0:00:00 - (Mitra Miller): Thanksgiving is going to be really awkward if you lose mom's money. I think entrepreneurs who take dumb money, that's actually a warning flag for me. If you don't do the hard work, you might as well have just put your money on red over at the roulette table. If you end up with a portfolio of a bunch of losers, you're going to think it's the asset class's problem, and it's not. If you're in your first 1, 2, 3, 4 years of angel investing, you don't realize this is going to happen over and over and over again.

0:00:30 - (Mitra Miller): Her product needs to be in the market. You just have to do it.

0:00:37 - (Andrew Kazlow): Welcome to the Diligent observer, where we help angel investors see what most 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. Today I'm replaying one of my favorite conversations on what separates smart money from dumb money in angel investing. My guest is Mitra Miller, president of the Houston Angel Network.

0:01:01 - (Andrew Kazlow): And in this episode, Mitra breaks down why dumb money is basically playing roulette while smart money plays a whole lot more like poker. She shares the story of one of her fastest exits ever and explains why the question who else has invested is such a powerful one. I hope you enjoy learning from Mitra as much as I did. Mitra, thank you for being with me today.

0:01:32 - (Mitra Miller): It's a pleasure. I'm so glad to be here. Thank you for asking me did I

0:01:36 - (Andrew Kazlow): see recently that you received an award for being Mentor of the Year in Houston, Is that right?

0:01:44 - (Mitra Miller): Yes, yes, I did.

0:01:46 - (Andrew Kazlow): Tell me about that.

0:01:47 - (Mitra Miller): Last week was the Innovation Awards sponsored by Innovation Map, and that is a media publication that reports on and promotes and helps people know about the innovation ecosystem in Houston across all different industries. The editor is my friend, Natalie Harms, and she and the rest of the team at Gal Media put together this annual awards ceremony to recognize leading entrepreneurs, investors, and other parts of the Houston ecosystem that drives innovation every year. And I think it's a wonderful recognition that helps highlight what innovation is and why it's important to the rest of the Houston community, to the broader community.

0:02:37 - (Mitra Miller): My award was Mentor of the Year, which was about giving counsel and advice to both early stage companies and to early stage investors. And then I also have a nonprofit that does the same thing for high school students in Title 1 schools. And so it was kind of my mentoring across all of those different segments, which are my interests. So I like helping entrepreneurs. I like creating More early stage investors who are interested in this high risk, high potential asset class, if they are accredited investors, of course.

0:03:18 - (Mitra Miller): And then encouraging teens, especially from Title 1 schools, to understand the unique opportunity that entrepreneurship and investing give them to actually grow wealth. That's what I do.

0:03:32 - (Andrew Kazlow): Well, Mitra, I'm not surprised at all to hear that you received that award. A question for you. What drives your motivation to give back so much? No one receives Mentor of the Year without having a tremendous passion and just intrinsic motivation to give back to the ecosystem. What drives that for you? Like, why are you so passionate about these things?

0:03:58 - (Mitra Miller): First, I'll give a shout out to last year's inaugural Mentor of the Year, Wade Pinder, who does exactly the same thing in a slightly different way. I can't answer for Wade, but I will tell you. I grew up in a household where service was a big part of the philosophy. My dad and his family were very much people who served others. So my grandfather, my great grandfather, they were ministers and in Brazil, and that's where my dad was born and raised.

0:04:30 - (Mitra Miller): And so there was always a servant mentality to what we did. So that's one piece. The other is just knowing the impact that other people's investment in me, what it's done for me, whether that's teachers in high school, professors in college, the countless business people who have mentored me from the earliest parts of my career and really encouraged me, it's been profound. And then the third piece is that I think I provide a unique perspective to people because I can glue together my experiences and provide a way of looking at things that I don't hear other people sharing.

0:05:20 - (Mitra Miller): Because of my background, because of my experiences, going through many early stage companies, becoming an early stage investor, having done it now for over 12 years, learning from brilliant people in all of these things and then being able to synthesize that and help other people. It's all of those things put together and I love it. Honestly, I really love being able to empower other people and see our entire ecosystem, not just in Houston, but in Texas, in the United States and across the globe, grow and prosper. I am a huge believer in the power of innovation and that our lives are getting better and better and better.

