The CEO/founder must be coachable. An arrogant founder can ruin the business as he or she will not be receptive to coaching and will alienate other team members as well as customers, prospects, investors and other collaborators. The whole team must have a strong work ethic, drive and a shared vision. The team must have deep expertise in the product or service, equally deep expertise in the market and competition within the market segment, and understand what it will take to succeed. I look for a balance of technical wizardry, high-level business know-how, and an underlying desire to diversify the team. It’s critical that each person on the team have humility and an ability to self-reflect. These traits enable success and foster diverse thinking. Team members must work well together to reach a high level of performance.
As a part of our series about “Social Impact Investors”, I had the pleasure of interviewing Marjorie Radlo-Zandi.
Marjorie Radlo-Zandi mentors and advises founders on building and scaling their firms, provides angel funds to promising startups, invests for impact, consults to growth businesses and encourages a more diverse, inclusive startup ecosystem.
Investing through Launchpad Venture Group and Branch Venture Group, Marjorie is always on the lookout for early-stage impact ventures in such industries as life sciences, diagnostics, green technology, better-for-you food, and food-related technologies.
Having successfully led, scaled and grown a startup into more than 100 global markets before exiting through an acquisition by a 2 billion dollars publicly-held company, Marjorie is a frequent and in-demand panelist and speaker on start-ups and scaling for growth, is a member of Harvard University Capital Partners, the Capital Network and Venture Mentoring Network at Northeastern University, and has served on private company and nonprofit boards.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
Entrepreneurship is in my blood. At 19 years old, I established the first sailing program in my college town. From there, whether in New York City, Silicon Valley or Boston, I have been responsible for expanding the growth of new technologies to be used throughout the world.
I grew the multiple-product company I led to expansion in over 100 countries using angel funds, and sold it to a 2 billion dollar publicly-held company. I pay it forward through both mentorship and capital, assisting other entrepreneurs achieve their goals and bring new technologies and products to market. I primarily invest for social impact and encourage a diverse and inclusive early stage ecosystem. Forty percent of my investments are led by people of color; a third are led by women.
Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?
Early in my career while working in California, I frequently traveled to give talks and meet with customers and prospects. California was colorful — literally and figuratively — and this influenced the way I dressed. Back in New York, I proudly walked into a meeting of all men wearing my fire engine red suit. Their stares were unforgiving. I had violated the East coast’s conservative dress code for the few women like me in business: think all grey or navy suits. I learned that one must think everything through in advance and dress for your audience — whether that’s dress up, down or by style.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
I’ve had two tipping points in my career. The first was moving to Silicon Valley due to my husband’s job. While I didn’t have a job lined up prior to our relocation, I secured twelve offers within the first three weeks. With each subsequent position I advanced into, I doubled my responsibilities and salary.
The second tipping point was after we’d been in Silicon Valley for eight years. I was offered a position in an early stage East coast company that had great growth potential. It was a substantial cut in pay but came with sizable equity. I joined to head up marketing and eventually was promoted to lead the entire organization.
The takeaway: start your career in a space that you enjoy, but also has substantial job opportunities. Build your expertise and compensation, then don’t be afraid to take a calculated risk to be part of building something new. The experience can be a set-up to embark on your own innovation until you’re ready to pay it forward, mentor others, and help build the next generation of innovators.
None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?
In Silicon Valley I reported to a leader who was extremely talented. He taught me about strategy and how to build a worldwide business. This wonderful individual faced the challenges of being Black in a mostly White male Silicon Valley culture that was — and still is — not particularly welcoming to people of color or women. Despite the barriers he faced, he gave his time generously to me and others.
You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?
Realize that life is full of pivots and be open to change. Embrace a growth mindset and put yourself in a place with multiple opportunities. This will make a pivot that much easier. Just as companies change direction to serve different markets or create other products, see yourself as optimizing your life and creating your own transformation.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
Level the playing field. Many communities do not have access to capital for initial rounds of investment. We need policies and funding that benefit disadvantaged communities for the next generation of entrepreneurs. Many are communities of color who lack initial startup funds to create their businesses. These startup funds, known as the “Friends and Family” round, are usually 50,000 dollars-100,000 dollars for each business. This round is a precursor to the Seed round of investment by outside investors.
