from portfolio companies trying to scrape the internet and say, Hey, if your head count is down by 50%, something's happening here. Like we should, We should look at it. so, And trying to make it like a more actionable tool than what it is now because my bias is towards action, right? My bias towards

Andrew Kazlow: like more predictive, preventative reaction to

Alycia Doxon: Yeah.

Andrew Kazlow: What's happening versus, oh yeah, you're right. I haven't heard from this company in seven years.

Yeah. Yeah. Things, and 

Alycia Doxon: Honestly, we, we have onboarded investors that have 15-year-old portfolios and as an offering, we have data migration projects that we can do on behalf of investors. And so we literally reach out to all of the investments and like it's all email kickback.

Andrew Kazlow: Oh my God.

Alycia Doxon: But they never knew. They just, or They saw at some point an email that we're dissolving and they never updated that in their spreadsheet. At a minimum, I think that if we could get to a place where all the angels know what's happening in their portfolio. With each company, we'd be in a great spot, and I think we're like not close to that right now.

Andrew Kazlow: I love the fact that you're working on this, Alycia, because this is such a need in this space, and your customer base is showing that, but it's [00:23:00] one that so many angels just struggle with because this is small part of their portfolio. It's 5, maybe 10% of their portfolio, well maybe 14% depending on the denominator effect of what's happening in the public portfolios, but it's intended to be a small piece of their portfolio. And then to do it well, you've gotta split that into 10, 20, 30 deals, and then you've gotta track each of those. And so it's just this diminishing return on effort.

Alycia Doxon: Mm-hmm.

Andrew Kazlow: For the angel to go actually go out and pull that information.

So the fact that, 

Alycia Doxon: yeah, 

Andrew Kazlow: you're building tools to make that easier is so valuable. 

Alycia Doxon: Yeah. Well, and it's so difficult because the public market's just like up and down every day. Right. So there's always something to look at. There's always dopamine. Whereas the private markets and startups are not, it just like, it's a slow moving beast.

And so your exit is like 7 to 10 years.

Andrew Kazlow: Yeah.

Alycia Doxon: And. 10 years from now, I can't imagine if I'm 29, if I invest in a company now, and then when I'm about to be 40. Like That's a very long decade to wait and try to continue to think about what's happening here. And so like, it's [00:24:00] just it by nature, the asset class is like a very long term horizon and that's hard to convince people that it's important to stay on top of it.

But it really is, especially at the angel level. So, 

Andrew Kazlow: Well, it's interesting to even think about the contrast, right? Because it's a super intimate decision making process. As I get to know you, I'm spending time with you, I'm having a lunch with you. I'm digesting all of your financials and your background.

You're still like, I spend a ton of time if I'm doing it well. Getting to know you and making this decision with confidence in you in many cases as a founder, and then theoretically in the good investments, I stay involved. I'm helping, I'm contributing. You know, we're touching base. We maintain that relationship as the company grows.

But that's not always the case.

Alycia Doxon: No,

Andrew Kazlow: that's the good ones, right? When it's done the right way with the investor that has the right mindset and the founder, that also has the right mindset. But it's only situations that intimate kind of investment process happens and it's super fulfilling to hand that check to you.

It's like, go! Go do. I'm here. We will be with [00:25:00] you in this, but go and do I trust you! And then they go and it's okay, it's been a year. It's been two years. Okay. It's been five. Okay. It's been 10. And that decision you made 10 years ago, it's so contrasting 

Alycia Doxon: Yeah. 

Andrew Kazlow: To think about.

Alycia Doxon: I truly think that if you're angel investing, you have to make a concerted effort to not expect it all to fail. Expect it all to go to zero. And if you're okay with that, make the investment. I think there's too big of a lack of data to like tout this as high return asset class, in my opinion.

And that's because I've seen a lot of varying data and behind the scenes, like we can't be specific with that. But if you look from Angel Group to Angel Group, or if you look at like PitchBook reports and things like that, you see the top 50. Okay, fine, they did great. But you'll notice where they're located and the kinds of companies that they're investing in and the fact that when they invest, they have follow on, ready to continue to funnel that, that growth forward. So they pick, right? Because there was, three or four Ubers, but Uber was the one that was chosen, and then Uber was fueled [00:26:00] forward. And so I'm not saying it's a conspiracy, but it, but it's something to think about that the data is lacking and so that adds to the risk

Andrew Kazlow: Sure.

