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Erica Duignan Minnihan: One Maternity Leave Away from A Career Switch

Erica Duignan Minnihan has been an investor and advisor to early stage technology companies for over 9 years. She began her career in Venture Capital as the original Executive Director of Golden Seeds, a national early-stage investor group. She continued working in VC as co-founder and Executive Director of STAR Angel Network and as a Managing Director at top-tier tech accelerator DreamIt Ventures. 

 
Erica is currently Managing Partner for 1000 Angels, the premier digital-first, invitation-only network for venture investors around the world. She has an BA in Business Economics from UCLA and an MBA in Finance from Columbia Business School.  She has also made regular appearances on network television for MSNBC and CNBC on “Your Business” and “Crowd Rules” as a startup business expert.  

Takeaways

  1. Each job is a learning experience, even if it means learning what you don’t want to do.
  2. When it comes to finding investors, word of mouth is your best source.
  3. Listen to your gut if you find yourself leaving work and not feeling good about what you put into the universe.

Transcript

BRYAN WISH: Will you share your One Away moment with us today?

ERICA DUIGNAN MINNIHAN: If I look back on my career, the One Away moment was back in 2006. I was on maternity leave with my youngest, my daughter. And I was seriously considering making a move away from investment banking towards something that I think was a little bit more fulfilling, something that I think could potentially have a more positive impact on society. I was on the Columbia Business School alumni job board searching around for things that I could do. I found an opportunity for a 20-hour week internship with a woman who was starting a brand new organization called Golden Seeds that was looking to invest in female founders. It was a novel idea at the time. I decided I’d throw my hat in the ring and give it a shot. Fifteen years later, I’m now running my venture fund. 

BRYAN WISH: It seems you had an early interest in finance or investing but you didn’t quite know how to take that and wrap something more meaningful around it. Where did that interest come from initially?

ERICA DUIGNAN MINNIHAN: I spent my entire 23-year career in finance. I suppose it came from a really interesting moment which could also be considered another One Away moment when I was in college. My mom is a physician. When I was in college, I believed that I was also going to go to medical school and become a doctor. As part of preparing for medical school, I was microbiology and molecular genetics major. You’re studying the course material but you also should get some experience working in a hospital.

When I was an undergrad at UCLA, I had a 24-hour a week job working as a unit service coordinator on the cardiothoracic transplant unit at the UCLA Medical Center. That’s where they do all the heart and lung transplants. As the unit service coordinator, I was able to develop relationships with all of the surgeons that did the transplants. They knew that I was a student at UCLA that was thinking about going to medical school and would advise me on my journey and sometimes let me sit in on procedures to observe. It was during that time that I realized I don’t like blood and I don’t like standing under fluorescent lights for a long period. A few of the surgeons told me, “Erica, you’ve got a great personality. You’re a really smart person.

You’d probably be much more successful in the business world and a lot happier than doing this horrible job.” I took their advice. The night before school started my senior year, I switched my major to business economics and dove right into that world. I immediately found an incredible passion for it. I was really lucky that one of my professors at UCLA, in the subject of accounting, was a charismatic, awesome guy. It seemed like the sort of subject that would be boring but in fact, it was pretty exciting and fun to learn. I developed a passion for it. From there, I ended up pursuing a career in investment banking, moving to New York and becoming a figure in the finance world. 

BRYAN WISH: In college, when you made that switch, did you have to take more time in school, or was it something you were able to finish your degree in the same amount of time? That seems like a very fast switch.

ERICA DUIGNAN MINNIHAN: I was somewhat fortunate. I graduated from high school when I was 16, and I had always planned to probably attend college for five years just so that I wouldn’t graduate before I was 21. So I did end up completing my business economics degree in two years. Then I was at UCLA for a total of five years. It was something I’d always planned. I didn’t think going out into the world and starting a full-time job when I was under 21 was a great idea. 

BRYAN WISH: You talked about the professor. He fascinated you with the feel of investing, finance, economics. 