Without the “Friends and Family Round,” early stage businesses stall and typically don’t get off the ground. U.S. Senators Cory Booker and Elizabeth Warren have proposed legislation that addresses this funding gap. Specifically, Cory Booker recommends increasing the level of federal investment and commitment to accelerating Black entrepreneurship and small business development; Elizabeth Warren has proposed a Small Business Equity Fund to help close the startup capital gap for minority-owned businesses. Senate Finance Committee Ranking Member Ron Wyden, D-Ore., has introduced legislation to expand female entrepreneurs’ access to capital.
Invest time and money in leaders and companies with diverse talent and potential.
Don’t just pay lip service to diversity; do it through your actions. Focus on organizations that help early stage entrepreneurs understand the fundraising process as well as advise in growth and scaling. Get involved with an organization like the Capital Network in Boston that educates startups on the vitals of fundraising.
Encourage more leadership programs that support underrepresented founders and leaders. McKinsey research shows that companies with higher-rates of diversity regularly outperform companies with a more uniform demographic. Board Ready Bootcamp, organized by the Massachusetts Technology Leadership Council, prepares underrepresented tech leaders, including African American, Latinx, LGBTQ and women to sit on public, private and nonprofit boards.
Diversify your VC or angel group, and then diversify even more. The angel investor and mentoring groups I’m part of look like the diverse entrepreneurs who pitch to us. Diverse founders aspire to be mentored or present to people who look like themselves.
You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?
I have focused primarily on investments in companies whose intention is to generate positive and measurable social and environmental impacts, coupled with a financial return. Examples include investments in clean energy, advances in veterinary medicine and disease detection, and better-for-you food. My angel investment portfolio is also forty percent leaders and founders who are people of color; one third are women founders/leaders.
What you are doing is not very common. Was there an “Aha Moment” that made you decide that you were going to focus on social impact investing? Can you share the story with us?
For more than 20 years I was privileged to lead a global company that positively impacts the lives of millions by protecting and enhancing the global food supply. The firm does this through providing tests for naturally-occurring contaminants in a variety of foods. The increased presence and levels of these contaminants, also known as mycotoxins, have been exacerbated by climate change. After seeing the damage that climate change could bring about, I recognized the need to invest in products that overall help the planet.
Because of my experience with distraught families whose pets face health challenges — including losing my own pet to cancer — I’ve invested in companies that make pet ailment diagnostics and treatments more humane, less costly and more accessible to the general public.
Last, because I know how important healthy foods are for quality of life and gastronomic delight, coupled with my view that food is also tasty medicine, I have invested in better-for-you food brands. These businesses make foods that contribute to good health and well-being without sacrificing flavor, texture or overall appeal.
Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?
I’m fortunate to have many successful angel investments across a range of sectors. One business that’s close to my heart is Torigen Pharmaceuticals, a startup in companion animal immuno-oncology. This is an attractive and lucrative space due to the increasing importance and growth of personalized medicine.
I initially invested with both my head and heart as my standard poodle Sabrina developed cancer (too late for Torigen’s treatments). If I had known about this company earlier, Sabrina would likely be alive today. Torigen uses a dog’s own tumor cells to create a personalized immunotherapy. It’s highly effective, kind to animals, easy to administer and costs a fraction of chemotherapy and radiation.
Torigen was named the 2018 Animal Health Innovation at the Kansas City Animal Health Investment Forum. In fact, its founder and CEO, Ashley Kalinaukas, was recently named to the 30 under 30 In Science 2020 by Forbes Magazine.
The main lesson about this investment is the absolute importance of not only the product, market, advisors, plan and potential exit, but the exemplary coachability of the founder/CEO.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
I invested in a startup with a terrific plan and SaaS platform, strong market potential, a stellar advisory board, and a team led by a CEO/founder who was related to one of the key board members. The founder’s challenge was his refusal to take advice. It was a good lesson in the importance of coachability and leadership in a CEO/founder. In the end, it’s about the people and leadership regardless of whether they have the best product/service/plans/markets. Although this venture looked promising, it did not succeed.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
I neglected to invest in an extremely successful clean tech company with an early-on patent challenge from a less than stellar competing company that was later successfully resolved. The lesson learned is to dig deep into a potential challenge to see whether it really is a game changer.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.
