Still in his thirties and still working full-time, Phillip Lachman is a leader at Walnut Ventures. How this startup executive finds time to invest as an angel is a remarkable story. Clever, articulate and full of good cheer, Phillip is always a delightful interlocutor. Fun episode!
Highlights:
How Phillip leverages his angel network and modern means of communication to work full-time and still be an active angel.
Phillip’s first angel investment was in a company called CoolChip, in which Sal also invested.
The company went under but Phillip and Sal still greatly respect the founder.
Will Sanchez, PhD and his co-founders provided an example of how to wind up a failed venture.
Phillip and Sal would gladly invest in a future venture of Will Sanchez. He showed a sterling character in difficult circumstances.
Will is actually friends with Shakeel Avadhany, CEO & co-founder of ClearMotion where Phillip works.
Phillip explains his approach to early-stage investing. He looks for founders with whom he has a rapport, a sense of shared values.
Phillip looks for grit and perseverance in the character of the founders, considering the enormous obstacles founders have to overcome.
Phillip relies on emotional intelligence to gauge the commitment of founders. He looks for the ability to be good stewards of investor money, for the ability to listen and the determination to solve problems.
Sal tells the story of his investment in PIKA Energy, recently acquired by Generac. Two MIT frat brothers eager to democratize the wind turbine business. PIKA discovered that the real business was creating circuits to manage the load from the various alternative energy sources in an efficient way. Their partnership with Panasonic batteries gave Powerwall from Tesla a good run for its money. Sal invites you to consider his syndicates.
Phillip talks about one of this podcast’s favorite founders “Action Jack” Huntress of HomeBinder as an example of someone who has his act together as an entrepreneur.
Fundraising tip from Phillip Lachman: no does not mean no forever; it means no right now. If an angel turns you down, continue to keep that angel in the loop on your raise. That’s how Jack Huntress got Phillip to invest in HomeBinder.
Sal talks about how hard it is to resist the temptation to play business analyst when deciding to invest in a startup. The angel should focus on the team, provided the market is large enough. If the team is really great, let them figure out the business.
On pitch decks, Phillip Lachman emphasizes having a simple explanation of the business the startup is in. Fearless Angel Joe Caruso also made the same point in his interview.
Keep in mind that angel investors are usually intelligent generalists. Don’t assume deep familiarity with industry jargon.
Phillip Lachman is also a fan of Kendall Tucker of Polis, a startup with sophisticated software to inform door-knocking campaigns.
Polis, a Techstar alum, has raised $2.5 MM in seed funding from Haystack VC whose portfolio also includes DoorDash and Instacart.
Kendall Tucker, like Jack Huntress, is a founder who stays engaged with her investors. Reaching out for help and keeping investors informed with regular reports.
Regular reporting has many virtues that founders may not appreciate.
Encapsulate the key take-aways in the subject line. Remember that you’re fighting for mind share with your investors.
Phillip makes a point about building credibility by saying what you’re going to do and then doing what you said you were going to do. Seems obvious but too many founders fall into the trap of over-promising.
ClearMotion, where Phillip works, started out in 2009 trying to harness energy being dissipated by shock absorbers with the goal of increasing fuel efficiency of military vehicles by 1 or 2 percent. Given how hard it was to build business with the government, ClearMotion (formerly Levant Power) pivoted in 2012 to building active suspensions to improve the ride of automobiles. The goal is to “erase the road” so as to improve the quality of the time when a rider is in motion
ClearMotion has grown a lot. It’s raised $290 million in funding and now employs about 210 people. They expect to get their first order later this year.
New England’s bumpy roads are the ideal lab for ClearMotion.
Think how valuable the company’s tech will be when autonomous vehicles start transiting our bumpy roads. ClearMotion aims to make the time riding autonomous vehicles as usable as possible.
What if they could eliminate motion sickness?
ClearMotion’s technology creates maps on a cloud that track where there are road bumps, thus enabling vehicles to react appropriately. These maps are constantly updated by sensors on vehicles.
Insurance companies may appreciate the reduction of wear and tear on vehicles.
Municipalities will have very precise information about the condition of roads in their jurisdiction.
Shakeel Avadhany of ClearMotion is a truly exceptional founder. He has the talent of bending reality to make seemingly impossible things happen. Shakeel is also great at motivating the organization to keep making constant improvements.
NextGen Partners, in which Phillip participates, employs a network-driven venture investing model. NexGen’s community of more than a thousand partners helps originate interesting deal flow and provides needed expertise for due diligence. Founders appreciate the significant funding and support that NextGen can mobilize.
Phillip and Sal invite listeners to consider angel investing wherever they live. They describe the rewards of being angel investors.
Sal invites listeners to follow the splendid example of Phillip Lachman and leave a review on iTunes.