Design's Seat at the (Cap) Table: Part II

Thu, 30 Mar 2023 00:00:00 GMT

In part one, we discussed the value of designers getting involved in angel investing. Let’s talk about the other side of the cap table—why it’s important for an investment round to have a designer be a part of it.

“Let me know how I can be helpful” is a running joke of dudes (it’s always a dude) in Patagonia vests, particularly in Silicon Valley. I truly believe when these words are backed with authentic action, it is so impactful and powerful for founders. Many pre-seed companies need capital to keep their idea alive. There are many reasons to have a designer on your cap table; some more obvious than others.

Design help in the product and brand

Let’s start with the obvious one...design. Unless one of the founders is a designer, there’s a chance that early-stage startups haven’t hired a designer yet. This might sound blasphemous, but the reality is a lot of funding in early startups will go to engineering to build the product. The amount of value a designer can provide to an early-stage startup is immense. Form Capital is a great example of this. They offer actual design work with their portfolio companies in the form of design sprints and working closely with founders.

Experience and system design

Experience is key and less visible than working on the startup’s product itself. When you make a decision on something, you’re designing an outcome. Early on, many companies are not prioritizing systems due to the need to move fast. Designers, some of the best systems thinkers, can offer consideration and a point of view that allows you to move fast without facing unintended consequences later on.

The area I’ve observed this to be very helpful is thinking about recruiting and hiring, DEI initiatives, and accessibility. These are not things that should be bolted on after you scale but considered from the very beginning. Designers also think a lot about macro-level interaction design, such as journey mapping and user experiences. Recruiting, hiring, and onboarding are some of the most crucial moments as your startup grows, and having a designer think about some of these opportunities adds tremendous value.

Many designers also have experience doing customer research, at least enough to be dangerous. This can help amplify product validation of what to work on next while moving quickly. In a world where research is often first on the chopping block, it’s unlikely a founding team has a researcher, and design can bridge that gap for quite some time.

Helping with hiring your first designer

There is no harder role to fill in design than the founding designer at a startup. An angel investor who is a designer can fill gaps in your startup. Even with a founder as a designer, they can benefit from an experienced advisor to help them navigate. An advisor has a great network of designers that your company can tap into.

These are a few examples of how a designer can help on your cap table. There’s this quote from the sci-fi cartoon Futurama, “When you do things right, people won't be sure you've done anything at all.” In many ways, I believe this is the value design angel investors bring.

Notes

If you want to learn more, Mike Kruzeniski has a great resource called Design Angels with really comprehensive information.
I highly recommend the book “Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups” by David S. Rose as a great primer to angel investing
Thanks to Hareem Mannan for brainstorming this article with me
A huge thanks to those who encouraged me to get into angel investing (you know who you are)

Read Part I: The value add design angel investors bring

Design's Seat at the (Cap) Table: Part I

Tue, 21 Mar 2023 00:00:00 GMT

Until recently, angel investment felt out of reach due to my perception of what it took to get started—a lot of capital and deal flow. The vivid dream turned into a reality when Paige Finn Doherty inspired me to make it real by investing in a syndicate she led. The experience was so inclusive it was a rude awakening for me on what’s really needed to get started.

Alumni designers who found success early at Silicon Valley startups formed entities like Designer Fund, Combine VC, and Form Capital. They’ve set the vision on what role design can play in venture capital. Despite that, there's still a large opportunity for designers to focus on individual angel investors.

Design continues to struggle to find that proverbial seat at the table on the executive level. We hear about the importance of design, yet we don’t see much representation at the most crucial level. Designers may not have a seat at the table at companies until there are more seats occupied on the cap table of design angel investors to advocate for it from the other side. A design angel investor has a proven track record of what happens when Design is (or isn’t) represented in leadership and strategy.

I’ve dipped my toes in many different roles, and I am a designer at heart. I love solving problems to create elegant software experiences for humans. In the investment world, you might call me an operator, which is a cool word for someone who works at a company. I work at Webflow as an operator leading Design, a practice I’ve done for almost as long as some of the founders I work with have been alive. I also have experience in scaling startups and have been a part of product leadership teams, which brought me closer to how a company operates.

I’m still a neophyte when it comes to angel investing, and there are so many more qualified people who can tell you about angel investing than I can. What I can offer is a fresh perspective of a designer who wanted to invest in founders and startups. I’ll tell you what I tell all founders I invest in: you can get more money from other angel investors, but I can give you other forms of value if I’m on your cap table. I’m deliberately letting people carry me to be involved and gain experience. You won’t see me cutting big checks or leading rounds yet for two simple reasons:

I’m not ready to write big checks based on how much I’m willing to allocate to angel investing
My primary commitment is as an operator, and leading a round is time-consuming

This is what makes micro-investing so appealing. I get to take high risk while keeping it low-key. Let’s not pretend that you don’t need money to invest. What people might not realize is the size of the check, which ranges from $1,000 to $100,000 (or more). I have absolutely no shame in the size of the check I write at this moment.

Though value is typically attributed to the size of the check you commit to, you can add value in so many other ways. Let’s go through a hypothetical situation. If you invest $1,000 in a round as a value add investor when others might be putting in $100,000, then chances are you might feel 100x inferior—I know I did. Investment starts with the check and doesn’t end with it.

An angel investor once told me that the value you can deliver as a value add investor can truly change the trajectory of a startup’s success. As an experienced operator, a quick call or email to advise a group of founders can save them time and money they would otherwise spend figuring things out on their own. So you might cut a $100,000 check, but you might also provide guidance for a startup to save them hundreds of thousands of dollars. This perspective completely changed how I viewed my tiny investment. A $100,000 check helps only when it converts to value.

The opportunity for designers in venture

Why would designers want to become angel investors? Isn’t that what product managers and engineers with successful exits do? That’s the problem within itself...why not us?

Guiding design decisions

By the time a designer joins a company, there is already so much legacy debt. Working with early startups gives us the opportunity to be proactive about problem-solving and having a design advisor can help flag dependencies early on.

Product strategy

Designers talk a lot about how they’d like to have more product influence in the companies they work at. This has resulted in some product designers pivoting into product management. There are other ways aside from a career change to have product influence, and startup advising is a great way to flex your product strategy muscle.

Angel investing is mentorship

Design leader coach Mia Blume (formerly IDEO, Pinterest, and Square) often speaks about how we need sponsorship in design leadership. One way to sponsor is to allocate funds to it. By committing to a check, even at a smaller size, it’s representative of your belief in the founders and their ambitions. If you don’t have the privilege of allocating funds to investments, see how you can get involved, such as being an advisor to a startup.

Being an accredited investor before meant you possessed a certain level of capital, but the Series 65, Series 7, or Series 82 exams are new pathways for accreditation. There’s no better time to get started.

I treat my angel investing the exact same way as I might back a Kickstarter project or invest in publicly traded companies on Robinhood; a way to build a portfolio of bets for things and people I believe in.

Don’t let the size of the check discourage you about the value you bring. It’s more than you probably give yourself credit for. The cap table may be the ultimate seat at the table design needs to enable more representation in companies. Stay tuned for part two of this post to discuss in greater detail the value of having a design angel on your cap table as an investor and startup founder.