0:06:06 - (Mitra Miller): And if we do it in a smart, sustainable, responsible, ethical way, that the sky's the limit in terms of what we can do and if we can champion more people. I really do subscribe to a rising tide lifts all boats. I'd say that it's a kind of all of that.

0:06:25 - (Andrew Kazlow): I'm curious Are there any specific stories or situations over the past year or so that you felt like that unique perspective came to bear and led an entrepreneur or student to a new outcome that they weren't expecting or that they wouldn't have gotten to otherwise?

0:06:45 - (Mitra Miller): Oh, sure. Well, I will say so. I'm really partial to the students I work with in my nonprofit. And one extraordinary story, I've been running Eagle Investors, that's the nonprofit, for over seven years. Coming up on eight. And one of our star students, her name is Arianna Williams, has been through our program. She started off in high school, became a leader in our program, and continued to help lead the program while she was at Prairie View A and M.

0:07:20 - (Mitra Miller): And because of her experience inside of Eagle Investors, she became very interested in business. She always knew she wanted to be a lawyer and she still wanted to be a lawyer, but she decided to major in business as an undergrad, which she had never planned to do before. And she's really excited about how innovation and early stage companies and creating these wonderful new ideas can impact the future and frankly, help all communities.

0:07:52 - (Mitra Miller): So she went to Prairie View A and M, which for those people who may not know, is a highly ranked, very highly regarded HBCU near Houston. And she realized because of Eagle Investors experience, having been to accelerators and incubators and business plan competitions in Houston for several years and knowing the opportunities that those presented to students, she got to Prairie View. And they didn't have much of that yet.

0:08:22 - (Mitra Miller): In fact, they didn't have really an innovation center at all yet. So she wrote a paper on that that she called Million Dollar Minds. She gave it to her professor who loved it, and that inspired him and the university with her getting to tag along as an undergrad to apply for funding to launch Prairie View's very first innovation center, which then got launched. And Ariana became the student leader of the center when it launched.

0:08:56 - (Mitra Miller): So they got a wonderful anchor sponsor to create an innovation center at Prairie View, essentially because Ariana had the Eagle Investors experience. You can't make that up. That just gives me the best warm fuzzies in the world. And that innovation center is now over a year old and she is now in law school. You don't know what the ripple effect is of every single action is going to be. But if you keep doing the right things, pouring yourself into people, the impacts, that can be profound.

0:09:32 - (Mitra Miller): And that's one of my favorite stories.

0:09:35 - (Andrew Kazlow): A student paper turns into an innovation center. I mean, how cool is that?

0:09:41 - (Mitra Miller): It does. And back to if she hadn't seen it being done in other universities. If she hadn't seen it being done in other spaces, she wouldn't have had the awareness. And that's the thesis of everything. Whether you're an entrepreneur, whether you're an angel investor, or whether you're a student just learning about innovation. Lack of awareness is what keeps people from being able to try new things. And there's the 0.01% of people who are willing to just put themselves way out there and go learn. But most of us don't know what we don't know.

0:10:18 - (Mitra Miller): But if we're exposed to it, another 10 or 20% of people will say, I can do something with that. I can do that. Obviously, entrepreneurship is not for everyone. Early stage venture is certainly not for everyone. Very high risk, and it's not for everyone. And innovation is not for everyone. But if we expose everyone to it and they know what it is, hopefully we can find the 10 to 20% of people who say, oh my goodness, I know what to do with that.

0:10:53 - (Mitra Miller): So, awareness.

0:10:55 - (Andrew Kazlow): So on that topic, you are plugged in nationally, but really plugged in in Houston, obviously receiving this award and being deeply known in this community. What are some things that most people don't realize about the Houston innovation scene entrepreneurship ecosystem that we should know about?

0:11:16 - (Mitra Miller): The thing that people don't realize really what innovation is. I'm going to start there, and I'm talking about adults. I think I'm going to pause it. This is just Nitra's assumption. But I think if you asked 100 random Houstonians, what does innovation, what do entrepreneurs in innovation, what do they do? Who invests things like that? I think maybe 1% would have a little bit of a clue about it. That's a problem.