Alycia Doxon: Of the investment that's already risky in the data that we do have.

Andrew Kazlow: So you've clearly been very thoughtful about

Alycia Doxon: mm-hmm.

Andrew Kazlow: Your approach to getting into this space. You've been in this business for a year and a half. Tell me some of the insights or some of the things that have surprised you or that you've discovered over the last year and a half working in this space, working with angels and other early stage investors.

 Coming from the operator's background, going through the MBA process and now entering into this side of the equation as a operator in a sense of a platform business that many of our investors are relying on. Share some of the insights or the things that you didn't expect that have become very clear to you over the last year and a half.

Alycia Doxon: Right after we took over, Pegasus Venture Group, one of his like 10 secrets of investing was that [00:27:00] investors largely invest based on gut feeling.

They're not necessarily using their brains to like crunch numbers and do things. That was one of the first things that I found when I took over and went to the first conference in Orlando. I went to a venture conference in Orlando and there was a VC panel and they were talking about, how do you analyze and then value deals and how are you doing your diligence?

Like what metrics are you looking for? He's like, well, warm intros and gut feeling. Like you're deploying. But they were huge fund, right? They're I think like a $75 million fund and they had SSBCI money that they're deploying for the state to double that amount. but then That became a trend in what I kept and keep seeing is that a lot of this, because it's people to people based, and people are trying to, I think that is just naturally like how humans de-risk anything is, Like if I could see you face to face, look in your eyes, I feel a lot better about what I'm doing. It was one of the things I didn't necessarily, I thought it was a little bit more methodical. Then it's. So that was the first one. The next one would probably be the [00:28:00] mess of the behind the scenes that I also didn't expect.

Yeah. Uh, So the other thing that I came across was the, the mess of the behind the scenes, not just for angel groups, but angel groups, venture funds, family offices.

Nobody likes to track data. Nobody likes to track documentation. It's the boring job that nobody wants to do.

Andrew Kazlow: Yeah.

Alycia Doxon: And so when we're trying to onboard a family office with 10 years of investment history in venture funds and startups and private equity funds, the whole project is not getting the data in the system.

It's finding the data is the problem. I was very surprised at the large, large, large number of funds and angel groups that don't have data or have to go track the data. I'm particularly appalled with, not anymore, but I was with the funds because the funds are taking LP capital. And so I look at it from the standpoint of, like, that's not my money, but I've taken on $10 million for my new fund and I didn't have the decency to track the investment documents.

I wouldn't dare take on capital of someone else's and then not know where my documents are or like, not [00:29:00] know how much this investment was and what year, what day it actually took place, and those kinds of things behind the scenes that was like, yeah, it was appalling to me, when I first started,

Andrew Kazlow: So, okay. So, on that point, you're talking to a new investor who's considering a fund, gimme like one or two questions that maybe most people aren't asking that you would encourage one to ask if I'm considering becoming an LP in a fund to kind of suss out the type of thing. 

Alycia Doxon: Okay, first thing is probably like where you're doing your admin and accounting, which is a stupid question to have to ask, but you have to ask it because I think there's a lot of risk with doing that internally. Some people do, like I actually talked to a number of people with angel funds here that do that in-house, and that is like a huge strain on the person doing it that's actually deploying the capital and in charge of the capital calls, capital commitments, all of that.

It's very difficult to manage and there are firms that do this fairly well, not Carta, but like other ones that do it actually really well. And so I think, that's a a question that I would ask. I would also ask about reporting in that [00:30:00] I think GPs do a bit better than, if you were making an investment into a company, GPs have a duty to a fiduciary duty.

So that's great. But I would certainly ask about like the frequency of that, the format in which this is coming. Because our tool has an LP portal and I found that like it's a nice to have, but you have maybe 20% of LPs that actually log in and see things. When I poll people and like who's using LP tool or not,

you have some people who are like very active, but that's a minority of your LP group. As an LP that would be something that if it were me, I would be curious about. And I'm a very hands on, very active person, so that's why. Other things that I would probably ask, how you're dealing with follow on strategy.

In terms of a VC strategy, I think the money is in the follow on, and the allocation of your portfolio is something that's really important and not necessarily under thought, but like. not as flashy as like we're raising a $50 million fund to invest in AgTech or [00:31:00] underrepresented founders, or whatever that happens to be.

