Rob Delman: Remove nepotism from investment opportunity

A month ago just before Christmas, Rob Delman of Golden Seeds (aka the “Golden Dude”) played Santa and dropped a gift packed with pitch preparation tips (for angels) down our chimney. We loved it and so did you. It’s a given – we’re very greedy when it comes to angel investing tips and insights. So we asked, shamelessly, “Rob, where’s our New Year’s gift??” So here he is, sharing his story and experience with Venture Hype.

Delman is a professional angel investor and managing director of Golden Seeds New York, an angel network that invests in women-led ventures. In addition to Golden Seeds, Delman belongs to 2 other groups in the NY Metro area.

So far, he’s held equity positions in 11 companies and has had 1 positive exit. The rest of the companies in his portfolio have survived the tumult of 2009 and are still in business today. Delman expects some positive exits within 2 years.

* Edited interview

VH: How did you become an angel investor? What’s your story?

RD: In 2000 I sold my business, a 60+ year-old importer and distributor of branded tableware products, to a large public company. After staying on with the acquirer through 2003, I began looking for new opportunities. I looked at franchises and independent businesses for sale but couldn’t find one that “lit a spark.”

One day I read an interesting article about “angel investing” in the Wall Street Journal. I did some research and joined a group in NYC and began my career as a full-time, professional angel investor.

I love working with motivated and passionate entrepreneurs and helping them develop their business!

VH: What drove you to invest in women-led ventures? What makes investing in women entrepreneurs especially attractive?

RD: It goes to the old adage of men retreating to their caves. There’s no question that women make excellent leaders because they’re so collaborative in everything they do.

Joining Golden Seeds enabled me to be part of an organization that has a wonderful process for screening and evaluating deals and performing due diligence.

Over 90% of Golden Seeds members are women, so the entire process is very collaborative. Since the companies we invest in are run by women, we find that the organizations themselves are also run collaboratively with the CEOs being very transparent and open to new ideas as well as our input.

VH: Share with us an unpleasant experience you had throughout your angel investing career. What have you learned from it?

RD: One of the very first investments I made as an angel was in a tech company that was owned by a relative of my attorney. I invested out of obligation without really getting to know the CEO or perform significant due diligence. The lesson learned is to remove any sense of obligation or nepotism from an investment opportunity.

VH: A critical item you look for in a term sheet is?

RD: One overlooked item is often information rights. It’s critical that you make sure the term sheet calls for you to receive quarterly updates and financials. If your investment is substantial enough, you should also try to get board observer status even a board seat.

Next, Delman will share some due diligence tips with beginning angels. Stay tuned.

Link:

• Golden Seeds