ERICA DUIGNAN MINNIHAN: He was an accounting professor which usually people think is the driest subject. He somehow made it fun.

BRYAN WISH: Take us to that moment because it’s pushed and propelled you. What was it about the teacher or the class that you saw yourself embarking down that field?

ERICA DUIGNAN MINNIHAN: I’m kind of a somewhat detail-oriented person. I sort of like things that require attention to detail. Accounting is one of those things. I love building and auditing, financial models. Not everybody loves that stuff. One of the things that were kind of interesting and it might have had something to do with the fact that it was L.A. One is that in L.A, at the time, in the late 90s, the accounting industry there was pretty big. From a finance perspective, that was sort of where all the jobs were. These were considered cool, well-paying jobs. At UCLA, your classes aren’t 30 people. They’re like 300 people. You’d be in this big auditorium and the professors, if they were good, were kind of like these rock stars; almost Hollywood-style showmen. I think this teacher just really nailed it. I believe he still teaches there because I was interviewing a founder a couple of days ago who was also a UCLA alum who had studied business economics as well. She was talking about how she had him also and he was great.

I was really lucky to have a teacher that inspired me in the path I was going down. I was also really fortunate to have just randomly had an opportunity to get a job in New York City in investment banking out of undergrad. UCLA is a very large school. I think like 30,000 students. When you’re applying for a job in investment banking in New York, I think they hired two people out of our class. It was competitive. I was fortunate just to get the opportunity and go down that path.

I will tell everybody listening that one of the things to remember is you’ve probably seen the articles recently about Goldman and how they’re not allowed to make their analysts work a certain amount. Back then, being in an analyst program was tantamount to indentured servitude. You went in there and you were working around the clock. You’d get into work at 8:30 in the morning and if your boss let you leave at midnight, that was considered a nice boss who cared about your well-being. It was the weekends. It’s a great opportunity but it was also a rigorous training program not only in the subject matter but in how to work hard and diligently.  

BRYAN WISH: I bet you were thrown into a world that you weren’t expecting or maybe you were.

ERICA DUIGNAN MINNIHAN: We were 100% expecting it. Part of the reason I got the job was that I mentioned that when I was in school, I had 60% hours a week full-time. A 24-hour a week job working on the cardiothoracic surgery unit. If you’re working in a hospital where they’re doing heart and lung transplants, that’s a pretty serious level position that you’re responsible for. My hours were every Saturday and Sunday night from 7 PM to 7 AM. I think knowing that I have sort of proven that I could do that kind of work while maintaining a full school schedule, was part of the reason why they were like, “Okay, you’ll probably be able to also handle being in investment banking.” 

BRYAN WISH: By your early 20s, you put yourself in two very rigorous environments and figured out how to navigate the storm and survive. I can see why you maybe had a little confidence going into the investment banking side of the world. How long were you in investment banking before you made a switch?

ERICA DUIGNAN MINNIHAN: I was in investment banking for eight years. I spent two years in corporate finance and then two years in asset management. I was in corporate finance at Salomon Smith Barney, which became Citigroup during the years that I was there. Two years in asset management at Credit Suisse First Boston. Two years doing my MBA during which time I also worked at some asset management firms. Then two years as a fixed income trader trading asset-backed securities. It was in 2006 that I pivoted into an early-stage venture where I think I found my fit outside of public market banking more on the buy side but at the very early stage. I’ve been in that role pretty much ever since. 

BRYAN WISH: It seems it built a good foundation and a lens for you to learn from. What were some of the things that those years instilled in you as you were able to make this pivot into a career that’s more fulfilling today?

ERICA DUIGNAN MINNIHAN: The most important things that I learned is I had an opportunity to learn a lot about a variety of different asset classes which I think is a really good sort of baseline to have for anybody who has a career in finance to sort of deeply understand different parts of the capital structure. That was valuable. The other thing I learned – and probably the vast majority of people – is that I don’t love being in a big corporate environment. I think most people don’t necessarily love being in a massive corporation like Citigroup or Credit Suisse. There are some challenges there just having to deal with so many different people and so many different levels of bureaucracy in your role can be a little bit more challenging. 

