logo

VC10X - VENTURE CAPITAL PODCAST

Venture Capitalists (VCs) & Angel Investors share their investing thesis, screening process, value-add, exits, and more. Hosted by Prashant Choubey (@ChoubeySahab)

  • angel-investing
  • canada
  • europe

Hands on Angel Investor - Steve Walsh, Founder, Hands on Angel

Listen on

Steve Walsh is the founder of Hands On Angel LLC. He is an entrepreneur and angel investor with a 20+-year executive portfolio across the sales, marketing and operations divisions of some of the largest technology and media companies including Comcast & Cox Communications. Steve has invested in over 60 early-stage companies, helping them raise millions of dollars in capital and countless connections via Hands On Angel’s key strategic relationships and partnerships.

We talk about:

  1. Steve's story & how he started investing?
  2. Public market investing V/s Private market investing
  3. What is Hands on Angel?
  4. Investment thesis at Hands on angel
  5. What kind of founders are you backing?
  6. Most contrarian investment
  7. How do you create value for portfolio founders?
  8. Rapid fire round

Steve's story & how he started investing?

So I was a public market investor for about 30 years, spent most of my time in corporate America working for big tech companies like Comcast. I was a Vice President at Comcast for like eleven years and then really wanted to get into private market investing in startups. And I had a thesis which was could I take my public market investment thesis, which was dollar cost average in a diverse portfolio over time and use those returns and reinvest the dividends and could I apply that to private market? So that's really my story of how I got into investing. And I've been an investor for a long time, and when I started getting into angel investing, I wanted to do it my way, which was I didn't just want to write checks. I thought that writing a check and then waiting for the quarterly update from the founder to cheer was sort of dumb money, that's a waste of time.

So I wanted to take an approach that said, if I'm going to use my own money and I'm a solo GP, I'm going to do it my way. Which is, why don't I see if I can be as helpful as possible? Because I have a fiduciary responsibility to the founder and to myself to make them as wildly successful. And I knew I had the most valuable thing in my arsenal besides my grey hair and my years of experience, was my network. And I just have a massive network of super helpful people that I'm like. What if I took this massive network I've spent the last 30 years building of 17,000 connections? And why don't I make that available to my founders and bring this great network of resources and these great founders with great companies, bring them together and see if I can make some magic. And that's really where I started and it just sort of took off from there.

Public market investing V/s Private market investing

I think private market investing, you have to have a longer horizon. I've been very fortunate. I've been private market investing about five years and I've had six exits so far, and I would call that highly unusual. Private market investing is typically a five to ten year horizon from the time a company started to the time it gets funded and maybe even has an exit, if they even have an exit. Such a small percentage due public market investing, you can have wins a lot sooner because companies are already public, they're liquid. You can have wins a lot sooner. I think the time horizon could be one to five years versus in private markets. You just have to be patient. These companies are young, they have to go through multiple rounds of funding, which can take years, especially in today's market. And you have to have more patience when I get into this. I had a ten year horizon, and the fact that I've had some wins in the first five years is great, but that wasn't my plan. It was really a ten year plan. And I think you just have to be a lot more patient because the life cycle to build these companies just takes longer. That's probably the biggest difference I've noticed.

What is Hands on Angel?

I'm a solo GP, so I use my own money. I'm not a fund, although I have invested through funds and the way it works, Hands On Angels is my company and an ecosystem. It's not just my investment vehicle. It's a consulting company I use to help early stage founders. The reason it came to be was I was starting to do angel investing, trying to be super helpful and making all these introductions. And I was actually on a podcast like this in Australia, of all places, and the person interviewed me said, you have this interesting approach. You sort of have this hands-on approach with all these founders. You're sort of like this hands on angel.

And my brother, who's an entrepreneur, was listening to it and he said, he goes, that's it. That's the name of the company, that's the website, that's the brand. So I started to just do my thing and be overly helpful to founders. And a couple of founders approach me and they're like, hey, can you do more of this for us? Can you be part of our team? I'm like, what does that look like? Can we hire you? I'm like, well, I'm like, I don't want to work for anybody. I'm sort of like an independent contractor here. I don't want to work for a company. No, just do what you're doing as a consultant. And I'm like, that's a business. And they're like, well, yeah, all these introductions you're making are super helpful, and we got all these partnerships now. Can you just do that? And I sort of blew it off, and I was like, Nah, I don't want to do that. I'll just be super helpful. And it happened like two or three times with different founders. And by the fourth founder asking me to do that, I'm like, okay, there's a business here, and I can be super helpful the founders and at the same time help them grow. And that's really where hands on angel became.

