Angel Invest Boston is sponsored by Peter Fasse, top life science patent attorney.
Born out of COVID in 2020, TBD Angels is Boston’s newest angel group. In its first seventeen months it has already invested in forty startups. Members David Chang and Yael deCapo spoke about what TBD offers startups and investors.
Click here for full episode transcript.
Highlights:
Sal Daher Introduces Yael deCapo and David Chang of TBD Angels
TBD Angel’s Process is Real-Time Not Batch
“We try to match their velocity, which is pretty hard to do, but we occasionally succeed at that.”
“There is a tool-based voting that if enough members vote that they're interested in hearing a pitch, we have an automatic way to schedule that pitch.”
TBD Angels Invests via a Special Purpose Vehicle (SPV)
“It's a little bit of an experiment from our standpoint. We started this group in the middle of a pandemic, the beginning of 2020.”
Sal Daher Thanks Matt Fates for Introducing Him to TBD Angels
In Seventeen Months, TBD Angels Has Invested in 40 Companies
Choice of Startups Is Driven by Member Interest and Not by Rigid Criteria
Sal Daher Introduces His Effort to Help Angels Invest in Life-Science Startups
Sal Daher Credits the Research of Jeff Behrens, PhD on Biotech Funding
“...I think it's a great value to the founders also, that they have that broader reach and it's not so siloed...”
Sal Daher Continues to Be Involved with Walnut Ventures Which Has a Lot of AI Expertise
TBD Angels Has Investors and Startups from Across the Country
The Singular Opportunity of Purdue University and Its 500 Professors of Engineering
AOA Diagnostics - Addressing Ovarian Cancer, a Silent Killer of Women
Kytopen - Scalable Production of Gene Therapies
How TBD Angels Connected with AOA Diagnostics
Brief Bios of David Chang and Yael deCapo
What Moved Yael deCapo to Write Her First Angel Check
David Chang and His Interest in Student Entrepreneurship
Boston as the World’s Bazaar of Biotech Talent
“...over a third of the CEOs that we've funded are women over a third, I believe are also people of color...”
Transcript of "TBD Angels”
Guests: Yael deCapo and David Chang
Sal Daher: This podcast is brought to you by Peter Fasse, patent attorney at Fish & Richardson.
Sal Daher Introduces Yael deCapo and David Chang of TBD Angels
Welcome to Angel Invest Boston, conversations with Boston's most interesting angel investors and founders. Today, we are very lucky to have two really active angel investors on the podcast as guests. Yael deCapo and David Chang, welcome both.
Yael deCapo: Glad to be here.
David Chang: Great to be here.
Sal Daher: Great. Now, David Chang is an alumnus of the podcast. You can look up an interview that I did with David some years ago. Maybe later on in the podcast, we could do a little bit of catch-up. Yael deCapo is on the podcast the first time, and I'm very happy to have her on. We both share an interest like we're just talking now, a shared interest in life science companies. Let's start talking about TBD Angels, which is an angel group that both of you belong to here in Boston. The question is for either one of you, what sets TBD Angels apart from the other many angel groups involved?
TBD Angel’s Process is Real-Time Not Batch
Yael deCapo: I think the biggest differentiator between what I've seen at TBD Angels and other angel groups especially in Boston, but I think this is true nationwide, is our focus on a very active community of experts around both functional expertise, operators. We have a lot of VCs through an enabled platform. We have built tools to make that process very founder-friendly. We're very focused in early-stage. At the moment, we're working very much-- It's just in time as opposed to back-- We're not doing the, "Our meeting is next month." We do monthly meetings. Rather, we schedule as things work for our both community members and members on the group, as well as the founders.
You pick and choose what you're interested in. We really leverage the expertise across the network, both functional in other areas to due diligence or diligence is probably lighter than others that they do. It is very focused on and pre-knowledge between one of our members who sourced the original company and the founder. We already have that underlying relationship. Often, it's a relationship that has gone on for years and that's part of our internal vetting process. David, what did I miss?
“We try to match their velocity, which is pretty hard to do, but we occasionally succeed at that.”
David Chang: I think you did a great job recapping what we're about. I think the main way we describe it to founders is that we have an angel base that's extremely connected. That generally means that they're active and relevant in fields that their startups are in. I think that is the biggest differentiator from a people standpoint. As Yael mentioned, we do try to move in a just-in-time fashion. Our process is one that is not batch-based and because it is more of a just-in-time system, it looks closer to the typical fundraise patterns that startups themselves have. We try to match their velocity, which is pretty hard to do, but we occasionally succeed at that.
Sal Daher: Can you walk me through what the process is? What's the workflow? Let's say a startup is introduced to you by one of the members, what happens next?