0:11:49 - (Mitra Miller): There's a lack of knowledge education nationally, but we're talking about Houston. And I would say that's obviously very, very different in Silicon Valley, where it seems like everybody knows about it, everybody's talking about it. In San Francisco, they're highly aware. Seattle, they're pretty aware. Boston, they're pretty darn aware. And then there's everybody else. But I do think Houston needs to do a much better job at creating that awareness so that people can determine if this is something they want to get into. Because lack of innovation is going to be a problem for the future of the country and for the future of any community. For a community to be vibrant, it needs to be constantly and relentlessly innovating, pushing boundaries, figuring out how to do things better.

0:12:47 - (Andrew Kazlow): Mitra, let me interrupt you before you move on. How would you define innovation? What would you want the hundred people to say when interviewed on the streets of Houston when they are asked, what does innovation mean?

0:13:02 - (Mitra Miller): So I don't know that we'll ever get the full hundred. If I get to 20, I'm going to feel that's a win, right? This isn't for everybody. Not everybody wants to know, cares to know. And so I don't think that's the realistic goal. But what do I want the 20 to be able to say? Innovation is about pushing the boundaries of any industry and figuring out how to do it better, faster and cheaper. How do we create the next version of an entire industry?

0:13:34 - (Mitra Miller): Obviously, Houston does a lot of oil and gas. And as my husband sometimes jokes, it's like that doesn't mean what's the coolest new drill bit to go drill? Oil and gas. I mean, that's important. But innovation is completely new energy drivers that we don't even have right now to create, to transmit, to store energy. If you're talking about energy within technology, innovation is thinking about how to apply leading cutting edge technologies coming out of research institutions and figuring out how to use them to improve business, to improve lives, to create value for people.

0:14:17 - (Mitra Miller): And it's really pushing those boundaries and thinking way out ahead. So it's new materials, it's new processing technologies, it's new anything that markedly moves the needle for me personally, and I think for a lot of early stage investors like myself, we're looking for what I would call disruptive technologies. Angels can invest in any kind of business they want to. They can invest in a barbershop, they can invest in a restaurant.

0:14:47 - (Mitra Miller): Anybody who brings their capital to an early stage company can technically be an angel investor. I personally am interested in highly disruptive technologies that can make a seismic shift in an industry that will literally become the new standard within that industry. What are the new standards going to be in five years, 10 years? Those are the technologies we should be investing in now as an early stage investor.

0:15:17 - (Andrew Kazlow): Okay, so that's what you would love for the 20 to say. What are some of the other comments on the Houston ecosystem specifically?

0:15:24 - (Mitra Miller): Oh, my goodness, the people here are amazing. What you saw, especially at the Innovation Awards the other night, you saw a community of good, hardworking, loyal people who support, encourage each other, the collaboration that happens here. So we talk a lot in Houston about convening and collaborating, and I think we do that exceptionally well. There are very few events, there are very few things that can get done without involving other people. And we are masters of coming together and joining forces to create positive things.

0:16:07 - (Mitra Miller): I think we actually do that better than most communities because there's not a lot of backbiting and infighting that you will see. Frankly, that's the upside to being a slightly less developed ecosystem is we all get everybody understands that the rising tide will lift all boats and we better be collaborating and working together and supporting each other and helping each other make connections to make this happen.

0:16:35 - (Mitra Miller): Because Houston has enormous potential. We're the arguably the third or the fourth largest city in the country, one or the other. We have phenomenal talent. We have a lot of capital here. What we need to do is change that mindset so that the capital and the people start thinking about this new innovation and how to create everything that goes into that. But the potential is here and it's extraordinary.

0:17:11 - (Andrew Kazlow): And you're clearly leaning into this, right, with all of your time, energy and resources. One of those areas that I'm eager to learn more about is in your role as the vice president at the Houston Angel Network and president elect, you are stewarding one of the most influential angel communities in the country. Say more about what you're excited about at the Houston Angel Network right now. Maybe some of the trends, some of the vision for the next couple of years that you all are thinking through as you step into this president role.