For some clients, I helped them with business development. For some clients, I'm helping them put rounds together with super helpful investors. And I'm writing checks at the same time of my own money. And I don't do anything alone. You mentioned syndicates and funds. What I do for a founder is I said, look, if I'm going to come into a deal, I like to bring friends along. And for me, those friends own funds, they own syndicates. Matt Wilson, who I know you had on your show, is a good friend of mine. He runs a fantastic syndicate called Allied. So Matt's a venture partner of mine. So what I'll say to the founder is, look, I'm going to come in, but I want to introduce my friend Matt, because Matt is 1000 member syndicate, and if we can convince Matt to come in the deal, instead of just my check, you're going to get checks from probably two or 3 other people in a syndicate. So instead of 25 or 50,000, maybe we can raise 2-300,000. And then I have a few other friends that have funds and they write half a million dollar checks. So let's see if we can get a few of them in.

It does two things for me, honestly, it validates my own thinking of I think this is a good deal. Let me go see if people that are a lot smarter and have been doing this a lot longer think so. And for the founder, instead of them getting 25 or 50,000, maybe we could put a million dollar round together. So it exponentially increases the investment size. So that's how hands on angel was founded. It's how my ecosystem is built. And I just like to bring friends along for the ride. I don't like to do anything alone, so I'm a solopreneur. But at the same time, I do investing with funds and syndicates alongside me that allow me to exponentially increase the amount of capital I can bring to a founder.

Investment thesis at Hands on angel

So it's not just sector based, it's stage based and thesis. So first and foremost, almost all of my deals, which I've done over 60 now, it's been at the pre-seed or seed stage where I've come in. I've almost never come in as a first check at the A or B round. The only time I'll invest in an A or B round is if I was in the pre-seed or seed round and I'm exercising pro rata. So I typically like to go early. I like to call it post-friends and family pre-series A is where I play.

Most of the founders I will work with are raising a preset of seed round of half a million to $3 million at valuations of three to $20 million. That's sort of my sweet spot from a sector perspective. I love B2B SaaS I spent almost my entire career in the B2B space, so I have a deep knowledge of customer buying cycles, CAC, how to drive, get share. So I love B2B SaaS and then within that there are other sub-sectors I really like. I spend a lot of time in fintech and the blockchain and crypto. I do think it can be the great equalizer not just for businesses, but for the world. From a banking perspective, I think it's ludicrous that there are 8 billion people in the world and one to 2 billion of them have no access to formal banking or finance. It makes no sense to me in 2022. So I spend a lot of time in that space. I do some spot stuff in Esports and gaming because crypto, blockchain and fintech and esports and gaming are sort of doing this and they're intersecting. So if you're into crypto and blockchain, you typically would be into esports and gaming. And I'm a big sports nut.

So I actually own an interest in a company called Cold Hard Football Facts, which is an algorithmic based company that helps sports betting for football. So those are where I spend most of my time. And there are sectors I don't touch. I don't do a lot of biotech. It's too hard. It costs too much money. I don't understand it. I don't touch cannabis at all. It's a personal thing. My dad died of lung disease, so I don't touch cannabis at all. And I've done some direct to consumer, but it's got to have something where I either know the founder or space I know well because direct to consumer can be incredibly expensive, cost a ton of capital, and if you're not a TikTok influencer, it's really hard to get share. So I don't do a ton of that. But so those are the sectors I spend a lot of my time in. 

What kind of founders are you backing?

So if you look at my portfolio, it's interesting because about a third of my portfolio is actually underrepresented founders. And it's interesting because when you look at me, you look at me and go, wow, he's not an underrepresented guy. But I look at it as a competitive advantage. So about a third of my portfolio is female founders, LGBTQ founders, latinx founders, African American, everything under the sun. And it's not just because it's the right thing to do. And they have had a disproportionately low amount of capital allocated to them over the years. But I look at it as a competitive advantage. When you meet an underrepresented founder, they probably have not had the easiest time getting to where they're getting to. And what I have found is that there is a willingness to win and a willingness to persevere that you don't always find in folks that might not be underrepresented.

