EP 268 – Maaike Doyer – Founder and Managing Partner at Epic Angels – A Big Believer in Learning by Doing

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:00
Are you ready?

Maaike Doyer 0:04
Yes, I’m ready.

Michael Waitze 0:05
Hi, this is Michael Waitze. And welcome back to the agent tech podcast. Let’s welcome Maaike Doyer back to the show. And the first time you were on, I don’t know if you remember, this was a little less than a year ago, which is like perfect timing for me. And the perfect time for a follow up. How are things going? How are you doing, by the way?

Maaike Doyer 0:24
I’m excited to be back on and speaking with you again, Michael. As always, it’s a pleasure. Now, so how are things going pretty excited, actually with Epic Angels. That was the topic that we spoke about the last time and at that moment, I think we were seeing on track to become the largest female only angel investments community in Asia. Right now I dare to say we are the largest female only Angel community in Asia. Yay. Right. So I think that that’s an amazing milestone that we reached. And that’s we just passed last week, actually, we pass the number 150 Female investors in our community.

Michael Waitze 1:06
Wow. Was Was that like, because that seems like a lot of people particularly I don’t know what the number was last year, but it must have been a lot closer to zero than it was 250. Is that?

Maaike Doyer 1:17
I think January last year, we were at 14, one, four. That is Yeah.

Michael Waitze 1:22
That’s amazing. That’s amazing. What else has changed, though? In the context of now you have 150 people there? How often do you meet with people? What kind of feedback are you getting from people that have joined? And are there people that have joined? Well, you’re surprised like, she already knew some of this stuff. But she joined to help out anyway, kind of thing. I’m just curious.

Maaike Doyer 1:43
Now, I’m not sure what what really helped our growth. It’s all been organic, which is really cool. And mostly because of our angels. And we did a fun campaign. It was called hashtag epic investors. We created this visual for all of our female investors to post that on their LinkedIn saying, like, hey, curious to see what an angel investor looks like, look, it’s a woman was not a man. So we had a bit of a fun around that campaign. And all our angels are so proud to be part of epic angels, so proud to be any angel investor. So they’ve all been sharing that on their LinkedIn. And that raised many, many new angels, many new women that were indeed, exactly as you said, either already investing and like, Oh, this is nice. It’s actually better to be part of a community that discuss some of the deals instead of just being on my own. And also a lot of people that were just curious, like, I’ve never done it, but I think I could do it is not sure how, yeah, help me out here.

Michael Waitze 2:44
So this is the reason why I called you, right? Because you had posted something I don’t know. Now, we could go two weeks ago, it doesn’t really matter to me about terminology. And as soon as I see definitions, I need to have a conversation. And I’ll tell you why. When I first started at Morgan Stanley, and this happened more in Tokyo than it did outside of Tokyo. But when I first started at Morgan Stanley in 1990, you know, I was delivering p&l to the trading desk, and I would talk to the traders and they were like, Yeah, lifting the offer hitting the bid and stuff like this. And I had no idea what they were talking about. None. And it wasn’t hard. But it was just like different terminology. Do you know what I mean? It was like if you didn’t play American football, and someone said I throw a bomb, you’d be like, Is everybody okay? You just have to know what these terms mean. So I’m curious what inspired you or what encouraged you to just like, say, You know what, I’m gonna sit down and I’m gonna write this out. I’m gonna break it down into categories. I have to do this because nobody else has done this yet. What was the inspiration for that?

Maaike Doyer 3:44
Yeah, it’s definitely all those new angels that we got on boards. First of all, I could see often there’s a little bit of a hesitation to ask those questions. People feel like I should notice right there to ask the question. So one of the things that we did was we opened a WhatsApp group for our new angels call it the rookie channels like you can ask every dumb question in there that you want. Right? So that was already a good starting point, because I could see a bit more but still people are a little bit reluctant to ask but when you were speaking one on one with those angels, then I got a lot of the questions about like, what is what is it in valuation? How does the work actually what is all this terminology that’s that’s been used and you can see it on their face on the body language that they’re using. You’re like okay, hold on. Let me pause here and let me actually explain it because there’s so much yeah blah blah happening as well. But hey, you know, you got used to applying to you and then you keep on you actually start using it yourself as well. So you know what, let’s let’s put this together in a one pager because that helps me then I don’t need to explain it for every angel again. I could just send them to my website now. Like, check it out, right? Use this glossary with all the terms Knology out there.

