Finding Your Champion: demystifying founder/funder relationships with Pieter Dorsman of Angel Forum
From evolution: a podcast by entrepreneurship@UBC
evolution is a podcast shining light on our ecosystem’s stories of innovation, impact and hustle throughout their venture building journey. Join us as we build community and knowledge related to entrepreneurship during the course of COVID-19.
On this week’s episode of our podcast evolution, guest host and entrepreneurship@UBC EiR Sarah Applebaum chats with Pieter Dorsman of Angel Forum on how to find your champion, demystifying founder and funder relationships. Pieter talks about the importance of entrepreneurs creating investor connections early on in their venture building journey, emphasizing the ways founders can gain value from investors -beyond money- and why this is absolutely crucial to their long term success.
Want to learn more? RSVP for our July 8th Community Town Hall on Finding Your Champion with Pieter Dorsman who will chat live in an AMA-style conversation with Aspect Biosystems’ Co-founder and CEO, Tamer Mohamed.
About Pieter Dorsman
Pieter Dorsman is a seasoned advisor, investor and mentor who is President & CEO of Redpeaks Management Inc., a consulting firm focused on advising technology companies on capital raising, M&A and restructuring activities. He has also taken on interim management roles at a number of Canadian tech companies. Additionally, Pieter is director and CFO at E-Fund, a Vancouver-based angel investment fund.
About Angel Forum
Angel Forum is one of the longest serving angel networks in Canada and since September 2018, has been under new management. They are a non-profit organization and connect promising start-ups with accredited angel capital. At the same time, they offer workshops to both entrepreneurs and investors. They provide a community for new or seasoned investors with our wealth of resources, knowledge, and opportunities.
Angel Forum has access to and works closely with angels from all over British Columbia, the rest of Canada and the USA and collaborates with local organizations and is part of Canada's National Angel Capital Organization. Membership of Angel Forum is for accredited investors only and private meetings are exclusive for pre-registered investors and a select group of companies and event sponsors. They organize in-person events in Vancouver, Victoria, Kelowna and Whistler as well as regular Zoom meetings where companies pitch.
To read a full transcript, see below:
Sarah: I’m really excited to have you here this afternoon. Let's start Pieter, could you tell us a little bit about yourself?
Pieter: Okay. Well, my name is Pieter Dorsman, I was born and raised in the Netherlands and my primary goal in life was to get out of Europe. So I started my career working in London in finance, and then I moved to Hong Kong where I live for seven years and then my wife and I moved over to Vancouver about 20 years ago and started really retooling my financial skill set to work with early stage technology companies. That has sort of grown exponentially over the last 20 years. It started with just sort of being an interim CFO or helping out a company with a business plan. Gradually, it grew into investing in companies, sitting on boards of companies, having long term mentoring relationships with entrepreneurs, starting a fund and having speaking engagements across Canada and in Europe. I co wrote with Boris Mann the term sheets for the National Angel Capital Organization (NACO) in Canada. So that's being used by most startups in Canada, so they don't have to go to expensive lawyers anymore and they can download that for free. So everything around finance and new technologies has become sort of my mandate in its broadest sense and sometimes I take on more than I can, but it's hard to say no to an exciting new opportunity.
So as part of that we took over Angel Forum two years ago, which is primarily run by my wife, but we select the companies to have them present to our members, who are all accredited investors. And we give a lot of support to the companies that present, it’s not just so that they can connect and hopefully get an investment but you know, we make connections for them to customers, to other people we know, we introduce them to our partners in Toronto... or even today we had a case that we have referred back to an industry expert in Europe for a company that came out of BC. So I mean, it's quite a bit, but I think you can spot what the central theme is of it all.
Sarah: Thank you. How did you first get interested in angel investing?
