CRAIG FRISCHLING ‒ NYA MEMBER SPOTLIGHT
Craig Frischling joined NYA ten years ago. Craig started his career in consumer marketing, first in consulting, and then as Brand Manager for Weight Watchers International’s flagship weight loss service. In 1993 Craig joined Lipo Chemicals, a personal care ingredients supplier co-founded by his father. By the time the company was sold in 2010, Lipo had operations in 13 countries and supplied most of the consumer product manufacturers in the personal care industry. After a period of transition at Lipo, Craig began his angel investing career in 2012. In this interview, Craig shares why resilience is the most important characteristic of successful founders, how a great pitch differentiates a company at Screening, and how NYA can help a company navigate the challenges that face all entrepreneurs.
How did you meet New York Angels?
Several months after I left the company, an acquaintance introduced me to my first angel investment. I realized that angel investing would be a great way to stay engaged while I figured out the next stage of my career. And, to do this, it was clear that I needed to join an angel group. I wanted a group with good and diverse deal flow, a focus on making good investments (not just social connections), and where members were actively involved with entrepreneurs. I quickly determined that NYA best fit my needs.
What has been your most memorable experience as a New York Angel?
There's no one memory that stands out for me but what is most important to me about NYA is that its members have such a diverse set of experiences and perspectives. It's a great group to collaborate with and learn from.
What do you look for when you are investing in a company?
Every investor looks for different things based on their personal objectives. I consider time to exit to be very important, so I favor companies that are post-revenue or have clear market validation and proven technology. I lean towards companies that have a clear path to exit in less than 7 years with at least 10x vs. companies that target 30x or more over a longer period.
Like most investors, I look for a team that has an excellent founder who has built an excellent team. It’s very hard to evaluate a founder before you have formed a relationship with them. So one thing I’ve learned to pay more attention to is how they navigate through the fundraising process itself. It’s a window on how they show up at their business and with their customers. Fundraising is essentially a sales process. How they prepare for the pitch, understand what investors care about, and follow up with investors says a lot about how they deal with customers, vendors, and team members.
I consider resilience to be one of the most important characteristic to look for in founders. By that I mean how do they respond to problems, setbacks, or new information that does not fit their prior assumptions. Reality for an early-stage business never turns out as planned. Ironically, that is one of the best reasons to plan well. Understanding how one thing impacts the other helps you to make better and faster decisions whenever reality doesn’t happen to fit your plan.
What do founders like most about working with you?
Many founders have told me that they appreciate that I often ask questions that they’ve not been asked before. I am naturally curious and usually want to understand the presumptions that have been made which underpin each founder’s conclusions. Every so often that causes an “aha” moment for the founder. Also, I always try to see things from the founder’s perspective and advocate for them. Most angel investors, I think, feel the same way. None of us rely on our angel portfolio for our survival and we tend to want to pay it forward.
What differentiates companies that you see at Screening versus those who make it through to Due Diligence?
The quality of your pitch can be as important as the merits of your business in determining whether your company makes it past the Screening meeting. The only purpose of the pitch is to pique enough interest from enough investors that they want to have a longer meeting with you. For good or for bad, some good companies don’t make it through Screening because their pitch was not well organized or delivered.
What advice would you give founders who are starting to fundraise?
When you are fundraising, it’s the most important thing you need to do and it cannot be delegated. If you are not successful at fundraising, it’s game over. I've seen companies fail despite being well run and having strong sales, high customer satisfaction, and a good business model. They closed because they mishandled their fundraising and had not called upon existing investors for help before it was too late to fix the problem.
When you look at your past investments, what advice would you give founders to deliver a successful exit?
Contrary to my initial expectation that product, market, and technology would be the most important issues, I’ve come to appreciate that the quality of the founder is more important. Looking back at my investments that have exited or are now well positioned for a good exit, there is a pattern…successful founders share strikingly similar traits. They are true experts in their market and business, they make fact-based decisions that are not ego driven, and they continuously seek perspectives to inform but not to form their decisions. If this describes you already, great. If not, do your best to behave that way now.
You also need to have a clear plan for exit…and a plan b, c, etc. Good exits don’t just happen because your company is doing well. With your board (it’s very important to have a good board!), discuss exit strategy fully and often, even if you are not planning to exit that year. Like any negotiation, you need to understand your value, your problems, and how you appear to others in order to negotiate a good deal. And your exit is, after all, your most important deal.
What advice do you have for newer NYA members?
Don’t feel like you need to rush. Early on, you'll come across many investment opportunities that look good. Be patient. If you miss one good deal there will be another. You don’t want to invest so quickly that you can’t participate in future deals. Portfolios of many investments do better than portfolios with just a few investment…and most investments will have follow-on rounds, so don’t overconcentrate your investment in one company or one year.
Like anything else, you’ll tend to get better over time and learn from mistakes. So try to learn from more experienced angel investors’ mistakes and successes. In other words, participate in meetings, in-person when you can.
How else can NYA help founders beyond writing a check?
Founders working with New York Angels have consistently reported that we add value to their business. Most typically, we help with things related to fundraising and governance. Collectively, our members have a very wide breadth and depth of experience that can be relevant and helpful to an early-stage business. In many cases, NYA investors have played pivotal roles in helping founders manage through crises, make good fundraising decisions, connect with important customers or vendors, improve exits, or just lend a supportive ear. New York Angels members are fans of entrepreneurs. The angel investor culture differs from traditional venture capital. We are in it for the money, but not just for the money. The angel investors on your cap table can provide a deep well of expertise and support to tap when you need it.
What should you expect on a day-to-day basis when joining NYA?
As an NYA member, your level of participation is your choice. In general, most, NYA members invest more time and money in startups than members of other angel groups. Some spend just a few hours each month while some spend the majority of their time with NYA-related activities. There are two structured meetings each month, one to screen new deals and the other for education, follow-on rounds, reviewing deal flow, or any other business related to the full group. Beyond that, each member participates in diligence for whichever deals interest them. We are a member-led group, so all members are encouraged to co-lead deals, participate on committees, or represent NYA at various events in the startup ecosystem. I am currently serving on the Membership Committee, the NYA Board of Directors, and also co-administer several NYA “sidecar” funds, so that’s a lot of time. I know other long-time members who stay connected but do not attend every month and invest in just a few deals each year. And each member’s level of participation can vary from year to year. It’s an individual choice.
