Early-stage investing is fraught with steep risks and a long, uncertain path to returns, but those facts shouldn’t necessarily deter new entrants, according to Danielle Gifford, former executive director at Movement51.
“What people don’t realize is that early-stage investing is very much a viable asset class,” Gifford said in a sit-down interview with BetaKit at SAAS NORTH 2023. “Everyone has their traditional portfolios that they’ve built out, and there’s an opportunity, which might be a little bit more of the spicy part of their portfolio, to actually invest in founders for companies that they really, truly believe in.”
“What people don’t realize is that early-stage investing is very much a viable asset class.”
Movement51’s mission? To grow Canada’s investor community by educating and empowering aspiring investors, and making early-stage investing more accessible and equitable.
“For aspiring investors that are either looking to invest for the first time as an angel, or if they’re looking to invest into a fund, usually the process can be kind of complicated, and there’s a lot of mystique around it,” Gifford said. Movement51 works to demystify those processes, from deal sourcing, to investment vehicles, diligence, and negotiating term sheets and ownership on the cap table.
One common stumbling block for first-time investors is underestimating the time commitment required in early-stage investing, Gifford explained, where the expectation of quick returns often leads to disappointment.
“It is a long-term game, and I don’t think that a lot of people sometimes understand what that actually looks like,” Gifford added. “With Movement51, what we really try to do is educate you on, as an angel, this is where you actually sit at the beginning of the game.”
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Time also plays a key role in the challenge Movement51 is tackling: enhancing diverse representation within Canada’s investment community. A recent report from BDC Capital found that despite year-over-year gains in the representation of women and visible minorities at Canadian venture firms, most of that diversity is happening at the analyst or associate level, and senior-level diversity in the industry is still lagging. Gifford said this is also, in part, a time problem.
“If you also look at the lifecycle of a fund, it’s 10 years, so it takes time to actually really train and bring individuals through the ranks as they go through that investing journey,” she said.
Targeting not just those climbing the corporate ladder but also first-time investors, Movement51 is looking to use education to build a knowledgeable and diverse investing community.
“[It’s about how] we educate both investors and founders, especially at this early stage, [about] what is common and what’s out there,” Gifford added. “I think the problem is unless you’re in the venture community, or unless you’re a serial entrepreneur, you don’t really know.”
Listen to Danielle Gifford’s full conversation below, and catch more conversations from SAAS NORTH 2023 on The BetaKit Podcast.