But like the actual structure with which you do that. Are you investing in safe? Are you investing convertible notes? Are you retaining a third of your portfolio to follow on investments for things that are going well? And I think those considerations are like, again, not the most uh. fun.

Andrew Kazlow: Yeah.

Alycia Doxon: Those are boring questions to ask.

I know. Yeah. They are.

Andrew Kazlow: Nobody wants to sit down and ask that. Just read the document.

Alycia Doxon: Yeah, it's not a fun part of the conversation, but I think it's really important and like the devil's in the details with this particular asset class, and so, having capital to double down on the companies that you actually really like and doing well is what it may or may not save your whole portfolio.

Andrew Kazlow: That's 

Alycia Doxon: Well, and, and 

Andrew Kazlow: that's why I love these questions so much because it's like, okay, well yeah, that's obvi, like those things should be table stakes that they have clean, clear answers, but sitting here with someone who is running the behind the scenes portfolio management tracking update thing, anyone who's listening to this, maybe, maybe that's a question we should all ask a little bit more often. 

Alycia Doxon: I think so. I think that we should all be a little bit more data focused. 'Cause the [00:32:00] data doesn't lie to you ever. Like, It's kind of hard to parse out even like the the Women's Capital breakfast that I was at this morning, the top line number that PitchBook pulls is that 2% of capital is going to female founders.

And I'm like, it makes me crazy because I have been a female founder on like other side of it. And the 2% number first of all is like not correct 'cause that's only female founded teams. That doesn't include mixed gender teams.

Andrew Kazlow: Yeah.

Alycia Doxon: And that number is closer to like 20%, 25%. And if you look it like, the vast majority of companies that are being invested in are tech companies.

And I don't know if you've been in an engineering classroom recently. So like, but then on the flip side of that, people say it's a pipeline problem, well, okay, but are you doing analytics on your pipeline? Because most of you are not like the, the, so it's kind of a, a really hard like.

I think people should be more data focused because I am very data focused and I would be doing like reporting on, if only 10% of our capital is going to founding teams with females on them. Is that 10% of my pipeline too, right? Because if that matches, then like, okay, you [00:33:00] could make the argument that you need to go source more companies that matches criteria.

Do your civic duty, right? Your ethical duty and go find better companies that have more diverse teams. But if that 10% that you're investing in matches the 10% that's applying, I see no problem.

Andrew Kazlow: Hmm.

Alycia Doxon: So it's just like there's nuance in the data and that's how you got asked.

But it's always like, not that interesting. 

Oh, well, I love it. And 

Andrew Kazlow: I think it's, it's important. And that's the key,

Alycia Doxon: I think so

Andrew Kazlow: takeaway here is if we're trying to allocate capital wisely, make smarter decisions, see what most miss, which is what this podcast is all about, most maybe miss some of these obvious questions because they're obvious questions.

That's super important. Any other key lessons or key kinda insights that you'd share? Final 

thoughts for our listeners? 

Alycia Doxon: Yeah. I think the other thing that I've noted is that it's really hard to nail down a right process, like a right best practices of doing any of this.

And I say that because like very so concretely when we built our API to link [00:34:00] into the software on the backend. I was considering, okay, do we link in with PitchBook or Crunchbase or, Affinity or like who do we, like, do we partner with someone directly and we came to the conclusion, we did a survey about for customers to say, what are you guys, what else are you guys using?

Right. To track it and every single person using something different. You could find trends that a lot of people for deal flow use, like Airtable or they're using, if they're angel grips are using Dealum, or like, Affinity for CVCs. But the vast majority of it's all custom tech stacks. And so you can find

Andrew Kazlow: everybody's home brewed their own.

Alycia Doxon: They all have home. 

Yes. And they're all piecing it together, which is great. It's a flexible way to do it, but it's also, you can't really find us. There's not a lot of standardization. I think now we do have, it's great to have like standard, at the very least, standardized security types.

although I saw a really interesting post on LinkedIn recently about safes and people safe stacking, if you've heard that term yet.

Andrew Kazlow: Yes.

Alycia Doxon: Like that is wild. As a founder, if I was considering how to scam people out of money, that's something I would consider.

Andrew Kazlow: Uh, yeah. Okay. So quick education on safe [00:35:00] stacking.

What is it to go? 

Alycia Doxon: Okay, so safe stacking is where if you're a founder and you think you can scale very quickly, if you take on safe money and then that safe never converts because we never do a price round, you never have to give up any equity, and it's not like a convertible note that you owe them, accrued interest via stock or cash or that converts on a certain date.

