Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital (Part 12)

By guest authors Irina Patterson and Candice Arnold

Saad: The biggest challenge that I see from a venture perspective for me, personally, is how do you scale yourself and your time? Unfortunately, there are only 24 hours in a day and seven days in a week. I can tell you that if I wanted to allocate every single minute of every single one of those days, I would have more than enough things to do, more than enough people whom I could be trying to help, and more places I want to be. That’s the biggest thing that I see.

Irina: Did anyone ever try to scale what you do?

Saad: For some of the things I’m talking about, in terms of leveraging talent outside of yourself and outside of your firms, for instance, there’s one way to make sure that you’re even bringing to bear talent that’s even more relevant than your own experience to help the entrepreneurs.

That’s where I think there’s an opportunity to scale in that ecosystem: to have that network; to be able to find the right people to help at the right stage of a company; and to be in all those places as a proxy for you, but more important, for what the entrepreneur needs at any given time. That’s part of the answer. That’s the struggle that I’m always dealing with, but we’re working on it.

Generally speaking, I think [people in] the venture business do not take their own advice very well. The advice we give and what we do don’t necessarily match up for the reasons I just identified.

There are people who have thought about trying to automate a lot of these processes, automate the investment-making process and to just look at things from an algorithmic perspective, and make their decisions on that basis.

You punch in a bunch of features about an investment opportunity in a company and then, based on a bunch of things that they’ve deemed, will give you a yes or no answer. Again, I’m not a fan of a lot of those criteria and a lot of those models because I think, at the end of the day, it’s a very human business.

It’s a very people-oriented business. For that reason, when your job is about finding, identifying, and then working with the best people in the world, you have to be out there constantly meeting.

The algorithms will always fall short because they will never capture that certain special feature that’s just hard to see on a spreadsheet. But when you see it in an entrepreneur and you know that, God, I don’t know what this guy is going to do in the future. He may cure cancer or he may start the next Google, but whatever it is, I’m in. That’s what you’re missing algorithmically.

I can tell you, I have that feeling pretty often and when I do, I’m trying to make sure I’m investing in that person in some shape or form, whether now or later. I always pay attention to those, and that’s what I think this business is all about.

Irina: I noticed you’re very selective, so what do you do with those entrepreneurs you don’t invest in?

Saad: First of all, I try to stay in touch with and be helpful to everyone I meet, regardless of whether we invest. If I know someone, if I can make an introduction to somebody else who might be interested or to a potential customer or to a potential partner, I do that.

I try to do that for every meeting that I go to. In many cases, I’m also monitoring the progress of a lot of these people over time because a big part of what we could do is: Maybe someone doesn’t have the right model yet, or maybe they don’t have the right team yet, but that doesn’t mean that they can’t change that later.

I’m constantly paying attention to the people I’ve met and I’ve thought there was something special there, but for whatever reason, we didn’t get over the line. There’s no reason why, down the road, this person couldn’t figure it out or have the right people.

For all those reasons, I’m constantly spending time with those people, getting updates on what they’ve done in the past. I’m always happy to take a call from someone I’ve met with, if there’s something that’s changed in his or her world, if there’s advice that I can help him with. I try to be as accessible as possible. I get lost in my e-mail every once in awhile, I’ll admit that.

I look at someone like Tim Westergren, the founder of Pandora, who, if you ask him about it, will tell you that he got rejected by VCs 300 times. A lot of people didn’t bet on him at the right time, but there’s no reason why even the people that I’ve passed on might not be the next founder of Google or Pandora. So, I’m always keeping my eyes and ears open and making sure that I’m being helpful to everyone who I come across. You never know who the next great entrepreneur might be.

Irina: Thank you, Saad. Very insightful.

This segment is part 12 in the series : Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital
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