0:17:47 - (Mitra Miller): Absolutely. So I've been Angel investing for 12, coming up on 13 years doing early stage venture, and I joined Hana almost six years ago now. That really helped me up my game because I went from doing it sort of part time on the side to being able to do as much as I wanted to. You can turn it into a full time job. So Han, as you pointed out, it's actually the first angel network in Texas, arguably the largest and the most active, depending on which metric you're looking at, and has been for 23 years.

0:18:24 - (Mitra Miller): We had our angel group before even Austin had an angel group. That's saying something. And that is a testament to the vision of the Houston Technology center and its founder, Paul Frison, who was the founder of Houston Angel Network as well. So what we're doing inside of Han right now is first of all, we're trying to get more people thinking about being early stage venture investors. When you get excited about innovation and the light bulb goes on, if somebody decides they want to take a little piece of their portfolio and start investing in this high risk, potentially high return asset class, then how do they learn?

0:19:08 - (Mitra Miller): Where do they go to do that? It's pretty overwhelming. And the Best way to do it is to join a community. And that's what Han is. HAN is a community of like minded early stage investors. We're over 100 members and we come from every kind of background that you can imagine. But you come in. Han provides educational opportunities, both ours and then through the Angel Capital association, which is a national umbrella association for all angel groups. And we are members of that, and our members get access to their educational materials as well.

0:19:42 - (Mitra Miller): But then it's the community piece. By coming to pitch meetings, participating in screening deals, participating in due diligence on deals, even if you may not be investing, that learning experience gives the individual the ability to understand the value points that you're looking for in an early stage company, the risk points that you're looking at, what your deal killers are, what you're willing to accept, the ROI that you're looking for and refine it.

0:20:15 - (Mitra Miller): Listening to other people's war stories, which is of course what this entire podcast is about, right? That's hearing from the more experienced people and learning from them. But then it's also as we look at deals, the magic is that everybody in the group brings some phenomenal experience. And you can draw upon your peer group. As you get to know the members of Han, you're looking at a deal. Somebody can bring that expertise to the table or they'll know the right person that we should ask.

0:20:49 - (Mitra Miller): So we were looking at an AI deal recently and one of our members is Nexpert Neural Networks, like an expert and he could really dig into this deal far beyond what I could do or someone else could do and we could draw upon his expertise. It was phenomenal.

0:21:09 - (Andrew Kazlow): A quick note before we continue the conversation. Alongside the Diligent observer podcast and newsletter, I also run an outsourced operations service specifically built to serve angel networks. My team handles things like initial screening, social media, newsletter prep plan, platform management, and a whole lot more. The kinds of things that either aren't getting done or shouldn't be done by busy community leaders.

0:21:30 - (Andrew Kazlow): If that sounds interesting to you, send me a note. Now back to it. Could you give an example where you maybe invested in a deal that you might not have otherwise without the community elements or someone else's expertise?

0:21:43 - (Mitra Miller): Oh goodness, that's probably almost every deal. There are a couple that I've gone into that I was the one who liked it. But for the most part, whether it's inside of Han or inside of a broader network, the power of the group to bring in the expertise is massive.

0:22:02 - (Andrew Kazlow): You mentioned a life sciences deal that was your best investment so far, that you would not have gone on otherwise. Say more about that. Yeah, we like to talk about winners here.

0:22:12 - (Mitra Miller): Right, right. Okay. So that one was actually through the Rice business plan competition. It was medical adhesive revolution. I was part of the OWL investment group that invested in them, the Goose. So the grand order of successful entrepreneurs, they also put a large prize into that. And so there was collaboration across the two groups into that investment. What was really exciting about that one was how fast it exited.

0:22:42 - (Mitra Miller): What happened was the entrepreneurial team found a technology that was languishing at Bayer in Germany and said, we can commercialize this. And they had a plan to commercialize it, and they did. And they were able to then sell that in a remarkably short amount of time. I don't want to say exactly how long it was, but it was remarkably short. It was one of the fastest exits I've ever had. And it was a multiple on it, on the investment.