Michael Waitze 5:01
And how did you decide which terms to use? I have some questions on some of them. But I’m just curious, like, how did you decide there’s a lot there? There are a few things that we can add, of course, but how did you decide?

Maaike Doyer 5:11
Well, you know, who I asked for help my dear friend GPT? For?

Michael Waitze 5:19
Yes, fair enough,

Maaike Doyer 5:20
because I was really I was running into this time and time and then I was like, you know, once synthesis generated fi right, it can help me. So I asked generate a pie like GPT, I like to use GPT for was better than three and a half I tested on both need to come up with a different list. And that gave me the first 1010 definitions only. So definitely not enough. I was like, Hey, can you add a bit more? Then I started to do some further research with my angels. So we have this rookie WhatsApp channel and I threw in there, hey, I’m creating this glossary, what are the terms you would like to know more of? So they were throwing in a lot of words to vote? Yep, I can use them. Of course, I use my own recollection of all the conversations that we’re having with all the angels. And that all together brought this list, the list became a little too long, which is why I decided to break it down into three main categories, because otherwise we couldn’t, we couldn’t discuss them anymore. We’ll get

Michael Waitze 6:19
to the categories in a second. But now that you’ve brought this up, I have to ask. So a year ago, if we’d had this conversation, we wouldn’t have talked about like, you wouldn’t have necessarily gone to Google. And chat. GBT didn’t exist. I mean, it did. But it didn’t exist in a way that either you or I knew about, right. Are you what’s the right word? Are you reticent, I guess is the right word to tell people that you’ve used it. I mean, obviously not because you’ve just announced it to all the listeners in 173 countries. But at first, were you afraid but you know what I mean, concerned about saying, like, I use this tool to do this thing, or not.

Maaike Doyer 6:57
I love using generative AI. And I’m a really big fan. I’m also a professor at SMU to Singapore management University, and I am encouraging my students to use it, I actually get pissed off if they don’t use it. So I’m a big fan. And the course that I’m doing, I’m helping these kids to work as an entrepreneur. And they need to do innovation, business design. So pretty complicated stuff, or people think you cannot use generate if AI, then yes, you can write and I’m telling you students, it’s it’s just for that first draft, you still need to do the thinking yourself, you know, this this generate? If I doesn’t fix it for you, I could not run it on GPT and then post it No, that would not have worked right still need to add that strategic thinking and the knowledge of the space. But for me, it’s just this associate that I have right that that creates the first draft. Otherwise, I would have asked my my junior like, Hey, can you write the first draft and then I’ll make it better? Now it just a GPT. It’s just much faster.

Michael Waitze 8:00
It’s much faster. And for me, I’m not putting words in your mouth. But I’m telling you what I think in a way, it’s better. Because if you had replaced the I went to chat GPT for to ask them the question with I went to the top 25 venture capitalists in Singapore and sat down with them for four hours and ask them the question. Nobody would think anything about it. But what you’ve basically WhatsApp GPT for is basically giving you the opportunity to do is ask every venture capitalist in every country in the whole world. Because the thing I think that most people miss about the gender of AI is you don’t ask him one question and go, thank you. You ask it another question the same way you would do anybody else? Can you just redefine that for me? Or give me a little bit more kind of thing? Yeah.

Maaike Doyer 8:39
Yep. Yep. And that’s the thing, right? And that’s how you make it better. And then you add in the your own knowledge, and I did some, some research amongst my angels to really figure out what are the terms that they struggle with most? Yeah. And that’s probably the glossary together.