Pieter: I came out of investment banking. I worked for one of the largest banks, UBS, and we decided, my wife and I, to move to Vancouver and sort of do something completely different. It was around 2000 during the tech boom, so my goal was to work for myself sort of independently, and be an entrepreneur. I was done and quite tired of large corporate organizations. So that was the one thing, and you have to start somewhere, so I started working with early stage companies and entrepreneurs, and helped them to get financed, get organized work with their business plan. And before you know it, it's like, well, "Pieter, maybe you can invest some money as well?".
So it was never my intention to get into angel investing at all. It was more sort of my intention to work with companies and then you know, we'll see where it goes. And we knew where it went eventually. But yeah, it was sort of out of my first engagement, working with entrepreneurs, came the opportunity to invest in the company and I decided to do that.
Sarah: Can you tell us about your first investment or if not your first angel investment, maybe your favourite angel investment?
Pieter: Well, I made two investments this time around 18 years ago, in an interactive games company. I was sort of a part time CFO there. It was one of my first gigs coming to Canada. And I didn't know anyone, really. So this was an opportunity I jumped into. And I invested in it. The company eventually was not successful. But what is quite interesting is that a lot of the people that worked there at the time, were very young, young developers, and graphic designers, etc. But they've all moved on and started their own businesses. So they now call me and they're much older in their late 30s and 40s. And they've got businesses and they call me “Pieter, can you help, can you get involved?”. So the important lesson was that money was lost, but what I got back in terms of relationships and friendships, is actually quite phenomenal. So it's not always just about the money, right? it's about more than that.
The other investment that we made was in a software scheduling company. They came out of SFU. They've been around for 18 years. And I've always given that as an example that sometimes if you're an angel investor, it takes a very long time before you see your money back, this company's quite successful, right? Recurring revenue, super great team, etc. I still talk to the CEO quite regularly. But we've been at that company for about 18 years. So you see one long term success and one thing that failed, but if you look at it closely, the fail was actually maybe a success based out of the sort of human relationship that came out of that.
Sarah: Yeah, and relationships are so important for you, too. We spend a lot of time talking about relationships and your philosophy around that with entrepreneurs and investment companies. So in your experience, what does a good founder/investor relationship look like? And what kind of relationship do you like to build with entrepreneurs and founders prior to deciding to make an investment?
Pieter: It's a long term relationship, you know, you better be sure that if that person is a good partner that you can work with him or her over a long period of time and you want to get to know them. It's like any good friendship, right? So I'd like to say it's sort of to get to know each other, go out for a beer or for coffee, help them before the whole discussion about investing or making money even comes up. Just build a relationship and see how that goes. Sometimes that started with me without having a real long period to get to know one another. But in most cases, the things that became successful, as people that I worked with, mentored, helped with and then the investment moment came...then it turned out to be sort of a long term project and these people become your friends, right? You don't just don't talk about business. You say, "Hey, what did you do over the weekend?".
I've recently worked with a founder who had some financial issues on the personal side, and I helped them and it becomes a sort of an all encompassing personal and business relationship. I think that is fairly essential because the ups and downs that you go through with a startup company, including all the financial stresses and the technical hurdles, is pretty intense. So a relationship needs to be able to sustain the many bumps and ups and downs that you encounter. I think it's essential for a successful investment relationship, which in my case it is often sort of continuous... you become a board member or a mentor or you have some sort of role in the company to help them.
"And I think that is fairly essential because the ups and downs that you go through with a startup company, including all the financial stresses and the technical hurdles, is pretty intense. So a relationship needs to be able to sustain the many bumps and ups and downs that you encounter."
Sarah: So our audience, our readership, viewership, and listenership is a lot of entrepreneurs, especially in the e@UBC network. For those entrepreneurs listening, what is the right time to reach out to an investor to start building that relationship? How early is too early?
Pieter: I don't think it's ever early enough. The problem is that most entrepreneurs start reaching and building relationships with investors once they need the money. It's like you get a call or they sent you a deck or an executive summary like, “Hey, we need investment” and it's like, “Okay, well, when do you need it?” “Well, actually, we need it yesterday because you know, we're burning money, etc.” So my recommendation is always start early on in the process. If you're starting a company early on, try and reach out to people like myself, or come to the Angel Forum or come to Angel networks or startup parties or just network with people: buy them a coffee, buy them lunch, and pick their brains without even raising the prospect of money because that may be 6 or 12, or maybe even 18 months down the road, but just sort of network people and get advice.