Why I found my place in an early-stage venture is that I preferred to be much close to the actual asset in what we were building. When you’re doing corporate finance and you’re taking a company public or you’re doing a debt offering, it’s very much about the numbers, the historical financials, the cash flow, the debt to equity ratios, interest coverage ratios.

Whereas, when you’re investing in an early-stage company, it’s very much about the people, the ideas, the opportunity, the potential which is not only a lot more interesting and exciting but you feel you’re more part of building something rather than figuring out how to extract value from something that already exists. In corporate finance, in asset management, and even as a trader, what we were doing was taking existing things of value and existing areas of cash flow and figuring out how to extract as much as we possibly could from using different methods of financial engineering. To me, that didn’t feel like a very creative place to be in the world. It felt potentially more destructive.

Not that I have anything against bankers. My husband has been an investment banker for probably 30 years now. They can be cool people. For me, there was a lot more creative opportunity to be part of the financing lifecycle at the early stage. I felt I could have a lot more impact positively in that role. 

BRYAN WISH: I love what you said about being closer to the asset and what’s being built on the ground floor. To see the potential in something. The internship was with a firm that was doing an early-stage venture, correct?

ERICA DUIGNAN MINNIHAN: Yes. My first job in the venture was as executive director of an organization called Golden Seeds. Golden Seeds was the very first gender lens investing organization here on the east coast. It’s now one of the largest angel networks in the world and they also have some funds that go along with their angel investor network. When the woman was first starting it, I was one of her first hires. She had just posted for a part-time intern and then after I was there for about six weeks, she ended up hiring me as executive director. I didn’t realize that it was going to be an opportunity for a bigger role but I started part-time as an intern. I was quickly able to move into a more substantial role there as she was building the company. 

BRYAN WISH: That must have been a neat experience for you to see something being built more on the ground floor. Were you able to see an organization be built at the forefront of it?

ERICA DUIGNAN MINNIHAN: Yeah, that’s what I do all the time now. It was probably a little bit more interesting there because angel investor networks are member-driven organizations. They’re not built as companies. Seeing how an organization like that grows was a really interesting learning experience for me. I did learn a lot about how to launch and manage those types of businesses. Since I was at Golden Seeds, I’ve started two other angel investor networks. One is called Star Angel Network. That was an angel investor network for professional athletes and influencers. Then another one called One Thousand Angels which I still run. It’s a digital-only angel investor network. I think it’s such a unique entity because it doesn’t operate in the same way that a traditional business does. It’s more of a co-op business model because it kind of exists for the benefit of its members rather than for the benefit of some corporate owner. 

BRYAN WISH: Could you explain how it’s structured?

ERICA DUIGNAN MINNIHAN: One of the things that are interesting about folks getting involved as angel investors is that it is a way for relatively high net worth individuals to have more of an impact on the business world than they would through just a traditional public market, ETF portfolio. It can be an interesting complement to your portfolio; maybe like 5%, max 10% of your overall investable assets to put into these high risk, potentially very high reward investments.

The other benefit is that not only is there the financial return but it can provide an opportunity for you to grow and learn in subject areas of business where you might not necessarily get exposure to what’s going on in the cutting edge. It’s kind of a combination of an interesting financial investment with the upside of some participation. It’s similar to the way that if you decided to add an Airbnb property to your investment portfolio, you have to go out and understand the neighborhood, find a house, decorate it; engage in the process of generating that cash flow. For some people, doing these sorts of early-stage investments can be similar. 