Michael Waitze 8:54
Okay, let’s talk some terms. I love it. And I love the fact that he’s jacked up to do this, because I use it a lot as well. I think you can imagine that. Let’s talk about stages if you don’t mind. Yeah, seed stage. Is there confusion around this particularly with the newest investors because even something like seriously like if I just went to a new investor and I said, Okay, I’m just gonna put some money into Syria say like, it doesn’t say anything at all. There’s no definition. So talk to me about seed stage and then we’ll get to SYRIZA in a second.

Maaike Doyer 9:26
I think enough, I thought that this was would not end up in a glossary reminder to GPT by the way. He also didn’t put it in there. But this was one that came up first when I asked the angels like Hey, what are the words that you would like to see back in the glossary? It was the free seats, seats, not so much series A I think in the news, you see a bit more around Series A, but precede seeds. You don’t see that a lot in the media. So there There was a lot of confusion specifically, but when it’s something precede and when it’s something seed and when it’s something Series A, how does that how does that work? Right? So, so that those were definitely definitions and deeds that we were looking at. So mean that precede really is the founder, or the founding team has an idea. It’s working on building something haven’t launched yet. And they’re really just still trying to figure out what is it? We’re in the seed stage, which is that next phase, it’s like, okay, we’re launching this beta, right now we have this minimum viable product, we’re testing it out, we’re trying to find some traction, getting some early revenue, and really, really working on that. And then the next one is series A is now I got it, I have my product market fits. Now I’m going into that next step, and really grow the company further. That’s the Series A,

Michael Waitze 10:54
so I’d love this. And to be fair, my definition of seed stage is this is that you just funding an experiment. It’s kind of like I think I know this is going to work, but I don’t know yet. And you’re gonna pay me to experiment to do this, right? Like I’ve already built a little bit, but now I need to refund that experiment. For me series A is just like funding growth, like you’re you said it, it’s already kind of working, I have some traction. Now I want to fund that growth, because I know it’s working already. And I can prove it to you. And I’m really glad actually that you put pre seed in there. Because frankly, I know what it is. But if you had asked me to define it for you, even on this call, I don’t think I could have come up with a definition better than yours. I read it and I was like, okay, that works for me. I can use that from now on. Makes sense. Yeah, it makes sense. But you did something actually, that was really interesting. And I think this will get us to one of our next, excuse me to one of our next definitions is when you were defining what series A was, I think you said, I have traction. And I want to fund growth. So you already started using other terminology that’s in the glossary. You’re making that face like Yeah, I did. And it’s hard not to Yeah. But this reminded me of something. When I was studying Japanese, right, and I love languages, right? But when I was studying Japanese, it was really easy to understand, like individual words Tibet, who to eat great, right? Egg icon, movie theater, great, but how do I use it in a complex sentence? Or a complex verb? Right? That really gives me deeper meaning. And that’s what you did. But that’s where things get hard, right? So I actually put together a sample sentence of this, right? Like, the unit economics don’t work and you’re operating with negative gross margins. Okay, if I don’t know what unit economics, and I don’t know what gross margins mean, I may as well have been speaking. Yeah, pick a language. You know what I mean? Greek, right. Yes. How do you go through that with people, these complex thoughts and what I’ll call complex verbs as well, so that they don’t just understand the individual words, that how they fit together?

Maaike Doyer 12:59
Yeah, I’m a big believer in learning by doing same. So it’s, it’s so hard. I mean, I could probably write another blog about how to use this in verbs and what are common sentences. But it doesn’t mean anything. Exactly your your sense in your sentence that you came up with, I’m like, yeah, and he does a lot of blah, blah. A lot, a lot of the BS being out there, right. Which, which often happens, and, and also, when we’re on the COVID founders, that often happens at time, they throw around some of these these terminologies. And, and this is focused on the actual investing, sometimes they also throw in blockchain and web three, and the fees and the carbon credits, and it even gets worse. And then I’m like, But if if you can’t explain it to your grandma, what you’re talking about here now, that means you don’t actually understand it yourself. So it’s not about throwing in the complex terminology. It’s about really making sure someone understands what you’re trying to convey. And you only learn that, unfortunately, it is a lot by doing. And that’s why we involve all our angels in the conversations with the founders in data room. And that was this so that we really get to the core of what this is all about.