“There is a tool-based voting that if enough members vote that they're interested in hearing a pitch, we have an automatic way to schedule that pitch.”
Yael deCapo: We trust our members. If a member has a high conviction in the deal, thinks it's a great deal, they submit it to the entire membership. There is a tool-based voting that if enough members vote that they're interested in hearing a pitch, we have an automatic way to schedule that pitch. That pitch usually gets scheduled within a week or two of that submission having happened. That pitch is actually a pretty long pitch. We do almost a 45-minute pitch. We have a short conversation afterward, fill out a short survey about whether or not members are interested. We also make sure those pitches are recorded.
Members who were not able to attend, because we're all very busy, can do so offline, and then we notify them, see whether or not there is enough interest in follow-through. If there is, we will do diligence depending on the specific situation. We do not have a prescribed diligence list that we go through. Sometimes, it's heavier. Sometimes, it's lighter. It really depends. Then, from there, we would go through assuming that the diligence went well, see if there's enough interest. We do have a minimum of a check size since we do spin out and SPV for each deal, so for a founder to one line item and run it from there.
Sal Daher: The minimum check size is for the SPV.
TBD Angels Invests via a Special Purpose Vehicle (SPV)
Yael deCapo: Yes.
Sal Daher: If the SPV does not hit a critical mass, a critical volume, it doesn't go for-- Can you share that, what that amount is?
Yael deCapo: Our minimum is 50K. To be honest, our average has been well above that in terms of-- If we end up investing, it's often above that. There are times where because of the network, we're able to get it to very highly sought-after deals and founders want us in the deal, so they save us 50K for an allocation, and that's all we have. Our check size is usually a little bit-- is I think around $100,000 to $200,000 range.
“It's a little bit of an experiment from our standpoint. We started this group in the middle of a pandemic, the beginning of 2020.”
David Chang: It's a little bit of an experiment from our standpoint. We started this group in the middle of a pandemic, the beginning of 2020. The premise, the thesis that we'd be able to move in a real-time fashion, it still is an ongoing experiment. There was a reason why angel groups all work in a pretty predictable fashion in terms of scheduling and for efficiency. That's the reason why they do this. We are doing this slightly differently mainly because we think that there is a class of startup that we would miss if we didn't do it that way.
We don't know, maybe in a year's time, we find that we were crazy if we're trying to do this and we really should be, "No, there's a reason why everyone else is doing it this way" and stop trying to do something that's different just for the sake of being different, but it does give us the ability to move along really fast with deals. This is a little bit of an exception, but there was one deal that we were involved in that from the moment that we saw it to the moment that it closed, I believe it was six calendar days. I may be off by one or two. After the six calendar days, we got all the checks from all the different members.
Then, it was a couple more days just waiting to send the check over to the portfolio company. We wouldn't have been able to do that with any other process, but that's one exception like stars aligned in that case and things don't always align as we all know.
Sal Daher Thanks Matt Fates for Introducing Him to TBD Angels
Sal Daher: That's very interesting. By the way, Yael, you mentioned that there are operators or venture capitalists. As a matter of fact, the reason that this interview came about is thanks to Matt Fates venture capitalist who is a member of TBD. We started talking about TBD and I said, "Oh, David Chang." "Okay, I've been meaning to catch up with David anyway." Then, it just happens that yesterday I was talking to Luke Burns who's also a venture capitalist and he said, "I'm also a member of the-- I like the way that you can do it asynchronously. You don't have to be at the meeting. You can listen to the recorded meeting, and then make a decision on your own."
It was very timely to have that conversation with Luke yesterday. I've heard about life science companies, which is my focus right now. What companies are you guys involved with in general?
In Seventeen Months TBD Angels Has Invested in 40 Companies
David Chang: From a portfolio standpoint, the companies that we're looking for are honestly, ones where we have at least some disproportionate knowledge. When I say, "we" it's the active membership base. In the year-plus that we've been around, we've done 35 or 36 investments, almost 40 investments.
Sal Daher: That's a fast pace.
Choice of Startups Is Driven by Member Interest and Not by Rigid Criteria
David Chang: It is a fast pace. The founders that we found that really resonate were the group of ones where there's at least some expertise within the membership base. As a result of our fairly diverse membership base, we've invested in fields such as digital health, marketing tech, fintech, SaaS, e-commerce, physical products, consumer products, clean tech as well. Those are all interesting industries outside of life sciences that you typically don't think that you've got a ton of expertise, but as we've grown the membership base now to almost nearly 200 angel investors, we are finding these great pockets of people that have very distinct B2C experience or someone that's done something in life sciences.
Part of the driver for this is that we want to be able to add value. When we look at a founder, there's not a clean set or a fund where we have to have a specific thesis. It's more about whether or not there's a decent likelihood that that particular founder in that particular space is one where we'd be able to discernibly add value, but at the same time, have some unique insights when we kick the tires. It's been really hard for us to answer, is there a specific space that we're looking for.