0:23:11 - (Mitra Miller): So without going into details, the IRR on that was fantastic because short time frame, multiple on the money. So the IRR was one of the best I've had. I don't know anything about life science. There were other people in our group who did. There were IP attorneys who could look at the patent portfolio and say, okay, that looks good. There were finance people who could look at that piece and see what they thought about it.

0:23:38 - (Mitra Miller): I'm kind of a horizontal person where I look at things and just try to figure out, where does this fit into the current landscape of technologies and do they have a solid business plan? So we put all of this together, and then you end up with a good investment. That came out really nicely.

0:23:59 - (Andrew Kazlow): What are some of the mistakes that you've learned from over the last few years that you'd like to share with our audience?

0:24:05 - (Mitra Miller): I would say the first thing is giving yourself plenty of time to learn from the people who have been doing this for a long time. Find somebody who's extremely knowledgeable inside our OWL investor group. We're led by a very experienced investor named Robert Winter. And he's extraordinary and has that experience. And frankly, that's how I learned was just following what Robert did on the deal side. I had my experience as being inside of companies and being able to understand business plans, markets, things like that. But from a deal perspective, he is a master, and getting to learn from him initially was absolutely invaluable.

0:24:49 - (Mitra Miller): You're talking about mistakes. I think the mistake that I've made is sometimes when I got excited about a deal because other people were excited about a deal and followed then into it without really doing as much work. So the problem as an angel is you're alone. You don't have a back office of analysts like a VC has. You have to analyze every single deal on your own. And if you don't make the time to do the hard work, to review everything and really think, figure out is this the right investment or not, and you follow other people into the deal, you might as well have just put your money on red over at the roulette table, right?

0:25:37 - (Mitra Miller): See what happens. Not a good strategy. Have I done it once or twice? Yes, because tight time frame. I didn't have time to sit down and do as much work on it as I should have done. Frankly, most of those are still hanging in, but you can see that they are not the strongest investments I've made.

0:25:58 - (Andrew Kazlow): So, Mitra, I want to double click on this because I think what you're describing is as much one of the greatest strengths and benefits of an angel community as it is its weakness. And that is this community driven mindset. I hear individual investors talk all the time about what you just said, which is don't blindly jump into an opportunity just because somebody that you like or trust is. But at the same time, if somebody that I trust is jumping into an opportunity, then that's a signal that this might be worth a look.

0:26:32 - (Andrew Kazlow): So say more about, like, how you balance this tension of, okay, these people I trust and respect are going in, but I don't want to blindly follow. How do you balance that tension?

0:26:42 - (Mitra Miller): What happens is it's experience. So this is because I've done it in the past. I've learned from my mistake and I am much better at looking for the red flags that tell me not to invest in a deal and trust my gut instead of following other people. Now what's happened is because I've been doing this a long time, sometimes other people want to follow me into deals and that really makes me uncomfortable.

0:27:15 - (Mitra Miller): And I try to downplay it as much as possible because they really need to be looking at the information themselves and figuring out if this is right for them. Because if you end up with a portfolio of a bunch of losers, you're going to think it's the asset class's problem and it's not. You can make equally bad picks in the stock market, you can make equally bad picks in real estate. It's not the asset class.

0:27:44 - (Mitra Miller): It's a failure of someone to do the work and the analysis. What a lot of people do is as they get into early stage investing, especially as an angel, where you've got to do the work yourself. They realize this is a crazy amount of work. Maybe I'll go be an LP instead and I'll hand it over to some professionals to go do it. I still think though, that being a member of an angel group, even if you're a venture lp, is important for two reasons. Number one, you need to know what's going on across the landscape so that you can see and assess.

0:28:22 - (Mitra Miller): Are the VCs investing the way you think they should be? Are they seeing the same kind of opportunities and trends? It's sort of like if you hand your stock portfolio over to someone to manage and, and you never read the business section and you never read the market section and you have no idea what's going on in the stock market. You can do that. Some people do, but it's not very smart because what if that person's doing a terrible job managing your money and they're giving you a 7% return when everybody else in the market is getting a 50% return, right?