I started One Thousand Angels five years ago as a platform that could provide more of a venture capital style approach to making angel investments and sort of separating the social club aspect of it from the investment aspect. All angel groups are different but the vast majority of them historically have been founded based on some sort of affinity group type thesis. For example, Golden Seeds was founded on the idea of investing in women-led startups. It was also started with the idea of somewhat of a regional economic development model. Most angel investor groups, historically, are based on some sort of a regional economic development model. That’s why it’s like Houston Angel Network, Miami Angels. Whatever city they’re in, they’re usually set up to invest in companies in that area. That’s one way that they can be formed. 

The second motivation, particularly for those sorts of groups, is that people join them because they’re looking to develop their networks with other folks who are potentially investing. What I noticed is one of the caveats there is that sometimes you’d get people joining who were joining more for what they perceived could be the positive social externalities of being members of such a group.

The downside there is that very often founders have a not great experience because they’re being treated more like a product for the entertainment of these members to show off their knowledge rather than serious candidates for financial investment. I’m not saying none of these founders have ever raised money with these groups because they have but just one of the downsides of these groups is that there was a certain motivation to kind of provide investment product as a more social entertainment type vehicle which is not great for founders.

I started One Thousand Angels with the motivation to do a couple of things. Number one, to take more of a venture capital-driven approach to investment selection. We don’t select deals based on, “Oh look, we’re all here in Tampa and we want to support Tampa companies.” No, it’s, “What are the best investment opportunities nationally that we can add to our portfolio?” Number two, the members don’t know each other. It’s a digital-only network. When you join, you’re joining purely for the motivation of actually building a portfolio.

You’re not there to rub shoulders with other people and other people aren’t coming after you for things because they’ve now identified you as a high net worth person. We operate a little bit more in a way to provide our portfolio companies a streamlined digital-only experience to get in front of a wide array of investors who are just serious about adding high-growth technology startup assets to a well-diversified portfolio of early-stage venture capital equity.  

Every group has its secret sauce, its benefits for members, and its approach to how it wants to operate in the world. There are angel groups that are right for a variety of different people. I certainly think for local, in-person, community-driven angel groups that are maybe trying to invest in life sciences or maybe want to fund more minority founders or whatever their theme is… The theme idea can be cool but not always for everybody. 

BRYAN WISH: It seems to be that the investors you’re attracting are probably more serious about making investments and finding good opportunities as opposed to the social aspect. Would it be fair to say that you’re trying to attract the more serious type of investor?

ERICA DUIGNAN MINNIHAN: Yeah. One Thousand Angels are designed purely for people who already have friends, already have a life. They’re not looking for something to entertain them or do or build their social network. They’re purely looking to build a portfolio of quality investment assets. It’s the same way if you want to buy an ETF. You don’t have to join some club and make friends with a bunch of people. You just buy the ETF. We’re kind of like providing a similar product which is early-stage investing, sort of minus a lot of the nonsense. There’s certainly some value to what I’m describing as nonsense in certain situations. That makes sense for some folks but we provide an alternative to that. I started One Thousand Angels five years ago.

Last year, we launched our fund which is called Reign Ventures. I run a $50 million fund that is investing in a similar asset class. Early-stage venture. We generally start with companies when they’re raising their first $1 million $3 million. Our initial checks are anywhere from $500,000-$1 million with follow-on capital of up to $3 million in subsequent rounds. We’ve been able to take that successful investing model and bring it to the market at scale by raising a fund. 

BRYAN WISH: To clarify for the audience, is Reign Ventures an extension of One Thousand Angels?

ERICA DUIGNAN MINNIHAN: It’s a completely separate entity but the kind of investment thesis that we’ve proven out through our One Thousand Angels deals carries over to our investing style at Reign Ventures. My partner there, Monique Mosley and I, actually started investing together about nine years ago. Over time, we’ve made investments using personal capital as well as capital that we’ve brought into rounds through the One Thousand Angels network as well as through other SPVs that we’ve put together. That was the foundation that we were able to use to establish a robust track record to successfully raise our fund. 

BRYAN WISH: On one side, I think it’s about finding the capital, getting people to invest in your fund, or using your own money to do that. The other side is finding the deals and creating that pipeline of deal flow to invest into. What have you and Monique and other investment partners been able to find as a way to find the deals you’re looking for?