Sal Daher Introduces His Effort to Help Angels Invest in Life-Science Startups
Sal Daher: I like this. It's almost like you get involved in the startups where you can crowdsource particular knowledge, specific knowledge about the startup. This is a little bit of what I'm trying to do with the life sciences. I'm creating an entity called, Labcoat Ventures. Initially, it's not going to be a venture fund. We'll just probably be a syndicate list, but the idea behind it is to create a set of supports for angel investors investing in life science companies because I find that there is a dearth of knowledge about life science companies, there's a fear of life science companies, there's a huge divide in the life science world.
You have the rock star companies like Moderna that get billions of dollars in funding, entities such as Flagship Pioneering that funded Moderna. They're not taking pitches from startups. Here in Boston, we had the success of PureTech Health, and they had founded entities. I was reading something today. Daphne says she wishes she could just fund everything internally. She will not even spin off a company. She regrets having spun off a lot of her companies. She just wishes she had the money to fund it internally. There's not a support for the much smaller life science companies that could provide a very attractive return for a group of investors.
Sal Daher Credits the Research of Jeff Behrens, PhD on Biotech Funding
I didn't discover this myself. I happened to interview a person that I'm on a board with, Jeff Behrens. I don't know if you've run across Jeff. He wrote a doctoral thesis on funding of startup companies. I interviewed him two times. The second one was his thesis defense on the podcast. He wasn't defending, it was the material from his thesis.
David Chang: That would be a fun episode, hard-hitting questions.
Sal Daher: [laughs] No, no, no. Wouldn't work. The point here is that I'm trying to figure out a way, and this is what the due diligence looks like for these life science companies, it's crowdsourcing. A life science company pops up and I start looking around at some of my friends, family members, who knows something about this particular kind of thing. I happen to have a lot of connections in microfluidics because I've invested in microfluidics companies and I know people who are very involved in microfluidics. I like the approach of TBD, what TBD is doing here with the crowdsourcing and focusing on what you can get particular knowledge on.
“...I think it's a great value to the founders also, that they have that broader reach and it's not so siloed...”
Yael deCapo: I'd add to that I think it's a great value to the founders also, that they have that broader reach and it's not so siloed, and the people that know exactly what they know as well, because then we can offer them people that have just general operator expertise in scaling, even though it's not necessarily in that industry, often it translates. Often, if you are in a certain industry, but you're not a scientific founder, but you now have to hire engineers, that is something that we have lots of operators who've done that many, many times and can assist in that process. There is that element for the founders.
For the members, it also offers the opportunity to enter into areas that you're interested in. You don't feel you have the depth of the expertise and you can broaden your view. I know enough about AI to be super dangerous in that I know I know nothing, but TBD offers me several people with a lot of expertise in that field so I can now invest in AI because I have that community around me to do so.
Sal Daher: Very interesting.
Yael deCapo: We as well then not only use the internal network within the community, but each one of those nodes has their own network outside of that that they can leverage. It's almost used as a wisdom of the crowd's process.
Sal Daher Continues to Be Involved with Walnut Ventures Which Has a Lot of AI Expertise
Sal Daher: I am a member of Walnut Ventures and there are quite a few AI people there that's a software-centric. As somebody focused on the life science, I like the people, I'm involved because I like the people. If you guys are looking for AI or software stuff, keep them in mind. You might have the companies pitch there as well, which I think could be really helpful. We'll also keep in mind if there are AI companies, to have them come over to TBD, to refer. This is one of the things that the audience should know, angel groups are not really competitive because you need a lot of angel groups to put a round together. It's like the more angel groups, the better.
Yael deCapo: Yes, we want founders to have the broadest base of support that they can, and that is leveraging. I will say one of the things that we've heard from founders is we are one of the few groups in Boston that will invest in consumer products because we do have the few people, not necessarily from Boston, from other places, that do have expertise in that space, and we will support those founders as well. Those are great companies and can have great returns in and of themselves. Hard to find angel groups in Boston in that space.
Sal Daher: Since you are an angel group that was born during COVID, at a time that everybody was having virtual conversations, are you focused on startups just in Boston or are you investing across the country?
Yael deCapo: Across the country.
TBD Angels Has Investors and Startups from Across the Country
Sal Daher: Your investors are just in Boston or across the country?
Yael deCapo: Across the country. In fact, one of my great passions is that geographic diversity is important as well in addition to the standard lens that we look at diversity, the geographic diversity adds both as an investor to your portfolio. That there are great areas within this country that we can bring some of the processes and expertise that we have in Boston and really provide support as well.