0:28:55 - (Mitra Miller): So if you're not reading the newspaper and being aware, you have no idea that they're doing a pretty darn mediocre job for you and maybe even a poor job because everybody else is getting richer faster than you are. Same thing in early stage in venture, if you're not aware of what's going on, what the trends are, you can't really know if your VC is doing a good job for you. So that's the first piece.

0:29:21 - (Mitra Miller): The other thing is when you think about investing in the stock market, the first thing you learn to do. Most of us is we learn to analyze stocks ourselves. It's the same idea. If you understand the mechanics of deals, that is going to again, help you to figure out whether you invest on your own or you invest through a vc, if they're doing that kind of due diligence that needs to happen, you can also co invest. Sometimes we do co invest with VCs and so you'll figure out who the good ones are that way as well.

0:29:58 - (Andrew Kazlow): You talk about the importance of staying current, following the trends, seeing what's happening in the ecosystem. Speak to some of the things that are happening right now in angel universe that are interesting, that are exciting, that are being discussed regularly.

0:30:13 - (Mitra Miller): So we're always talking about deal flow and that's nothing revolutionary, but it's so critical, so. So being known as good sources of thoughtful, smart capital. Have you gone into smart money, dumb money before and what that is? It's a really important concept, both for the entrepreneur and for the investor. The idea is dumb money is someone. Usually the classic the joke is a doctor or a lawyer with a bunch of money and a checkbook and they go and they start putting checks into all kinds of things. Now it can be anybody. That's just the joke, right? Doctors and lawyers.

0:30:55 - (Mitra Miller): But they put money in, they don't really understand what it is. It sounds cool. Maybe it's, you know, somebody they know from the golf club or something else. Oh yeah, I'll put some money into that. And sometimes it works out and sometimes it doesn't. Again, it's like what I said a minute ago about putting your money on red. In roulette, you're just spin the wheel and let's see what happens. There are people, including early stage investors, who will put money into a hundred deals in a year or two.

0:31:25 - (Mitra Miller): And they've got enough capital to do that and they figure one of them will pop and it'll be a unicorn. And who cares about the other 99 dying? Well, that's a strategy. That's like betting on roulette. But that's what I would call dumb money. They don't really know the industry. They don't have any insights or expertise. Smart money is making much more educated bets. It's probably closer to poker where it takes a lot of strategy, a lot of insight, a lot of reading, the room and the personalities.

0:31:57 - (Mitra Miller): But there's still obviously an element, a chance because markets go up, markets go down, natural disasters, all kinds of things can kill a business. But you are stacking the deck in your favor as much as you can. That's smart money. But you also bring more to the table than just your checkbook. You're able to understand the industry, understand the entrepreneurs, and hopefully you're bringing your own personal expertise and your own Rolodex to them so that you can provide insights and assistance on their journey.

0:32:32 - (Mitra Miller): As an investor, if you are invested in a good early stage company, they send us at least quarterly reports on what's going on with the business. They tell us the highs, the lows, the challenges, and then they'll put in the ask. Here are the our sticking points right now that we really need help with. And a good investor makes the time to read all of those things and say, I bet I know somebody who could help with that.

0:32:59 - (Mitra Miller): I'm going to go out of my way, I'm going to pick up the phone and I'm going to do something there. I'm invested in A company that provides really innovative intimate apparel for women post cancer surgery. That's a long story, but I'm invested in this company and she's having trouble breaking into some certain markets. Can I pick up the phone and ask someone at the Texas Medical center to talk with her? She's not faced in Texas.

0:33:29 - (Mitra Miller): Yeah, I can do that. You better believe I'm going to do that. That's smart money. That's somebody saying she's got a challenge. I'm not her biggest investor by far, but I can be her smartest investor. I can be someone who's trying to help her. Can I give her support and encouragement, Open doors mostly for her sake. My investment is something that, God forbid she doesn't make it. It's not going to break me.

0:33:55 - (Mitra Miller): Most angel investors, we care deeply about supporting entrepreneurs and really making a difference. Her product needs to be in the market post cancer surgery. Shouldn't have to wear ugly, uncomfortable, unfitted, terrible things. Right? This was an area that needed to be innovated. So that's just one example. But smart money is an investor who gives their expertise and their contacts in addition to their capital.

0:34:30 - (Mitra Miller): What we want to be is the smart investor.