Michael Waitze 14:16
Do you get the sense that some of the people that use the glossary that get trained by you and the other Epic angels angels are like going home and tested on their kids and their spouses? You know what I mean?

Maaike Doyer 14:30
Maybe Yeah.

Michael Waitze 14:31
Do you know what I mean? Like, Hey, honey, I think they’re negative gross margins. And just like the other person that has any idea what they’re talking about.

Maaike Doyer 14:38
Yeah. And this is what my sense is, well, I’m, they’re, they’re actually using a lot of these words. What are you really saying here? What’s your core message? What’s the thing that you want to bring across? That’s what people should focus on and not on the terminology.

Michael Waitze 14:53
Let’s do a couple more if that’s okay. I want to do a couple from from every category. I like this due diligence and find financial metrics as well. And I liked the way you’ve broken this down, because it makes sense to me from an organizational standpoint. Frankly, I wish a lot of investors would do more due diligence. But that’s a conversation for another time. Yeah, exactly. I can tell by your laughing You know what I mean? How important is it to understand not just what a cap table is? But what that cap table is telling you?

Maaike Doyer 15:23
Yeah, excellent. And specifically, the ladder? That’s the most important part, right? It’s What the What does any metric tell you? What does any piece of information tell you? Because it’s easy sometimes. I feel that as investors, we’re getting blindsided by the number of spreadsheets and documents that they’re giving us when we do our due diligence, which is another stupid word for, hey, does this start up make sense? And should we invest in here? Yes or no. And then we get access to the data room, which is another one, and which is indeed the information that have all that financial and legal information in there. And that’s how we run into all these metrics and everything in their cap table being a very important one. So the cap table, funny enough, it’s just a simple spreadsheet, it’s usually the very the most simple spreadsheet that there is, and that indicates who owns which part of the business. So what’s the percentage of ownership that the founder has? There’s probably already some other investors that went in what percentages do they have? So that you can see exactly who owns which part of the company? That’s the captain?

Michael Waitze 16:37
And do you talk about cap table complexity, particularly at the earliest stages of investing? This is just a bugbear for me, right? Because I’m very complex cap table, to me is a red flag. And I’m just curious if when you’re defining these terms for people, like, if you’re a seed stage investor, an angel investor, and they’re already 15 other people on the cap table, and actually 15 is okay. But if there are 15 other entities on the cap table, the level of complexity just gets so much harder to fund later. If that’s if that’s the case, you do use the opportunity when you’re defining these things, again, to also define what the significance of it is, and some of this sort of sub details as well.

Maaike Doyer 17:17
Because you, there are a few things in here. One is how messy is it or not? So that’s often the number of people that are on there. If that gets very messy, specifically, if it’s 00, or 0.1, or something very small percentages. And you’re like, Oh, it doesn’t really make sense in the whole scheme of things. The other part that we’re looking at, like, what is the percentage that the founders have? Because now new investors are coming on boards, which means you reduce your own percentage as a founder, are you still going to have the majority? Is that’s another important element that we’re looking for.

Michael Waitze 17:53
So what is that number that you are looking for? For the founders, particularly at the earliest date? And it’s I’m not religious about it, right? Like, doesn’t have to be 78.3%. But I’m just talking about you, because you said a majority. at the seed stage, it should be more than the majority, but it shouldn’t be 10%. Is that fair?

Maaike Doyer 18:12
Correct. And I think the, on average, what we see, because we look at precede seed and Series A, so they’re all somewhere different. And it also depends a lot per industry. But what I’m looking for when they’re raising money, the amount that they raise should roughly be 20% of the valuation of the company, which basically for every round, you’re giving away 20% of your equity, which typically goes from your equity as a founder to to that next investor that’s out there. So that that roughly needs to come across in the campaign.