ERICA DUIGNAN MINNIHAN: Our fund thesis is really about the opportunity presented to generate alpha by investing in underrepresented founders in early rounds. That’s where we have a lens as far as investing. How we cultivate our deal flow is based on the fact that between the two of us, we have 25 years of venture capital investing experience and have been in this ecosystem for a long time.

I’ve known you, Bryan, for 5-6 years. We’ve taken a very dedicated approach to being part of the startup community to contributing our time as mentors, judges for Startup of the Year, judges for 43 North, judges for various TechCrunch events, mentors for a whole bunch of different programs, running tons of accelerators and other mentorship programs to really kind of be on the ground building relationships with portfolio companies that might be potential investments. Our deal flow strategy is relationship-driven and about getting to know people before we invest but also kind of being in the right place at the right time when they are seeing traction and ready to raise around. 

For our fund, it’s my partner and me. We also have two amazing venture partners; one of whom is a VP of consumer tech at Silicon Valley Bank. She sees every new consumer tech company that’s starting a bank account. The other is a long-time professor of digital marketing at Columbia Business School NYU and Cornell Tech’s program here in New York. We have a lot of feet on the ground as far as identifying phenomenal potential candidates and building those relationships. We also have invested a lot of time and energy into relationships with other venture firms that come in; maybe series A that we’ve co-invested with as well as growth equity firms that support our companies at series B and later stages. 

BRYAN WISH: You’ve taken a very long-term and healthy approach to not rushing success.

ERICA DUIGNAN MINNIHAN: Yeah. I think for investors, word of mouth is your best source of customer referrals. We’re really lucky that our portfolio company founders are our biggest evangelists and make a lot of high-quality introductions for us.

BRYAN WISH: Something that’s a theme here with Golden Seeds and what you’ve done now is the underrepresented founders. With Golden Seeds, it was more women-led investments. Right now, where you see people taking on this fight to help underrepresented founders, where do you, in the startup ecosystem specifically, see opportunities for underrepresented founders who have the most impact in industries to innovate within? How are you thinking about that and approaching founders when you meet them?

ERICA DUIGNAN MINNIHAN: We invest in consumer tech and software just because those are the sectors where we have the most experience and feel that we can bring the most value to our portfolio companies. There’s an opportunity for female founders and founders of color to innovate in whatever industries they specifically are in. We don’t tell founders what to do or what to create. That’s their job. Our number one criteria for investment is founder market fits. Certainly, when we make investments, we’re generally investing a lot of times in a sector that has solutions created that has been dominated by one traditional approach.

Having a different perspective can potentially create value. A great example of that is a company called SoLo Funds that we invested in. We made our first investment in the company in like 2018. It’s one of the fastest-growing fintech companies. It was really simple, like two amazingly talented African American men who had an idea. It was the idea of one of them and he brought on the other one to be the CEO. Saw a really simple problem in the black community which is that people needed emergency loans sometimes. It was really hard to get a couple of hundred dollars if you needed it and could they create a platform that would allow people to fulfill this role and make loans to each other in a seamless and structured way?

It was kind of like a big vision type of product somewhat complex to execute but they were a team that was uniquely suited to execute it. Now they have SoLo Funds which is a peer-to-peer lending marketplace that I’d encourage people to check out. It’s pretty amazing. If you need to borrow money in a bind, you can go on there. You say, “I need to borrow $100,” but you also set what you’re willing to pay for it. It’s up to you. You can say, “If somebody lends me $100, I’ll give you a $9 tip.” The more attractive the tip, the more likely your loan is to get funded. It’s kind of like Priceline. You’re walking that fine line between, “I want somebody to make the loan to me but I also want to minimize how much I’m paying for it” which is pretty cool.