0:34:32 - (Andrew Kazlow): I've talked to a lot of entrepreneurs and angel investors. Angel networks tend to have kind of a mixed reputation, oftentimes for being smart money or dumb money. How do you think about making time for that? Because that's not easy to do. Sit down. Actually read those notes every quarter, actually pick up the phone. Like that takes time, energy. Most investors have a day job, that family, they've got other things going on.

0:34:58 - (Andrew Kazlow): How do you balance kind of a realistic time allocation to doing this on a regular basis?

0:35:05 - (Mitra Miller): You just have to do it. I mean, honestly, it's like saying, oh, you're invested in the stock market and you don't bother to read your reports. I mean, if you're going to be an investor now, again, you can go bet on roulette. But if you're going to be an investor and you want to be good, you need to make the time. Now you get big enough, you create a family office and you hire someone to go read all the reports.

0:35:31 - (Mitra Miller): That's fantastic for those people who get to that point. Otherwise, you just need to make it your responsibility to do that and find the time. It is challenging. I agree with you. Especially at Houston Angel Network, we have more younger members. I think we have maybe one or two who are actually in their 20s. We have a nice group in their 30s, many in their 40s and 50s, whereas this used to be a group that was mostly retirees.

0:36:02 - (Mitra Miller): Now 75% of our membership easily is not retired. They're still working, actively building their wealth, growing their portfolio and getting into this at a much earlier stage. And you're right, it is a challenge to do that. Just to kind of give you the flip side. I think entrepreneurs who take dumb money, that's actually a warning flag for me. If I see them taking a bunch of dumb money and filling out their whole round that way and they haven't brought in somebody who actually understands their industry, that's actually a big concern for me.

0:36:42 - (Mitra Miller): I'm looking for people who know the industry as well, or certainly better than I do, who are either angels or maybe they brought in a strategic right that's some sort of an institutional who knows this space. VCs have moved down market. DCs are now playing in the angel space. Not all of them, but many of them do. There are pre seed funds, there are tons of seed funds. There are a funds that have moved down to seed because of other capital dynamics that are going on.

0:37:17 - (Mitra Miller): If they don't have anyone like that on the cap table and anyone like that even interested, that's a bit of a warning flag to me. It's not a deal killer, but it's a dig in and figure out why.

0:37:30 - (Andrew Kazlow): So how do you suss that out? You literally have the entrepreneur open up the cap table to you and you look up every single lp.

0:37:39 - (Mitra Miller): Yes. Now that's in due diligence. That doesn't happen on day one. You've already figured out you really like the product or the service. You like the ip. You're in love with the management team and you think they're the hard driving people who can get this done. You've checked all the other boxes then yeah, you better believe that you want to see that as well. And it doesn't take long to get through all those other things and then say, who are your other investors?

0:38:05 - (Mitra Miller): I actually do not mind at all if mom's on the cap table. Right. If their mom's on the cap table. Thanksgiving is going to be really awkward if you lose mom's money. I'm okay with that. In fact, sometimes I'm like, okay, that's okay. And someday I have kids and maybe they're going to be entrepreneurs and you better believe I better be on their cap table. And Thanksgiving will be very awkward if they're not doing their best job.

0:38:29 - (Mitra Miller): But I also want to see some people who actually understand the industry. I think that's one of the green lights that you can get on an industry. And I think about it a whole lot harder when I see that level of smart money already invested. I also want to see are they continuing to invest? So let's say that there's an institutional that went in in the pre seed, so small amount, and they know this industry, they know this sector well.

0:39:01 - (Mitra Miller): Are they going back in at the seat? If they're not, another warning flag. Why are they not coming back in? Why are they not leading the round? And a lot of them, you know, you may have that one really good institution. They're going to lead the round and then they need angels to fill out the rest. That's kind of my perfect scenario, though. I also want to talk to that fund. I want to talk to the person at the vc, find out something more about them, what their successes are, what they're seeing in this. This is back to building the relationships across the entire ecosystem.

0:39:38 - (Andrew Kazlow): Any other recent thoughts or lessons learned that you want to share?