Don't forget, investors, Angel investors in particular, are very willing to give free advice. Right? They like to sit down for a drink, for a chat, and give you some pointers that are of immense value to entrepreneurs. Last year I did this session in Halifax, I met with entrepreneurs for the whole day like back to back half hours. And they said, “Pieter, that half hour with you was more valuable than anything that I could have found on the internet or course” because I gave them some pointers because I've seen it so many times. And that's beneficial. So the earlier they started the process, the better. And then when the time comes, that money is required or an investment route needs to be done, then I know the person and the person knows me, and it becomes so much easier. And if it's really something, I probably have already told some other investors like, “hey, there's something interesting coming. I met this person, the relationship, you know, I think they're ready now”. Because it's not just me doing the financing, right? If you put a million or two million together, it's a group of people that come together, but I usually can play a leading role in bringing in other people and if I know someone, it's much easier for me to sell it to other people.
To add to that, I think trust is important. Any relationship is built on trust. So an entrepreneur that has nothing to offer, it's just an idea, or concept that they're working on...so what effectively sells is trust, like, "trust me, you know, I can be your friend, we can do something together". That's how you have to think about it. And a lot of people think about, well, you have money, give me your money, but it's more like, well, I'm a trustworthy person with great ideas, you can help me and see if we can do something together.
"Don't forget, investors, Angel investors in particular, are very willing to give free advice."
Sarah: You brought up something really interesting about sort of the investor network and being able to refer a company to other investors that you know, and vice versa. Can you talk a little bit about the importance of that network with other angel investors, especially in pulling around together and getting companies funded?
Pieter: Yeah, because the amounts are, you know, often not insignificant, and it's hard for one angel investor to spread their risk. So they put small amounts in multiple deals. So as I said, between one and two million dollars, as an example, you have maybe 10 to 20 people who put in money. I mean, just this last week, we were closing a financing and we had people out of Toronto, we had people out of Victoria, we had people out of Vancouver coming to a company that is located in North Vancouver, and it’s having that relationship and work across borders. Because a lot of people, a lot of angel investors, don't forget, it's sort of the 80/20 rule... or 80% of angel investors put their money in and don't want to be bothered by the company. You don't want to be involved. Then it’s the 20% that want to feel involved- like me- that roll up their sleeves and help the company make connections. So the 80% sort of relies on the 20% of people that are putting the deals together like “Okay, you guys have done your due diligence, we can trust you we will we'll follow you, right”. It's often surprising sometimes that the simple phone call will trigger an investment or someone says okay, if he or she is in, I'm coming in, but that other person knows that people who've been working on the deal have done their homework.
So again, it comes down to trust and relationships, and having a network. I mean, we're now working on another deal in Victoria that we're doing together with two funds. And you know, we've gone out to a network across Canada and they know us and they trust us. And they know that we've done our work in structuring the term sheet and the legal work and we've done our due diligence. So you can then close the financing much quicker because you know, the trust people have done the initial work.
Sarah: Yeah, so trust, obviously, is a very, you know, important theme here. For entrepreneurs who don't know you yet, or don't have a relationship - because I know you're going to get a flurry of emails in your inbox as soon as this goes live of people are wanting to connect- what should they think about and get in terms of getting on your radar, getting your attention, so you're not going out for 50 coffees next week?