Michael Waitze 18:50
It’s a good number. I’m so glad you said that number. Because that’s really my starting point for everybody. If it’s like, even if it’s like 25% I’m like, what were you doing? It’s just because it’s just too much. Can you talk a little bit about dilution as well. And I’m curious if this is a concept that’s at the beginning, at least hard for most, again, rookie angel investors to understand what does that mean? I thought I own 4% COMM Now I only like 3.6. Like, when did that happen? Is this a problem at the beginning? I mean,

Maaike Doyer 19:19
dilution is definitely going to be one of my next articles that I’m going to write about and with with a couple of specific examples in there because dilution is confusing. It just is. And basically it means if you own 10% of a company, let’s say the company is worth a million, the valuation is a million, so you put 100,000 in there, so that means you own 10% But now, the company is not worth 1 million anymore. It’s all of a sudden worth 10 million. But you don’t own the 10% anymore of the full company because other investors are coming in at that valuation right Because you came in at that valuation of 1 million, and all of a sudden, this company just did a lot more and new investors are coming in, which means you’re sharing the pool with more investors. So that means that your percentage goes down on the 10% value valuation on the sorry, 10 million valuation that we have out there. But that’s a very complicated one to where it is.

Michael Waitze 20:22
It’s really complicated. And I remember sitting in somebody’s office, I remember sitting in somebody’s office when I first started thinking about venture style investing. And I remember exactly where I was, and I remember the guy explicitly and he was like, Look, we’re dealing with a pre money valuation of two and a half million dollars, I had no idea like, pre money, what does that mean? Is we already have money? Like, it just didn’t make any sense to me? You don’t necessarily have to define that one if you don’t want to, but I just remember sitting there like, I’ve come out of a 20 year of finance career. And if I don’t understand pre money, like how does the regular person understand it? I don’t know.

Maaike Doyer 21:01
No, but I think that that notion indeed, of pre and post money, it’s mean, you can of course, do both, right? But let’s assume, if you say my valuation is a million, right, and I’m raising 250 1000s, well, if my valuation is pre money, that means valuation is a million, I’m raising 250. So after the race, it’s 1,000,250 1000s. So the that’s the post money valuation after the money came in, from the investors, that’s an example. So but if your 1 million that we just said is already post money valuation, that means that your money is already included in that valuation, and then we start to look at ownership or spend percentages, that’s where you really start to see the difference. Because if the if the 1 million is free money, it means as an investor, you’d have 20% of the company. However, if it’s post money is actually 25% of the company. So that really makes quite a big difference. So you do need to know is this including my money already, or exploiting my money? That’s basically the question you need to ask. I love

Michael Waitze 22:17
this, we could do this forever. I wanted to a couple more, and then I’ll let you go. When I first started raising money in Southeast Asia, and helping a commerce do a convertible note, we had a cap. And again, I find your loving already. And I find that explaining what that cap is to people really hard. So when you’re raising convertible notes or safes or whatever, you know, structure they finally take, how do you explain what a cap is? Because it does get a little bit complicated, right? You’re raising a $20 million valuation for the next round with a $12 million? Like, where am I investing in? What am I getting? How do you explain a cap to people?

Maaike Doyer 22:59
Yeah, I mean, it cap is basically like, I don’t want to discuss yet what my current valuation is, but I I have set my eyes on my future valuation, which hopefully is in about one and a half, two years, because that’s typically what you’re speaking about, is going to be this valuation, or, Hey, hopefully, it’s going to be more, so I’m capping you, and that’s whatever is gonna happen, the other investment may be able need to pay more. But since you are an early investor, I’m rewarding you so your valuation is not going to be higher than this specific valuation.

Michael Waitze 23:35
So I love this, because you’ve just introduced my next question, you’re rewarding them? And what are you rewarding them for? Not just being early what it gives them for

Maaike Doyer 23:46
that to take that risk with you as an entrepreneur? Like, Hey, I know it’s riskier, because it’s not proven yet. So therefore, you know, you’re you’re gonna get some discounts, basically, as well, on the on the valuation.