0:39:46 - (Mitra Miller): Thinking about this before we got on today, I think the other mistake that I've made is playing it too safe sometimes not going into a deal that I could have gone in, at least at a small level, and that would have been okay for me. I mean, again, it's about your own personal risk tolerance, ROI potential of the deal. And I could have gone into some other things that I didn't because it depends on how disciplined you want to be as an investor. You say, I'm going to do X number of deals a year.

0:40:23 - (Mitra Miller): What if that other one comes along that just looks amazing and you think, okay, I'm fully deployed. Do I want to borrow some capital from next year and do this? That's tough. But I've missed out on some really great opportunities because I probably should have taken a little bit more of a risk on some of those and just said, okay. I think that's one of my biggest lessons learned. Every investor talks about not just successes and failures. We talk about the ones that got away.

0:40:53 - (Mitra Miller): That takes time for you to start thinking back again. Having done this for 12 years, okay, why did I pass on those deals? They were great. I love the technology. But either I felt it was for whatever reason that I skipped on it at the time. How should I have been thinking about it? Instead of. So it's that constant analysis.

0:41:16 - (Andrew Kazlow): Do you have a specific strategy for doing that? Reflection, for helping take notes? How do you personally do that? Because I know every individual angel that I've talked to struggles with staying organized and thinking Back, you know what, why did I make this decision eight years ago when the company now goes public and you're like, oh,

0:41:35 - (Mitra Miller): that is a great question. I do keep notes. I am that person that from the very first time I meet them, I can go back and look at my notes in my folder in the cloud and see what I thought of them at the time. So, yes, I do do that. Every single conversation I have with an early stage company, invest or not. And of course, most of them I don't. I have notes on that and I can go back. We're looking at a company right now at Houston Angel Network came through two years ago and I have my notes and I can pull it back up and see how do they actually execute on what they said they were going to do.

0:42:11 - (Mitra Miller): Getting organized and keeping that information is incredibly important and that actually is across asset classes. I find that doesn't matter what asset it is. Deals come back up. You don't know that. If you're in your first 1, 2, 3, 4 years at angel investing, you don't realize this is going to happen over and over and over again. But you can learn from that. Honestly, what I think I have learned is that the relentlessness of the entrepreneur is what is most important to me in a deal.

0:42:46 - (Mitra Miller): I want to see, we talked about disruptive technology. I want to see something that can be a whole new standard in an industry. And I want to see an entrepreneur who is so committed and passionate that they are willing to, on a daily basis, look at the world and trim their sales so that they're going to actually hit their target. It's a long journey. I have deals that are 12 years old and have not exited yet.

0:43:16 - (Mitra Miller): That's not supposed to happen. We can talk about lack of liquidity in early stage. Right now that's a whole different thing. But those entrepreneurs, we talk about the pivot, but it's really more of a everyday, a relentlessness about optimizing. I would really call it optimizing. Talking to your customers, talking to your suppliers, talking to your development team and optimize, optimize, optimize, optimize. How do we refine?

0:43:49 - (Mitra Miller): How do we improve on a daily basis, on a weekly basis, on a monthly basis. It's not about the huge, oh, this was our strategy, now this is our strategy. It's that constant evolution that happens on a micro basis but has the most profound impact. It's that drive to just be the best. That's a personality thing that you're looking for at the top level of the organization and you're looking for them to be able to bring a team around them, like minded people with that same drive.

0:44:23 - (Mitra Miller): If you see that the likelihood of success at least I think is much higher and then I don't care who they are, where they're from, how old they are, what their background is, it's that individual that is going to be able to create a very successful company.

0:44:44 - (Andrew Kazlow): Amazing. Well, we will, we will end it there. Mishra, thank you so much for joining me today. This has been a blast.

0:44:51 - (Mitra Miller): So great talking with you and I hope we get more angel investors into the community.

0:44:59 - (Andrew Kazlow): Thanks for listening to this episode of the Diligent Observer. I'm your host Andrew and if you're an angel investor looking for essential angel intel in five minutes every week, I think you'd enjoy my newsletter. I send my best stuff, interesting deals and more straight to your inbox so you never miss a thing. Subscribe today@thediligentobserver.com.