And to me, as an investor, I like to back founders that have that willingness to do anything for their company to win. Because when you look at why companies fail, a lot of people think it's because they run out of money. The reality is it's not. It's because the founder quits, and it just gets too hard. So I look for those founders that when it gets hard, are going to work harder. They're going to run through walls for their company. And this is a people business because the companies you invest in will pivot. They'll change products, but you're really investing at the early stage. You're investing in people. So I look for founders that have grit. I look for founders that have tenacity, that have a no quit mentality, and who surround themselves with people who can buy into their vision.

To me, the sign of a great founder is not just someone that can build a product, but someone that can surround themselves and get people around them that are so excited about their product they either want to buy it or go work for them. So I really look for that more than anything at this stage, the product piece. 

Most contrarian investment

I'll use an example I use all the time. I invested three times in a company called Steezy, which is a dance app, really. So think of TikTok's meets Dancing With the Stars. It teaches millennials and Gen Z's how to hip hop dance and pop dance and all those types of dance. A couple of things to know about me. I can't dance, I stink at dancing, and I hate dancing. And it's direct to consumer, which I just said I don't do a lot. But I met the founding team and I loved them. The growth was insane. They were very capital efficient. And then I look at the co investors that brought me the deal, and it was like Jason Calacanis and the laundry list of people on the cap table. I'm going, these are some of the best investors in the world, and they're all pouring money into this company. And I'm like, well, what the hell do I know? And I met the founders and I'm like, I can't tell you how the hell they're going to require customers, and I can't tell you how they're going to control the CAC from getting out of control. But I can just tell you this team is going to win. And they have. And I've invested three times. So that's one where it was a founder bet and it was a co investor bet because of people I know. And I'm going to come in, and since then, I've come in two more times. 

How do you create value for portfolio founders?

I think the way you create value is there are a lot of people that will tell you what they can do. A lot of people out there saying, I can do this for founders, I have this, I have access. I like to show people what I can do. I'm a show not tell guy. So I just start helping founders, and we'll go something like this before we realize how we're going to make money together, why don't I just make some introductions? Why don't I just introduce you to some people in my circles that might have capital, might have resources, might have partnerships, and let you see the quality of people I surround myself with and how they might be able to help your company, and then you tell me if that's valuable.

So with a lot of my founders that I've ever invested in or might be clients of mine, the relationship literally started because I just started making introductions and then like five or six introductions in there. Like, Steve, this is really good. Can we do more of this? Let's formalize something here. And I've been fortunate to sit on some advisory boards, and some boards of directors was never at my ask. It was never me saying I require anything. It was the founder saying, we really like this relationship and would like to have more of you and formalize it. Will you join our board? So the advice I would give people is stop telling and start doing and just start helping people make introductions, open up doors for people, help founders save time by not talking to the wrong people and put them in front of the right people. That's probably the secret sauce I have, is I just start doing things. And when you have action like that and founders see that, I just think good things will happen. That's the advice I would give. 

Rapid fire round

What are the regions you invest in?

Outside the US. I've done deals in Canada, Europe and the far East.

What stage you typically invest in?

Preseed & seed.

What's the typical check size?

There isn't one. I've written checks as small as 5000 and checks as big as 50,000. But when I co-invest, which I always do with other people, we might come in and take 100 to 300,000 of the round between myself and some friends.

Where can founders pitch you?

You can ping me on LinkedIn or you can find me on my website, handsonangel.com. I have a way to contact me there as well.

Where can our listeners follow you?

I'm on Twitter. @handsonangel1 on Twitter. I'm on LinkedIn. Those are probably the two most prominent things I do. And I do some Twitter spaces stuff on Tuesday nights with some founders, which is fun. And also on Antra at joinantra.com. It's an online platform. It's one of my portfolio companies for creators. I do some investor office hours there where I talk to potential founders who pitch, and we give them critiques on their pitches. 


Hands-on Angel website- https://www.handsonangel.com/

Follow Steve on Linkedin-https://www.linkedin.com/in/steve-walsh-a791a44/

Follow Steve on Twitter- https://twitter.com/HandsOnAngel1

Hosted by Prashant Choubey

Subscribe to VC10X on Apple Podcasts, Spotify, Google Podcasts.