The Singular Opportunity of Purdue University and Its 500 Professors of Engineering
Sal Daher: This is very interesting because today as we're recording this, a few hours ago, I was getting ready to launch a podcast next week, which is an interview with an assistant dean at Purdue University. Purdue University, they have the top-five engineering program in the country, 500 engineering professors, and there is not an angel investing community, really. The closest is Indianapolis, but it's very small. They are out there. They don't have a lot of connections with Silicon Valley because they have some electro-engineering, but a lot of what they do is in life sciences or in Ag-tech and so forth.
I wonder if there isn't some way that we could tie TBD angels with that whole Cornell community. Sorry, Purdue community. Cornell might also be like that because there are similar universities in the sense that they are-
David Chang: It's my alma mater.
Sal Daher: -both land grant universities and they both have every skill for every- What is it?
David Chang: Yes, it's actually on the wall someplace here. The founded institution where anyone would find instruction in any field.
Sal Daher: In any field, yes. Purdue is a little bit like that as well, except that I think Cornell's closer to New York, not that Cornell's close to anything. [laughs] My daughter went to Cornell, my younger daughter. She's exactly the one who needles me about my podcast. She's the coach of the host. I remember how far everything was going every time we went to Cornell, but they're in New York State, but Purdue is out there. I'm just thinking, maybe there's a connection to be made. Maybe offline we could talk about that.
Yael deCapo: I think there is. I think right now we are looking at a company, for example, it's in our process, called Yuva Biosciences. That is actually a Boston tech entrepreneur, just had a few exits that met up with-- It is in life sciences, but the company itself is out in Birmingham, Alabama.
Sal Daher: Interesting.
Yael deCapo: The doctor, he had gone to your traditional, I think he went to Johns Hopkins, the doctor that had the initial technology for this, but it is out in Birmingham, Alabama, and I think that's fantastic to bring the Boston life science expertise into that tech.
David Chang: Yes, and their reaction. Not to go too deep into that one, but their reaction to having access to all of the great smart founders in this area with industry expertise has been great. Bridging those worlds, especially in a virtual sense, where I don't know if you're 3 miles away or 3,000 miles away, it doesn't really matter. It's been awesome to see those connections being made where historically they haven't been.
Sal Daher: It's funny that you're saying that. Just at the beginning of the lockdown, I'm on a board of a company called Savran Technologies. It's a company that came out of Purdue. The company's located here in Boston, but the founder is a professor at Purdue. He connected me with all the entrepreneurship people there at Purdue Foundry. It's the entrepreneurship center for startups there. I was talking to him the first time and then it dawned on me, I have more in common with Wade Lang, who is thousands of miles away, than this person who lives two houses down from me, whose house I walk by all the time, I've walked by for three years, I've never met the person. [laughs]
It's like somebody who's 200 feet away from me, I have no clue who that person is, but I know a lot more about Wade Lang, who's thousands of miles away. In a certain way, if you go through your connection trees and so forth, you're introduced by people and so forth, you could get to know people a lot better than people who are geographically close to you. Yesterday, I was having a funny conversation with a lady who's a brand expert, her name is Orly Zeewy, and she is in Philadelphia. By the way, if somebody is looking for a brand person, she's phenomenal. She was a professor at Drexel, and I really loved her.
She was connected to me by a friend of Raul's. Raul's a sound guy. She's a delightful lady. She said to me, "I have my brand business all across the country, but I don't seem to be able to break into the companies here in Philadelphia." It's like it's-- People create these, I remember being in Boston, I had the same thing. I was at Bank of Boston for two years, and then I left the office, the building I was right next to the Bank of Boston, could never do business with Bank of Boston. I did business with Deutsche Bank, I did business with every bank in the world but somehow, it's like have this ability to isolate yourself from someone who is in the same physical space as you and ignore them. This is an amazing human ability.
David Chang: Yes. Geography is a weird thing because early-stage so much has changed. It was a big benefit to be near your investor. Now, I think it's actually more important for you to be pretty close to whatever the raw materials for your startup is. It could be talent. It could be a product, or it could be manufacturing, it could be your customer base. It could be potential partners and distribution, the investor side. You generally can be almost anywhere. It's changing quite a bit. It's one of the cool things about being part of TBD angels although is largely borne out of Boston because the initial members were largely based out of here.
We very quickly found the person that was like us but 200 miles away, 2,000 miles away. Like, "Oh my God, how can we talk more?" Then what was really interesting about that is we shared common values but had very different networks. That's the power of bringing those kinds of people together. We're in month 17 of an experiment.
Sal Daher: Far out.
David Chang: It's looking pretty good.
AOA Diagnostics – Addressing Ovarian Cancer, a Silent Killer of Women
Sal Daher: As far as my audience is concerned, I think I'm in trouble because we're getting into 20 minutes and we haven't talked about a company. Let's get down to companies here. I understand AOA is a very interesting company and it is a TBD company. Tell me about AOA.