Pieter: No, I know exactly. I get lots of emails. And I say that because relationship building is so important, I always say I'm always willing to listen to people and answer emails and answer questions and hop on a zoom or coffee or whatever is required. How to get my attention... I'd just send a very personal note of who you are, what you're working on, what your background is, where you're coming from... that's always helpful. A lot of entrepreneurs come to the decision to start up a company or develop technology because they've encountered certain issues in their lives. Like they had a job where they found problems with the way technology worked, or they saw an opportunity back in the country where they came from. So people always have a backstory that informs or drives their decision to move forward as entrepreneurs. So if you have an interesting backstory, “so I was at university for this many years, and I was doing research in this area, and no one thought of turning this into a company but I thought this is a potentially interesting company”... yeah, that's an interesting story. That will pique my interest. So having an interesting backstory, and summarizing it in a few paragraphs in an email is often more than sufficient. If you can share the deck or visual, you know, that's helpful. But the backstory is actually quite important for me.
"So if you have an interesting backstory, “so I was at university for this many years, and I was doing research in this area, and no one thought of turning this into a company but I thought this is a potentially interesting company”... yeah, that's an interesting story. That will pique my interest."
Sarah: Great. So switching gears a little bit Pieter, recognizing that investing in software companies and building these types of companies can look very different than building a deep science/deep technology company with lots of intellectual property in it, what are the differences in your approach when evaluating these types of ventures? Are there any?
Pieter: Yeah, well, mostly my initial analysis, I do it on my own. I meet with a person, I assess the people involved in the company because the people aspect- that's key for me- then I look at sort of the technology... and if I get stuck, which sometimes happens with on say, a biotech company, or you know, we see cleantech companies that are very exciting, but it requires a lot of R&D and a lot of time to bring it to market and I try to involve, again, putting into my network...there's probably one or two cleantech experts who have time for it, or there's a biotech expert who can help me. And then you form a team around scoping out the opportunity. So that's also very important because people rely on me for the term sheets and the financial and legal aspects, because that's what I tend to do in my sleep. But analyzing a biotech patent, you know, that's not my skill set, but I have people that I work very closely with, who I know can do that. So that's where the collaboration among angels comes in place.
And often, you know, these deep tech opportunities that also require more capital are a bit lengthier than SaaS company. So that requires a bit more work. But again, you know, if it's an interesting opportunity, we can bring people together and work on that opportunity. So I would sort of, in short, answer that question as it’s a collaboration of people with the right skill sets to bring it to fruition. And the interesting thing is also, if you bring people, they're more than willing to make connections with other research opportunities or other commercial opportunities across borders and open the founders to things that they haven't even thought about.
Sarah: I think that's a great answer and some great insights there. Thanks, Pieter. So before we wrap up, I just want to hear from you...what are you reading this these days or listening to...what is sitting next to your bed on the bedside table?
Pieter: I read a lot of history to be honest with you. I don't read books about tax or investing because that's what I do all day. I read a lot of biographies, political biographies, like the 700-800 page biographies. That's what I read. Because I learned that it comes down to sort of life stories, long term careers, how politicians started out, how they got over certain hurdles, what they learned, how to build coalitions, and how they became successful. And I think, if I look at them, entrepreneurs and tech people, that's what you should do, you should really make a study of other successful or very interesting people and see how they navigate the challenges in their life. And it can be politicians, it can be rock stars, or it can be tech entrepreneurs, but you know, the journey for most of us in life is, you know, is similar. And I relish reading long biographies. So, that's what I do. And sometimes I grab a current book. I can tell you I've read all the books by Yuval Noah Harari, who I liked a lot. We are at a juncture with our society and the world, there's so many changes happening at the same time. And technology plays in that too, big time. So any technology that we see now, you know, you try to sort of see how it fits into sort of the developing stories for the world at the moment and the whole COVID crisis has has added to that right, some things have accelerated like crazy things that were already happening, have now sort of accelerated to the point that they need to be adopted and get to market much quicker than they were thinking previously before the crisis.
Sarah: Pieter, thank you so much for your time this afternoon. I think this is a great teaser or a taste of you, if you will, for the town hall that we have coming up with you in July. So really looking forward to that and to collaborating together in the future!
Want to hear more from Pieter? RSVP for our July 8th Community Town Hall for a live AMA-style conversation with Pieter Dorsman of Angel Forum and Aspect Biosystems' Co-founder and CEO Tamer Mohamed.