Also, for individuals who have some extra money, they can go on the platform and they’re the ones that fund the loans. You can make a 30-day loan of $100 and earn a $5 tip on that. It’s really difficult to figure out how to deploy smaller size investments into the financial markets and generate a return of 2%-5% per month. But it’s a great opportunity on both sides. It’s disintermediating predatory, short-term lenders successfully. That was a great product because of their unique perspective on the market, like actually being a part of the community that uses these loans, they were able to innovate technology that worked better, was cheaper for everybody, and created a lot more value on all sides. 

We have another company that we’re going to be leading an investment in this year called Coco and Breezy which is one of the first black-owned eyewear brands. They’re not only innovating fashion-forward eyewear but one of the things that folks haven’t been aware of in the past is that people of color have different face shapes and need a different design of glasses to be able to comfortably wear them. There were no brands in the market that were even considering this fact even though it’s a huge part of the consumer population. They’re in there doing an awesome eyewear brand but with a perspective that’s more inclusive and that they’re able to capture value from. When I think about a lot of our portfolio companies, I can describe with each of them, how their position as a founder that has a different and unique perspective is helping them better address a market opportunity. 

BRYAN WISH: When it’s all said and done and you look back on all of this, how do you want to define a legacy that you shaped for other people? 

ERICA DUIGNAN MINNIHAN: All I care about is helping female founders and founders of color build billion-dollar companies that are creating great technology products and solutions in the market. As far as I’m concerned, I think that’s what my legacy is going to be. It’s so exciting. It’s amazing to have faith in somebody and belief in somebody and invest your time and energy in supporting them in getting to their goals. To see them succeed is pretty miraculous. As far as what drives me and what I love doing, that’s the magic trick that we’re able to pull off in life which shocks me all the time.

I think about when we’re making investments in companies, there’s generally still a pretty substantial amount of risk but the way we’re looking at it is, “In five years, this company is going to be doing $50 million in revenue,” and you’re putting together your little financial model. You’re investing. Then when it happens, you’re like, “Holy crap. How did that happen?” Part of you feels like, “Oh my god. Can we do this again?” It’s such an interesting thing to be part of, to help somebody build a company and to create hundreds of jobs. There’s nothing better than when one of your portfolio companies is successful and you see them creating high-quality, really good jobs for people. That’s fabulous at a company with a good culture.

That’s making the world a better place. For me, I don’t need attention or a legacy or care if anybody knows who I am. Just being part of bringing those things into the world, that’s what makes me feel I did something great with my time, energy, and life. That’s exactly why, when I was sitting there as an asset-backed security trader trading CDOs and CMBS and all the structured products that ended up bringing down the economy, I had a transformative moment. As an asset-backed security trader, you’re trading a lot of different types of securitized products. I think that day, I had to bid on a $15 million package of bonds that was securitized by people’s trailer homes. As a trader, I’m just sort of like, “Okay, cool. What’s the collateral? What’s the payment history on this?”

As I kind of thought about it, I felt icky that I was trading this product that is secured by the home of somebody that lives in a trailer. The intention is if they miss a payment, which they probably will, they’re going to take that person’s trailer and make a lot of money off it. I felt horrible about it. I called my mom that night, who is a physician, and I said, “You’re lucky. You’re a pediatrician. You know you’re helping people in your work. I don’t feel good about what I’m doing here. I need to find some way I can still be in finance but not come home at night and feel gross about a transaction I did that day.”

BRYAN WISH: That’s so good that you were able to lean into that feeling and realize it’s not right for you. You listened to that inner voice which is so hard to do. You did and now the way you speak about making that impact, it feels rewarding just listening to it. For you doing it, I’m sure it’s such a surreal and beautiful feeling. Thank you for sharing. If someone wanted to get in touch with you or someone who has a deal to send to you, what would be the best way to contact you?

ERICA DUIGNAN MINNIHAN: You can connect with me on LinkedIn: Erica Duignan Minnihan. I’m also on Instagram @EricaMinnihan. Our fund handle is @reignBC. You can always email me at erica@reignBC.com.

One Away Podcast
Bryan Wish

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