Yael deCapo: AOA is a company we recently invested in. They recently closed their round. They are a diagnostic company for ovarian cancer. They are back-- to tie it into the conversation. We just had the underlying technology actually comes out of McGill University. The founders are a group that had done a diagnostic company before. This is their second-- they understand the commercialization of a diagnostic company quite well. They were really looking for what is that technology, the diagnostic technology that they can use their competencies and bring to market very quickly.
They found it out of McGill, I think ovarian cancer for those parts of your audience that don't know is one of those silent killers of women. So many of them are diagnosed like over 90% are diagnosed in stage three and stage four. The symptoms are extraordinarily diffuse. Women are usually not believed when they complain of abdominal pains. It's bloating, it's could be a whole host of other things by there no good diagnostic test for it. It is extraordinarily invasive. By the time that they are truly diagnosed and can be treated its stage three, stage four, that's pretty late. It's not a great survival rate.
I think one of the great benefits of what this technology can do is a simple blood test that you will be able to basically discern whether or not it is more likely to be ovarian cancer or perhaps endometriosis or something similar. That's extraordinarily exciting. To a lot of our angel investing, one of the things that we're very proud of that happened with this particular transaction within TBD is that we got a large number of investors excited. We like it when we have a lot of members invest into a deal that reinforces our view, that we made the right decision. The founder right now they've gotten accepted into Y Combinator, which is obviously so they're going through that right now as well.
Hopefully, we'll be able to raise more money in there. Again, I think the great benefit of the founder is that the de-risking of the commercialization. I think your conversation about how difficult life science is. There is a technology, there's always the question of is the science going to work. What worked in the lab, are you going to be able to commercialize it? Having a team that is so focused and so conversant, and has a plan on how to commercialize, how to get through the regulatory approval, how to get through a payor acceptance and has thought through that piece of it, and not only the super excited scientist founder who believes they have something that could work.
I think that is as an investor, that is really a great diligence point. You've de-risked that really difficult phase. Now it is really is a question of, this is the science that worked in the lab can you make it work in clinical trials? That's what early-stage investing is about.
Sal Daher: That was a very big question. Laboratory conditions are ideal conditions.
Yael deCapo: Oriana, the CEO is fantastic. She is from Boston. Hopefully, she can join you one day.
Sal Daher: That would be tremendous. Decent interval after she's out of Y Combinator; when she's fully rested.
Yael deCapo: Hopefully she can share then a little bit more about exactly what portion of that population of women that are missed early. They can ascertain how many more women they can save a year. All of those are fantastic.
Sal Daher: Outstanding. Are there any other life science companies that you'd like to talk about?
Yael deCapo: I think another great life science that we invested in is Kytopen.
Kytopen, Scalable Production of Gene Therapies
Sal Daher: Kytopen. I saw them at MIT Angels, and I saw that they're now portfolio company of The Engine MIT's early-stage venture fund.
Yael deCapo: Yes. This is much more about the bio-processing pathway. I will tell you, I got super excited about this particular deal in terms of what we were talking about. How do you use your network? I in the past worked at Millipore before it was bought out by Merck merged with Sigma way back when, and I noticed that a bunch of the C-suite Martin Modales and [unintelligible 00:26:30] and Paul Chapman all invested in Kytopen. They believed in the company, they were reinvesting and to me that was enough. I trust their views on that. Yes, this is gene processing. It's not what Millipore did, but I know they understand this space.
I don't understand enough, but I don't truly under- It didn't require the high level of diligence that it would have needed.
Sal Daher: Would you explain to the audience a little bit what Kytopen does?
Yael deCapo: What Kytopen does, if you think about current cell therapy engineering, you have viral and non-viral, and this is a non-viral manufacturing of cell therapy. This is not effective through viral. It is done offline and basically increases the yields up to almost the billions of high-quality engineered cells.
Sal Daher: They are an electroporation transfection company. Transfection is the transformation of cells by inserting various types of genetic material into the cell. The reason that I'm involved with this is that I'm an investor in SQZ Biotech, which is also a transfection company. They do transfection by squeezing cells, through small constrictions, compromising a cell membrane and stuff gets in. What Kytopen does is electroporation in a flow. They have electro current running through a flow situation. Therefore, it's a lot gentler than the batch electroporation because electroporation basically is zapping the cells with electric shock, and compromising the cell membrane to allow stuff to get in. That's stuff similar to what SQZ does, but it's been optimized around gene therapy.
Yael deCapo: It functions around different kinds of cells as well. It's both the transfection process as well and the ability, therefore, to work with different kinds of cells, including things like killer cells which are extraordinarily difficult in other methodologies.
