Dazzled, Burned, and Still Betting on Women

What my first angel investment taught me about risk, resilience, and the real cost of chasing vision

Dear Fabulous Female Founders,

A few weeks ago, I wrote about debt financing as a growth tool. Today, let’s turn to angel investing—starting with my first experience, about a decade ago.

At the time, I had just exited both Alta Bicycle Share and Alta Planning + Design. At age 48, financially strong and W-2-untethered for the first time in my life, I was eager to mentor, coach, advise, and invest in others.

That’s when I met the dazzling founder who would open my eyes to the world of venture capital and angel investing.

My companies had bootstrapped and tapped lines of credit and loans. We’d never brought in investors.

The founder’s software company grew out of a college project. While leading her company, she was also busily launching several related nonprofits. I resonated with that, for I’d done the same. She’d raised money from friends and family already, was on the verge of a merger, and in a cash crunch.

“Please,” she said. “Any amount, any interest rate.”

I was moved, nervous, and intrigued. I wanted to take the leap, and I wanted to be smart about it.

I looked at her business plan, leadership team, and financials, and decided to take the leap and loan her money on a convertible note.¹

An angel in action!

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When the merger proceeded, I agreed to convert the loan to equity. The other firm, also led by a fabulous female founder, was bigger, funded by investors and lenders, had a sympatico software product, and also did consulting. The merged company’s cap table² listed close to 60 owners; my percentage was small. The valuation was solid and the future bright.

I joined the board and forged a close relationship with the newly hired CEO. I was excited to learn, to watch the inner workings of SaaS³ powered by outside funding, to support not just one but two fabulous female founders.

And oh, did I learn.

Soon after, COVID hit. The young, scattered team fractured. Behind the scenes: ballooning costs, sinking products, looming competitors, staff unrest, non-stop stress.

I decided to leave the board. The CEO resigned as well.

Eventually, the company abandoned the software to focus exclusively on consulting—triggering a valuation crash. I grew uncomfortable with the ideological direction of their work and sold my shares at a near-total loss.

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The dazzling founder told me she feels a sense of shame. But should she? In the tech world, male founders are quite often rewarded handsomely for failing, their failures framed as bold bets, valuable experience, or stepping stones to the next venture. She created something from nothing, something clever and worth exploring that didn’t end up being super profitable from an investment standpoint, like most start-ups. No shame there, and the merged firm is still going, how well, I don’t know. I think it’s unlikely that the investors will see anything in the way of payback.

Her other creations—three impactful non-profits—are all still going strong. Both founders plus the former CEO are powerful, brilliant women I’m honored to have in my life.

I do feel a sense of annoyance—not for investing in the first place—but for not taking the opportunity to be repaid rather than agreeing to the note conversion. While no one could have predicted the pandemic, I could and should have gotten a better grasp on the cost of software development and been more wary about both founders’ ideologies. In other words, my attempt at due diligence was woefully inadequate.

Overall, I consider the experience to have been an excellent learning opportunity. Case in point: since then, I’ve invested primarily through Rogue Women’s Fund, led by the level-headed and diligent Caroline Lewis. Minimal returns so far—but the process is disciplined, clear, and tied to a strong thesis rather than my heartstrings.

Fabulous female founders, whether you’re seeking funding or are in a position to be an angel yourself, understand that angel investing comes with considerable risk and zero guarantees. Never take or invest money you aren’t prepared to lose. Create for yourself a diversified personal investment portfolio in alignment with your values, financial needs, and goals. (DM me if you need a financial planner or advisor recommendation.)

Finally, as we’ve been exploring the many ways to fund business growth (grants, loans, crowdfunding, venture, and angels), I end with this: each source comes with expectations. None are free.

There’s no single right way to grow—only the way that’s right for you.

~ Mia

P.S. Stay tuned for FFF pieces on crowdfunding, grants, and venture in the coming weeks. I’m also going to tell you stories from companies that converted to ESOP and other alternative structures.

1. Convertible note: a loan that can be converted to equity at an agreed-upon future date or event, such as a fundraising round (like a Series A).

2. Capitalization (cap) table = detailed record of a company's equity ownership.

3. SaaS = Software as a Service, a cloud-based software delivery model where applications are hosted online and accessed by users via the internet, typically through a subscription.