- Unique offerings with a sizable total addressable market, solid financials, and the intention to generate positive and measurable social and/or environmental impacts. Numbers are never secondary to new technology or new product offerings and knowing the numbers is key. Be well-versed in top line revenue, gross margin, net profit margin, and impact metrics. Offer a realistic mid-level five-year projection including a P&L. Show some traction as it relates to product and sales, proof of the company’s unique offerings within a total addressable market and impacts you’ve planned for. I have seen too many unrealistically high projections which signals that you’re not completely credible. You want to avoid this at all costs. For example one company that presented to me showed 100,000 dollars in sales in year one, then 10,000,000 dollars in year two, and 100,000,000 dollars in year three. Although possible, these projections are highly unlikely and will be seen as such.
- Team: The CEO/founder must be coachable. An arrogant founder can ruin the business as he or she will not be receptive to coaching and will alienate other team members as well as customers, prospects, investors and other collaborators. The whole team must have a strong work ethic, drive and a shared vision. The team must have deep expertise in the product or service, equally deep expertise in the market and competition within the market segment, and understand what it will take to succeed. I look for a balance of technical wizardry, high-level business know-how, and an underlying desire to diversify the team. It’s critical that each person on the team have humility and an ability to self-reflect. These traits enable success and foster diverse thinking. Team members must work well together to reach a high level of performance.
- Realistic valuation: Valuations on the outer edge of reasonable within a market will likely not be considered. I have seen many terrific companies not get the traction they deserve due to an unrealistically high valuation. For example, a valuation of 50 million dollars with 250,000 dollars in sales with five employees and no patent issued will usually not hold water.
- Potential exits and multiples of similar companies: It’s important to show multiples of companies in a similar space (examples: 7X sales or 10X EBIDA) and what the exits looked like. Highlight prospective organizations with potential for acquiring the company. Remember, investors invest for a return on capital. I have seen many pitches where the founders seem unaware that investors expect an exit.
- Respect: Not all investors know the market that your company operates in. Be considerate of each investor’s questions and act with knowledge and humility. Be prepared and anticipate questions that may come up — give sufficient detail and keep your response short. Arrogance doesn’t play well when seeking investment; I have seen this can be a deal breaker in instances where a CEO is seen as non–coachable.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I am committed to inspiring entrepreneurship, and have acted to bring capital and expertise to all communities and countries, in particular those challenged by chronic poverty and conflict. Whether in the U.S. or globally, entrepreneurs in communities challenged with poverty frequently lack the capital, network and expertise to start enterprises. Therefore, I would encourage investors to look at and mentor companies that deliver a substantial social and/or environmental impact and sound financial return (double/triple bottom line).
If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, like you, what would you tell them?
If you’re in the workforce, be sure to assess whether a company you want to work for has a mission you agree with and a role you’ll be proud to take on. A good place to start is by making a list of B-Corporations in a sector you find appealing.
Whether you work for someone else or you’re a startup founder, a large bank account by itself does not make for true fulfillment. True fulfillment comes from making life better for others over many generations. Think of it as having a positive impact in ways that are much bigger than yourself. Be proud of the many small actions you take. You’ll look back with deep satisfaction at the difference you’ve made in people’s lives.
We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. 🙂
Sir Richard Branson
I’m in awe of this amazing entrepreneur and founder of Virgin Atlantic Records who founded or invested in a large number of companies. I’m inspired by his vision, which he puts into action by investing in companies and causes that make for a cleaner environment and more humane world both for people and animals. With the passage of time, Sir Richard has created a rich legacy of impact. I also admire his positivity, love of nature and humility, especially given his extraordinary business success. He was conferred knighthood as Sir Richard Branson for good reason!
How can our readers follow you online?
Thank you so much for this. This was very inspirational, and we wish you only continued success!