How TBD Angels Connected with AOA Diagnotics
Sal Daher: Good. Two really interesting companies. The other company AOA, how did it come to you?
Yael deCapo: AOA came to us through another member who had met Oriana I think at some event around Boston. I don’t remember how-
David Chang: We could say, Vicki Davies. She super active and it came through Vicki.
Yael deCapo: It came through Vicki. Vicki introduced Oriana and AOA both to TBD and to Beacon Angels.
Sal Daher: Oh, yes.
Yael deCapo: They, I believe invested as well. I'm not 100% sure, but I'm fairly sure.
Sal Daher: Greetings to William Swiggart. I should have him on the podcast at some point. They do a lot of stuff in the life sciences. Very good.
David Chang: Sal, to your point, these groups work together super well I think unlike early-stage venture where you have a specific thesis and you've got a specific space carved out, that it's a little bit more competitive on that side. Early-stage investing for angel groups we're very much about trying to find the right people. As a result, we piggyback off each other's efforts. If another group has done some great due diligence work then fantastic, if another group has some good connections in the space it's even better.
Sal Daher: Excellent. Excellent. I'm relieved. We got two companies in, two startups in my listeners who are always upset, 13 minutes that I haven't heard about a startup yet. I have a little bit of a Mulligan here, because if we're talking about angel investing groups which is also an important thing for startups.
Yael deCapo: We are a startup.
Sal Daher: [laughs] That's right.
David Chang: Perfect from minute one.
Sal Daher: That's a perfect answer.
Yael deCapo: We started out with TBD Angels and we started.
Brief Bios of David Chang and Yael deCapo
Sal Daher: It's a startup that's right. It's less than a year old or barely a year old. Let's talk a little bit about biography. How David came to angel investing, David's a Wall Street person, PayPal, started a bunch of companies, is also an executive, he's been involved with various kinds of student things and so forth. David's biography is in a podcast specifically about David Chang. I highly recommend that podcast because you're going to learn tons. I did not know David that TripAdvisor, this is something I learned from David, the model that they have of having hotel reviews, which if somebody told me a bad hotel review from TripAdvisor is $50,000 for the hotel in business, it's the most important thing in their business. It was an accident they discovered by accident. I learned that from you.
David Chang: I learned that from the founders, it's a great startup lesson.
Sal Daher: Aside with the listener, go listen to the interview with David Chang. Lots of stuff to learn, but here we have Yael deCapo. Yael, give us a little bit of your background, which I think is also very interesting. You came from Israel.
Yael deCapo: Yes. Israeli did the Israeli army, the tech army stuff, met the right people there. Then started, was in Israel during the tech boom of the late '90s and the Israeli tech company boom at the time, and supported a few of those companies in venture deals and IPOs at which point [I] decided I was actually a lawyer at the time, decided that since everyone was getting listed on NASDAQ, I should come to the US and learn how it's really done. Theoretically came for two years to work at a large law firm, which I did at Skadden Arps, and chose Boston for a whole host of reasons, preferred Boston over New York or the West Coast.
Then 2000 happened, which changed a little bit of the tech infrastructure and other things happened at the time as well and stayed in Boston. Made my life here, worked a lot in M&A lots of the very large corporate clients doing both IPOs and [less] IPOs obviously in the early 2000s. Some a lot of the tech ones and started to move more into the life science, although some enterprise storage and always kept a hand in the tech space. Then moved on and moved into a life science company to do corporate strategy and business development on the theory of how do you do partnerships? How do you do M&A within it and can you expand that?
Sal Daher: Was that Millipore?
Yael deCapo: That was Millipore, yes. Millipore did what it wanted to do and sold itself to Merck KGaA so the German Merck not the pharma Merck. At the time, and after having done a lot of partnership works within there and looked at a lot of M&A from a corporate perspective left and decided that I really enjoyed working with founders. Working with not necessarily within that corporate infrastructure, but working with the people, the scientists on the ground with more of the entrepreneurs and move to spend my time doing that. With very much a focus on underrepresented groups within that, which started out being a lot of female founder scientists who even within the Boston ecosystem have a much harder time to be heard and seen and are pushed to the side and let's give you someone who can pitch for you, but empowering them when it's the right thing to do.
Sometimes find a partner is the right thing to do, but I think that female lens is great and so spend some time on angel investing. I continue to mentor a lot of companies. I like doing that. I work with multiple transfer tech offices and so forth to support companies in that process, entrepreneurs in that process, and have over the time done it by myself. I've joined a few angel groups here and there; I was part of Pipeline Angels for their duration and those actually made great connections and now TBD Angels.
What Moved Yael deCapo to Write Her First Angel Check
Sal Daher: That's tremendous. Tell me about what got you over the edge to write your first check, perfectly good money into a completely illiquid company run by a bunch of young people who've never done this before maybe?
