ROB HEDLUND ‒ NYA MEMBER SPOTLIGHT
Rob Hedlund joined New York Angels in May 2024 and has co-led several deals in this short time. Rob's extensive experience as an institutional investor, spanning healthcare, alternative energy, software, consumer products, and financial services, give him the ability to effectively assess diverse investment opportunities. In this interview, Rob shares his thoughts about NYA’s strong diversity of deal flow and how successful companies explain why their solution is superior to others.
How did you hear about New York Angels, and why did you decide to join?
In March of last year, I attended an alumni networking event focused on entrepreneurship through acquisition, and I met Seth Masters. He was wearing a New York Angels name tag, so I asked him about it. I had heard of New York Angels before, but I didn’t know much about it. Seth explained how investing with NYA worked, and I was very intrigued because I was looking for some new ways to invest, including angel investing, but didn’t know how to approach it as an individual.
Seth explained the power of NYA, the deal flow, and many other benefits, which made me interested in exploring NYA it further. Within a week or two, I attended my first guest session, and I eventually joined in May.
What has been your most memorable experience as a New York Angel?
Since I am relatively new, all of my investments are still in that wonderful stage of not having succeeded or failed yet – just pure possibility. What has stood out to me most is the diversity of deal flow. Before joining, I thought angel investing was heavily focused on tech, SaaS businesses, or AI, but I was pleasantly surprised to see a wide variety of deals across many sectors. That’s been a very positive aspect for me.
What do you look for when you are investing in a company?
After one of my first New York Angels meetings, I was able to catch up with David Rose, one of the OGs of angel investing and the founder of NYA. During the conversation, he convinced me to buy his book on angel investing. I took away some valuable insights from it, but the point that resonated the most with me was the importance of finding companies with the potential for a very large multiple of money at exit.
As I have been reading the book, I also thoughtink about how to invest. Similar to how people talk about the 4 T’s (Team, TAM, Traction, Technology) in venture capital investing, when evaluating a company, I focus on:
TAM: How big can the company grow to be? What is its market size and exit potential? If the market niche is too small, the exit will not justify the early-stage risks.
Team: How plausible is it that this company can achieve it? A great team is a force multiplier, while a bad team can make even the best idea uninvestable.
Technology & Differentiation: What makes this company’s solution unique and defensible? Why is it that their specific solution to whatever the problem is that's being solved is unique enough and defensible enough that they can own this market in a way that creates value and then traction.
Traction: While we see companies in all different stages, early-stage companies may have little to no traction, those that have demonstrated traction provide additional de-risking. But if you really love the product and the valuation is correct, I would still probably invest.
What do founders appreciate most about working with you?
I am still relatively new, so my direct impact on founders has been limited to co-leading deals and participating in due diligence. However, I bring a strong background in corporate finance and investing. I’ve done due diligence on hundreds, if not over a thousand, companies with all kinds of different business models. That experience gives me a broad perspective on potential challenges and opportunities companies may face as they scale.
What advice would you give founders starting to fundraise?
Founders must understand from our point of view as angel investors that these are high-risk investments. While they may have a great deal of conviction that their company will succeed, expecting investors to think that doubling or tripling their money is a terrific outcome is not realistic. Since angel investors have to take into account that most early-stage investments fail, a 2-3x return unfortunately does not cover our total portfolio losses. Founders need to be able to put themselves in their investors’ shoes. Throughout the fundraising process, founders need to be able to clearly articulate the problem they are solving, whatthe market size is achievable, and why the team and their solution is differentiated and going to succeed versus competition. Many founders fail to communicate why their company will be the one to succeed.
What differentiates companies that you see at Screening versus those who make it through to Due Diligence?
Many companies can articulate the problem they’re solving, but those that advance do the best job of explaining why their solution is superior to others. Almost every decent company will come up and say “Here's the problem we're looking to solve. It's a really big problem, and whoever solves it will make a lot of money. That’s going to be us.” Those companies can make it through to Screening, but companies that are aware of their competitive set and can articulate “Here’s why we will succeed where our competition has not and will not be able to” are those that make it to due diligence.
We see a lot of AI startups often start their pitch by identifying the big problem that they plan to solve and that it is worth billions of dollars. Then they say that they will use AI to take all of the unsorted data and turn it into actionable insights without a clear explanation. It seems like that as long as they have uttered the magic words, they think investors will love it. Instead, what investors really want to know is how their AI-solution is unique, defensible, not commoditized, and where is the moat?
What expertise do you bring to New York Angels?
I spent my career as a generalist, so I am not a true domain expert in any one field, but I have some knowledge of almost everything including healthcare, alternative energy, software, consumer products, and financial services. That breadth of experience allows me to evaluate companies, conduct due diligence, and assess investability across various sectors.
Many New York Angels Members are real domain experts. When I was considering joining NYA, Seth told me the value that NYA members get from each other is enormous. I have found that to be true as I would not try to invest in many tech and healthcare companiesbiotech without an expert’s perspective, and NYA has experts in almostpretty much every domain. Due to this breadth of expertise and experience, NYA also attracts deal flow across pretty much every industry.
What’s a little-known fact about you that has contributed to your success?
In college, I was co-captain of the lightweight crew team. Rowing is known for being both physically challenging and incredibly team-oriented. That experience instilled in me the values of hard work and teamwork, which have been helpful to me all throughout my career.