Safes just have. It open-ended forever. So if you can raise on a safe and then raise more on a safe and get your revenue to a place you're doing 5, 10 million AR, you all of a sudden have a lovely cash flowing business. You got get cash flow, but then you never have to do anything with it and you don't have to convert those safes.

Andrew Kazlow: Mm-hmm.

Alycia Doxon: I saw it on LinkedIn. I don't know how that post went, but it's also, you could look at it from the standpoint of saying all of the safes that have been issued are now at risk, because there's billions of dollars of safes out there and those don't have to convert ever.

That's what safe stacking is. Really fun. 

Yeah. Well, we've seen a few of these deals where there's, 

yeah. Well I think there was a, a court case too that, someone sued the investor sued the company on a, it was something related to a convertible note though, because their note didn't convert and the [00:36:00] investor thought that they were worth a lot of money.

And then the court said, no, you don't get to force a conversion here.

Again, in the details, it's very important

Andrew Kazlow: the terms matter.

Alycia Doxon: Yeah. 

Andrew Kazlow: Know what a most favorite nation and prorata like, know all these things. And that's such a key part of being an educated and formed angel is understanding what these things mean.

Maybe not going to the nth degree, but at least having a basic conversational awareness of what these things mean. 

Alycia Doxon: Yeah. And I think that's actually a really hard part of angel investing because it's a very new asset class to most people. And then not only do you have multiple hurdles, it's the hurdle of,

this is like a very risky investment to make. So I have to have quite a bit of money to even want to invest in this asset class. And then from there it's also, there's a bunch of new terminology

Andrew Kazlow: mm-hmm.

Alycia Doxon: That you have to learn and all of those things that are wrapped up in legal documents and they mean a lot to the deal.

And so unless you're like, you need counsel and, and most angel groups and ventures do have council, but as a person, like you're supposed to look for deals you like, look for people you like, due diligence on those [00:37:00] deals, and then deploy capital whilst understanding all of the terms in that, term sheet 

Andrew Kazlow: can be really overwhelming.

Alycia Doxon: And so, yeah, it's, it's a hard thing to, I think wrap your head around as somebody who may come from outside the industry and it's just learning about it. And I think that's why angel groups struggle with recruitment and with retention is because it's hard and then you get screwed on one term and that's it.

Andrew Kazlow: Which I think is a great reason for angel groups to, 

Alycia Doxon: yes. 

Andrew Kazlow: Be a consideration for someone that's listening to this. If you're not a part of a group, consider joining one because they're likely to have or know of resources to help provide some of this education. And even just people to tap the shoulder on and be like, Hey, have you seen this before?

Is this right? Is this normal? 

Alycia Doxon: Yeah. I wouldn't do this outside of groups if it were me, like if I was investing in startups, I would not do this outside of a group setting. And there are people that do, there's a lot of, we've got, 350 individual angels. So just solo, not enterprise just solo people that are tracking their portfolio and, I don't know why or how like you have to be, and maybe they're just like very intelligent people.

That's great.

Andrew Kazlow: Super angel.

Alycia Doxon: Its, but it's, you're going at it [00:38:00] solo and then you're deploying capital solo. If angel groups have a hard time getting data as a solo angel with, and you're not a part of a syndicator or something, you have no insider legs to stand on. So, angel groups all the way, 

Andrew Kazlow: I love it. So, Alycia, thank you for taking the time to join me. here. Any last thoughts as we close? 

Alycia Doxon: So, if you're an investor, an angel, a VC, please track your data. Please just start tracking it. You don't have to use Seraf if use something else.

I I I don't care what you do, but it helps us all if you track your data. and I think that is really anything in the private markets is really hard to track anyway because you're not mandated. But it's important And we're like, I think 20, 25 years into angel investing being mainstream. 20 something years since the ACA was founded.

And so we should be at a point where we have regular data reporting. And we don't have that, and I think that is a little bit broken. So I would just encourage everyone to start both the pipeline and the active portfolio, or hire my friend here who [00:39:00] does. We can help you with all of this and give you tools to do things.

So that's all I would say. 

Andrew Kazlow: Well, Alycia, thank you for joining us in Denver, Colorado here at the Angel Capital Association Annual Summit. We'll be here again next year, and so look forward to meeting many of you then. Alycia, look forward to our next conversation. 

Alycia Doxon: Thank you very much.

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