Changing the Color of Angel Investing: An Interview with Andy Ayim of The Angel Investing School
The following conversation was conducted over email and edited for flow and clarity.
Andy Ayim is the creator of The Angel Investing School, a school that trains professionals from all backgrounds on how to become effective angel investors for startups. He also runs a Productized Consultancy that creates Product Playbooks for large corporations in highly regulated industries and enables them to set up new product teams that work with agility and create products that customers love.
Acquania Escarne from Wealth Noir (WN): Andy, I am so excited to share your story with Wealth Noir readers. Tell me, where did you get your entrepreneurial spirit? What inspired you to start your first business a decade ago?
Andy Ayim of The Angel Investing School: Just over a decade ago, I worked as a Management Consultant and felt inadequate knowing I was only 60% of my true self as I tried to adapt to the working environment, which was all new to me. I had an entrepreneurial spirit that felt unfulfilled from the work that I was doing in my day job.
Like many entrepreneurs, I discovered a personal pain point I wanted to solve. In 2010, prior to Spotify and Apple Music, I found it challenging to find UK rap, grime and hip hop music in one central location on the internet. At the time, DatPiff and LiveMixtapes served the U.S. market, but we had nothing like it in the UK.
This inspired my co-founders and me to spend our evenings and weekends to launch Mixtape Madness as a solution to that problem. Growing up, I didn’t really feel entrepreneurship in tech was accessible to me as the rockstars like Bill Gates, Steve Jobs and Mark Zuckerberg were all white and had a completely different upbringing than me. So, I had to feel the fear and do it anyway as I was inspired to create a new path and tell different stories.
WN: So, Andy, I find your story particularly interesting because now you run another business, the Angel Investing School. From what I understand, Angel Investing School does not have any angel investors, and yet you are committed to helping entrepreneurs find and become angel investors.
Why are you working so hard to get funding and investors for entrepreneurs when you didn’t need the help of angel investors to start two successful businesses?
Andy Ayim of The Angel Investing School: This is a great question as I have never raised investment for myself but have done so for dozens of entrepreneurs. There are two things to understand that are very important here.
The first is that at the intersection of technology and finance there is an incredible opportunity for wealth creation as technology companies such as Facebook, Amazon, Apple, Microsoft and Alphabet are among the best-performing companies in the world and generated millions in wealth for its founders, employees and early investors.
Second, less than 1% of Venture Capital (VC), which is the funding that a high proportion of tech startups get during their formative years, goes to black founders. In fact, less than 0.2% goes to black women. That means that we are excluded from participating in this wealth creation journey.
Now, what most people don’t understand initially is that tech startups don’t raise their first round of funding from VCs, but, rather, it comes from angel investors. These are high net worth or sophisticated investors who choose to take the risk and invest in early-stage small businesses (aka startups). Again, black people are highly underrepresented in this asset class.
It is very important for me to help widen participation as the more black investors we have, the more black founders get funded and, holistically, the more wealth we can generate together in collaboration.
WN: In my research before this interview, I also learned you are not just a business matchmaker. You are also a real estate investor in the United Kingdom. What was your first real estate investment? How did you get started in real estate investing?
Andy Ayim of The Angel Investing School: Nine years ago, I managed to persuade nine friends to save money together every month as a group with the intention of investing in property together. Along this journey, I was attending networking events, joining forums and groups, reading, researching, and consuming podcasts and videos on residential property strategy and investing. In the end, we managed to save about $50,000 together. But sadly, one by one, they each asked for their money back mainly due to a loss of patience and willingness to invest sooner rather than later.
This motivated my two brothers and me to utilize the knowledge we had acquired to put our money together and we purchased a one-bedroom apartment in Manchester, United Kingdom. We still own it today and it has been rented out for six years with no vacant months and strong net yields. Our strategy is focused on the following five points:
- Buy to rent, optimizing for strong net yields rather than increasing property valuations;
- Play the long game and hold onto properties for 20 years or more;
- Reinvest profits every 3-5 years;
- Look for strong fundamentals for young professionals such as public transportation, easy access to supermarkets and a local community of other young professionals; and
- Look for government investment plans for redevelopment projects, e.g., new shopping centers or train stations near the property.