Yael deCapo: I think those young people showed me more promise and more focus and more integrity at times than a lot of other people I've seen. I'm going to say not from a corporate perspective. Not a Millipore! Remember, I worked for a very, very long time as an M&A lawyer and I felt very safe to support what they were doing and thought that those projects deserve that support as much, and the best way that I could support them was to help writing those few checks.
I'll tell you a story. I am invested in a company that has, and this is a Pipeline Angel story that a Black female doctor who pitched multiple places and was asked multiple times, "Why don't you want to just be a doctor and practice and raise your kids, why are you starting a company?" That infuriated me so I happily wrote a check.
They are now in Phase 2 trials. I think the company she founded is now in Phase 2 trials. Sometimes that is the reason. I think that the ecosystem there is changing. It's not there yet, but it is empowering to see how that is changing over time and just how many people want to do that, and how many operators and founders. I think what I like to see is how many female founders, even if they haven't hit the super big exit, and they're really looking for places to park their money, but they do now have the money to support other founders are doing it because they know how hard the road is.
That often, what you really want from that angel investor is the first few steps. It's the first few 100,000 that are hard and once you've hit it fundraising is so much easier.
Sal Daher: The lead investor is everything in a raise; getting a strong lead investor. It's really valuable. David, I'm curious, you did a stint CEO of a company involved with student debt and you're very involved with Boston as a university town. The second university town is perhaps Philadelphia talking to Orly yesterday it reminded me of this. Philadelphia has a whole bunch of universities like Boston. Tell me a little bit about what you're doing in that space.
David Chang and His Interest in Student Entrepreneurship
David Chang: I've been a huge fan of student entrepreneurship for at least the past five years probably longer than that. I have done work both at Babson where I've run the Summer Venture program and been an advisor to the program, as well as Harvard Business School, where I was an Entrepreneur in Residence, and every single time I meet a student entrepreneur, I get fired up. Some of it just because Boston's this great college town, and this is next generation of talent and all that good stuff. When you meet someone like that, you can either feel super old in that, wow, it was so long ago that I was in your shoes, or it actually makes me feel super young and at least for that's true for me.
When I meet these first-time founders, sometimes there are multiple-time founders. I immediately jumped to, oh my God, if I could connect you with the people that I know any mistakes that I've done in the past, if I can help you avoid one of those, then I feel like it's time that's such well spent. I've just spent tons of it over the last couple years, trying to make those connections with these early-stage founders and being a Boston fan, I guess, a New York native, but moved to Boston 20 years ago I'm finding that this is this continually refreshing pool of smart people that come through. If I can connect them to the startup ecosystem better and have them stay and build companies here and especially some of those are big companies then fantastic. That's what largely motivates me.
Sal Daher: I can tell you I've interviewed one founder that I'm invested in Ed Goluch of QSM Diagnostics. He's a professor at Northeastern. He gave up a very valuable post is a top expert in a certain field to take that technology to the market. He said, "For me, it was a no-brainer starting a company in Boston. Boston is an expensive environment, but the talent of people in the life sciences you can get here. You just have so many people who are in the life sciences come to Boston because they know that there are life science jobs and companies come here because they know there is life science talent. It's like the bazaar."
Boston as the World’s Bazaar of Biotech Talent
The bazaar is where the business gets done. There are lots of shops, but there are also lots of shoppers at the bazaar. Boston is like the world's bazaar of biotech ideas. For me, the limitation that I find in Boston is that Boston is very idea-rich and cash-poor. If you go outside of the big venture capitalist's Flagship Pioneering backing Moderna some of the other big players they'll back the big companies, but if you're a startup, not in that category, for example, AOA, they have to raise angel money. It's much, much harder. The bone that I'm gnawing on is I'm trying to figure out how do I make it easier for angels to help life science companies? How do I get angels into the life sciences?
I think that in the next 10 years, we're going to see an explosion of interesting companies the way that we saw the last 10 years in software. Software eating the world circa 2011, Mark Andreessen wrote that article in the Wall Street Journal. I think the next 10 years is going to be biotech eating the world. That's what I'm engaged with. I see that this interesting work being done at TBD, I'm curious, I would like to participate. I don't know what your induction process is. I think I would very much like to participate in TBD and continue to be an angel at Walnut and so forth. I like what you guys have described.
David Chang: Terrific to hear the induction processes, this whole formal ceremony where we anoint-
Sal Daher: Is there a robe involved?
David Chang: There's a robe, there's a multicolored jacket and there's lots of good stuff there.
Sal Daher: It's done virtually, that's the thing, there's a robe, but it's virtual.
David Chang: We pass it. It's a Zoom background.
