THOMAS BLUM ‒ NYA MEMBER SPOTLIGHT
Thomas Blum joined New York Angels in 2004 as one of our earliest members. Tom spent twenty years as an investment banker, and has since an active early stage investor with a focus in cleantech. Tom shares how NYA Founder David Rose shared an office with him, his 72x return from NYA Member Dan Chait's start-up, and why NYA members like to see companies again even if they didn't invest in them the first time.
How did you meet New York Angels, and why did you decide to join?
In 2004, New York Angels was founded as a successor to the NY New Media Angel Group. Mark Schneider and I were members of another angel group, Tri-State PIN managed by Ellen Sandles and Mike Segal. We heard New York Angels was member-run, more active and had better deal flow. I forget exactly how I met David Rose, but I remember asking him if any angels might want to share an office that I had on East 48th St. with my venture capital mentor, Tony Lamport. David moved in the next day.
What has been your most memorable experience as a New York Angel?
The experience of due diligencing my way out of investing in Tote, thus saving my family from the headaches of great wealth. Tote was a mobile shopping app that was basically the first version of Pinterest. My wife and daughter had panned their demo, something I periodically remind them of.
The next best was when NYA member Dan Chait passed the hat around for a start-up called Greenhouse he was going to do. Some of us helped out, but then we didn't hear much from him until TPG recapped the company for 72x return.
What do you enjoy about angel investing?
Initially I got into angel investing as a diversification to public stock/bond investments after hearing university endowment managers say that alternatives such as VCs produce better ROIC. Since then, my reasons to invest as an angel has widened to include companies that help the world (healthcare, cleantech), investments to help deserving founders (Re-Nuble), and good cocktail conversation material, plus to learn about newer technologies from energetic entrepreneurs and help founders who are often around my kids' age and a few cases, provided offspring employment opportunities. One summer, my eldest was paid to test online games for GameTrust and met Elon Musk.
What do you look for when you are investing in a company?
A mix of upside potential, angel-friendly founders and exciting technology.
What do founders like most about working with you?
Straightforward advice.
What differentiates companies that you see at Screening versus those who make it through to Due Diligence?
In the early days, it was hard to get people to show up at Screening – now Screenings are better attended than the breakfasts. Many companies are worth 1-2 hours, but sometimes issues appear that weren't obvious in the Screening pitch.
What advice would you give founders who are starting to fundraise?
Understand the reasons that angels invest and their expectations. Angel groups are a significant source of early-stage funding, but rarely are they the first money into the company. Angel groups have a process that has more steps and takes longer than founders usually realize. Start-ups compete with other start-ups for the attention of angel investors – there is a marketplace where valuations and deal structures matter. NYA gets something like 100 applications per month and advances only a dozen of them – so unfortunately not all great companies advance. We like entrepreneurs who don't stop at the first “No”, since persistence is one of the keys to business success.
What advice would you give other angel investors or those interested in joining New York Angels?
Don't get locked into too rigid a style or analysis – many of my successful investments were pivots such as AthenaHealth and Matrix Management. It's better to be lucky than smart.
The best thing about NYA is knowing the members and managers, including all the future angels, whom I would have little chance of otherwise meeting. I remember Alan Patricof joining a diligence meeting where he sat about 2’ from the founder asking pointed questions – the founder unaware of who Alan was.