Today, as a family we have five properties in the United Kingdom and Ghana.
WN: You used to have roles within major venture capital funds, like Backstage Capital. How did you make the decision to go into business for yourself?
Andy Ayim of The Angel Investing School: One of the lessons validated through my experience at Backstage Capital was that there was a high supply of diverse founders but not enough early-stage investors to close rounds. In practice, what this meant was that a founder could be seeking $300,000 in funding, and at Backstage, we could invest $100,000 but found it challenging to find co-investors to invest the other $200,000.
This insight showed me that we need to build a managed network of diverse angel investors so that we could share this ample deal flow with professionals who had domain expertise, networks and the capital but just needed trusted advice on how to get started.
I’ve never had ambitions to start a business, but, rather, I have always been a creative problem solver. I have no ego or bias toward solving problems through working for others or working with them as an entrepreneur. It is all about solving problems in ways that delight your customers and fulfills their needs. Sometimes that exists already in the market; in the case of The Angel Investing School, it didn’t in this form in Europe.
WN: What do you believe is the greatest challenge most startups face? What advice do you have to help them overcome this common challenge?
Andy Ayim of The Angel Investing School: Ninety-five percent of startups fail in their first few years and the main reason is usually that they quit.
Three things lead to startups quitting: 1) Lack of access to knowledge, 2) Lack of access to networks, and 3) Lack of access to capital.
Lack of access to knowledge means the startup founders are unaware of that starting and growing a business actually entails working seven days a week, managing people and admin, and other things not often thought of as part of the entrepreneurial journey.
Lack of access to networks means it can be a lonely journey and an exhausting uphill battle when you are not connected to other entrepreneurs, operators that can fill your knowledge gaps and people who can introduce you to partners, customers or investors.
Lack of access to capital means some startups require a lot of capital to get started such as hardware startups like FitBit or a lot of capital in order to remain competitive and grow such as marketplaces like Airbnb.
As an advisor and investor, I always try and do the simple things such as focusing on nurturing a trusted relationship by being responsive and focusing on the three things above continuously by leveraging my experience and my network.
WN: How do you balance investing in real estate, running your consulting business and facilitating the Angel Investing School. Give us a glimpse into the life of Andy Ayim.
Andy Ayim of The Angel Investing School: I am very intentional with my time. I’ve created my lifestyle with my family at the center of it all. In practice, this means I work three days a week running my consulting business and spend two days a week relaxing, practicing self-care and spending time with family.
Angel Investing School runs twice a year, in April and September, for six weeks each time. During those weeks, I spend one day a week to facilitate the program and a few days for promotion when applications are out.
My real estate investments are all managed by property managers and therefore require minimal time apart from accounting and responding to urgent requests.
On a typical day, I wake up at 5 a.m., pray, meditate and do deep work till 9:30 a.m. I work until 5 p.m. at the latest and then switch off from technology and switch on being present with my wife and three-year-old daughter.
I’ve realized more recently that less is more. I honestly believe that with all the money in the world, in my heart the things I would really want are the things I can do today such as spending time with family and friends, eating great food, having good health and traveling to amazing locations. This is why I have designed a lifestyle that works for me and my family rather than centering it around a job. The caveat is that I have worked for 10 years to afford this privilege.
WN: Are there any exciting products or offerings you have coming up? Anything you are currently working on now?
Andy Ayim of The Angel Investing School: I have a weekly newsletter where I share news, opportunities and events in European tech for minorities that your readers would love. I am also looking forward to the next class of the Angel Investing School, which starts in September 2020. We do intakes for new cohorts twice a year. I encourage your readers to check it out.