Sal Daher: A Zoom background.
David Chang: We did actually meet people live today for the first time in many, many, many months. Scott Kirsner and Gianna Eggers from Miralogic pulled together a networking coffee and had about 40, 50 people come out. It's fantastic to see some of the investors, some of the entrepreneurs, and student founders that I asked to come out to get together. We had five or six different TBD members come from different parts of the ecosystem, all different fields, and met up. We are slowly getting back into a live-world thing.
Sal Daher: I think it makes sense to have at least one in-person meeting. I spent 25 years in a business where you knew people on the phone. I was a trader in distressed international debt. Every time there was a World Bank meeting or something like you went and you met people face to face, you have been talking to this guy for 20 years or this woman putting a face to a voice, very interesting. You connect. It's amazing how much you know about each other from talking on the phone, just a phone, not even an image, just on the phone you pick up a lot. Voice communication is really rich. Written communication is very poor.
Going from email to Zoom, I think is going to be a big help eventually when we figure out how to use it and so forth, it's much richer.
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As we wrap up this interview, I'd like to open up the forum to the two of you. If there are thoughts that you want to leave us to this audience of founders would-be founders, angel investors.
David Chang: Yael, do you want to share some thoughts on your side? You're on a mission you care deeply about.
Yael deCapo: I know, I did stand on my soapbox for a minute, didn't I? It's okay. I think diversity is important just to stand on my soapbox I think, especially at TBD, as we're building something that is leveraging what you call crowdsourcing, the diversity of that group is so important. Otherwise, all that happens is you build into that bias. While we've talked a lot about life science companies, we've done a lot of other types of investments as well. Don't discourage anyone else with other interests from coming in. I think we've done FinTech, we've done Ag-tech, we've done Mar-tech
Sal Daher: Just because I'm focusing on life science. I asked them these guys do everything else.
Yael deCapo: I don't know that we do everything, but we try. I think that's where we see diversity is so important. It is important because it does lead to better companies, better investments, better networks, better decisions, better all-around, that's my soapbox for the day.
“...over a third of the CEOs that we've funded are women over a third, I believe are also people of color...”
David Chang: Maybe I'll just double down on that. This absolutely feeds upon itself. The diversity of the angel members influences the diversity of the founders, influences the diversity of the businesses that we get to see. Even though it's not specifically in our charter, over a third of the CEOs that we've funded are women over a third, I believe are also people of color. Although it hasn't been a conscious filtering on that part. We're not actively seeking investments in that. It's just that when you have a diverse membership base, that's what you get to see. As we all know, diversity increases great outcomes.
Sal Daher: Perhaps you could explain a little bit, if one is a founder, how does one connect with TBD?
Yael deCapo: We don't have the apply here button and cold call us. As I said, our diligence process is extremely light compared to some other angel groups. One of the reasons that we're comfortable with that is that all of our deals are sourced by our members. Really for founders, it's incumbent on us to get to the right deals by building the right membership. The diversity is not only through a gender racial lens, it really is in a functional basis. Are we in different industries? Do we have the right expertise? We do have members both in terms we have lots of members who are very active with student entrepreneurship in the various accelerator programs.
We love talking to people in other angel groups to have those connections because often those are the best deals that we see is they have been seen by another angel group or by another VC firm. They're like, "You know what you're not quite right for us. Go talk to the people at TBD. They're going to be the right fit." Or it's "I worked with this person at name the right company. They're starting a company. They're great." It doesn't have to be a long-lasting I've known this person for 15 years. It can be a person I trust recommends them, that's enough. That's what kicks off our process. From then we get to know the founder and take it from there.
Again, as David was saying, we're experimenting. This is the current process. It could change next week. We are very much member-run, which means we're constantly iterating. As we have new members who have new ideas, we are refining, and we're rebuilding. We are truly a startup in that sense, in that we're accidentally learning what really has impact.
David Chang: Oh, you bet if you were to quantify this, I think our iteration cycle, we probably push new stuff out every week. There's a change to a tool or there's a change to the process. Everything that we do is one, it's iterative. The whole ethos runs through to even our members. We've got a ton of new angels and they've learned by doing.
Sal Daher: David Chang, Yael deCapo. I'm really, really grateful for you both coming on and telling me about TBD Angels and all the exciting things that you're doing there.
David Chang: Thanks for having us. Thank you for all of the great work that you do for this podcast, as well as your other efforts, to just help connect founders and angels in the Boston area it's so needed. Thank you for that.
Sal Daher: Thank you for recognizing that. It's we try. There's a lot more to be done, and I'm always looking for advice and looking for ideas on how I can do a better job of supporting angels, particularly in the life sciences.
This is Angel Invest Boston. I'm Sal Daher.
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Sal Daher: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.
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