Michael Waitze 24:02
I wanted to put that up. Because I think a lot of early stage investors and new investors come in and go, I don’t understand why did they get like this thing? It’s like, I’m investing as well, how come? I can’t get that? And the real answer is, they took this risk a year and a half ago. Yes, things look a lot different today. And they’re just getting compensated, or as you said, rewarded for that risk. And that’s what that cap is doing, because that valuation could be much higher. And they’re saying, like, why am I paying that when I was in a year and a half ago, when it couldn’t have been worth that then that’s the reward or the compensation for them. Let’s do one more. I was gonna do the pro rata rights. But that in and of itself can be just a really long conversation. Let’s not do that. Let’s talk about carried interest or carry.

Maaike Doyer 24:47
Oh, yeah. Carry? Yeah. That’s the business model of venture capital basically. Because as you can see, as investors it’s your Getting these deals presented that you can invest in, you’re getting the startups presented that you can invest in. But a lot of work goes in to find those startups. So there are people doing their job for venture capitals, but also at Epic angels. Of course, we do the same. And you see that everywhere. So for example, I’m seeing about 100 startups every month, and only one of them gets funding. But I still need to go through 100 decks, I need to actively go out there, Scout them, find them, do all the conversations to narrow it down to this one. So there has to be some type of compensation for the people that actually sourced those deals for you. And that’s what’s called the carry or to carry interest. So that’s typical in venture capital, where I call it like a no pure, no fee type of rewards. Because carry is only being paid out if the startup gets to a successful exits. So this only happens, you put in your money, and then five years later, 10 years later, yes, we have a successful exit. So you will have some profits, you only pay that percentage on the profits that you’ve made. So that means if you didn’t get any profit on your investments, then there is zero carry, and then the venture capital person or the syndicate leads, just ends up with nothing. But if you do make a profits, a percentage of that goes to the company, the organization that actually makes the investment available for you.

Michael Waitze 26:30
Yeah, and I want to make this really explicitly clear that you’re right, Carrie is not like an accrual that you make in your income statement. And then you can like you can see it coming in every year. It’s kind of binary, right? And it’s the risk is I won’t say it’s the riskiest part of this, but it’s pretty risky, right? You may never get Carrie. And like you said, if 80% or 90% of startups fail, that means that 90% of your startups, you won’t get any carry you just investing money. And that’s it. Right? So, right. And if you think about the just the simple math that you’ve talked about, if you look at 100 a month, did you say 100?

Maaike Doyer 27:07
Yes.

Michael Waitze 27:11
I’m just saying, and you invest in one of them. And I don’t have to do the math for anybody. Please tell me I don’t have to do the math on the percentages there. But it just means that there’s a lot of work and only pay off for like one investment. Yeah.

Maaike Doyer 27:23
And that still needs to get to a positive outcome.

Michael Waitze 27:28
Right. And that’s why I want to make this Yes. Like he didn’t just doesn’t happen today. Right? No. And that happened seven to 10 years, which is the average life of every sort of typical or traditional venture capital funds, you may get no carry for a long time. Right. And you can’t eat off of it. Yeah, to be fair, no.

Maaike Doyer 27:49
But I think it’s good because it is, it is a reward for both parties. It also means that the person that’s giving you this deal flow, as it’s as we like to call it is it’s giving you the opportunity to invest in the startup means they need to believe in it. Because yes, they also want to have to carry at the ends, right? Because that’s their reward. So it is a win win situation, win win win. It’s for the startup. It’s for the one who’s sourcing the deal for you. And it’s for any investor that’s actually putting the money in so it’s it’s a positive one for everyone involved.

Michael Waitze 28:17
Yeah. And it falls into my category of everyone’s an overnight success. 10 years later, right? Because yeah, you’re not getting you’re not investing today and getting carry at the end of the year and it’s just so rare. Okay, I’ve taken up enough of your time we’ve had some incredible definitions. As always, we have to have you back and I’m gonna do a public open invitation to you anytime you want to get a message out anytime you or your team of Epic Angels wants to come on the show is an open invitation to come and talk about stuff. I cannot thank you enough. That was awesome.

Maaike Doyer 28:48
Love to. Curious to see if any of the listeners come up with some other terminology they want to add to the glossary or any other further deep dives happy to do so.