DOUG PEARSON ‒ NYA MEMBER SPOTLIGHT
Doug Pearson joined New York Angels in 2019 and became a NYA Board Member earlier this year. Doug is also a member of TCA and hopes to help connect the two leading angel groups to improve deal flow despite being on opposite coasts. His collaboration with Alyssa Tam for the Plug and Play Preview Days has helped build the angel ecosystem across dozens of angel groups. Doug discusses how he joined NYA’s board, the unique role angel investors play vs. VC and PE firms, and why angel groups should collaborate to become more effective.
How did you meet New York Angels? Why did you choose NYA?
A fellow member from another angel investment group introduced me to NYA, and I felt like it gave me more capacity to evaluate deals. That is true for any angel group: the more deals you see, the more deals you invest in, which leads to increasing your batting average for an exit.
What roles have you held within NYA?
Up until this year, I was a regular New York Angels member. I did my share of deal leading and sourcing, but nothing out of the ordinary. Cindy Cook, our NYA Chair, recognized I was working to bring NYA together with some other angel groups. I started collaborating on the Plug and Play Preview last fall with Alyssa Tam. Cindy approached me this spring and said, “This is a voice we need on the board.” She explained we were expanding the NYA Board. She thought the connections I have across the country could help unite NYA with other groups and we could learn from each other to help the overall angel ecosystem.
With your focus on building the early-stage ecosystem, what have you learned about the power of angel groups working together? What are the benefits to founders when angel groups partner?
First, as everyone who is reading this knows, there is a progression of capital stack. Founders know their first set of investors are friends and family, and they know where to find them. Later-stage VCs and PE firms are also pretty visible. They may not know who to contact or it may be challenging to connect with VCs and Pes, but you know who they are. The gap is the angel stage.
The angel stage is very fragmented and made up of many groups, like NYA, across the country and around the world. These groups don’t traditionally work together, so no one group is usually able to fill the entire round or negotiates alone. That means founders often have to collect multiple groups to complete a round, which takes time.
If a VC firm liked the company, they could take down the whole round with one check and set the terms. Founders working with angels miss out on speed, but they gain something even more valuable: learning and mentorship. Angels are often the first people outside friends and family to back you, and they want to help.
I have an old NYA business card that describes our commitment to funding and mentoring great young companies. We have always had a culture of wanting to help. VCs, who are very numbers-focused, often do not have the desire to mentor founders through the good times and bad times, as angels often do.
As a member of both NYA and TCA, what do you think each group can learn from the other?
TCA is a large group on the West Coast, and NYA has a long history on the East Coast. Between our two groups, we have some of the fathers and mothers of angel investing. At NYA, everyone knows David S. Rose. On the West Coast, there was Luis Villalobos, Dave Berkus, and John Harbison.
These two groups have a lot of institutional memory and shared capability, and we have an incredible opportunity to collaborate. We already share a handful of members between groups.
We have to find ways to work together. In the past it was more difficult, but Zoom changed everything. Angel investing used to be a primarily physical meeting business, but now it is easier to welcome out-of-town members. We can learn a lot from each other. Cindy and her TCA counterpart are actually meeting this month to explore our relationship further.
As an NYA Board Member, what are some of your goals for the organization? How do you see NYA changing the landscape of angel investing?
Our goals are to invest in and mentor great founders and provide increased deal flow for NYA Members. By connecting NYA with other angel groups and building out the angel ecosystem, we all win together. Founders win with better access to angels across the country, and NYA and other angel investors win with access to carefully selected, high-potential early-stage companies.
We are also finding new ways to bring in more members who are not NYC-centric. When I joined in 2019, most NYA members had finance backgrounds, which is natural in New York, but other angel groups have different compositions of experiences. TCA has a lot of entrepreneurs and MedTech experts because of their proximity to universities like the University of California. We can benefit from their diversity.
I am also concerned about VCs and PE firms moving into seed stage deals. If they take the best deals early, that is a threat to the angel investor access and investment model. I want to get ahead of that curve by building out the angel ecosystem to ensure founders have the support and capital they need to be successful.
NYA continues to invest heavily in AI. Are there ways NYA and other angel investment groups should be leveraging AI in our own organizations?
This is a great example of where angel groups could collaborate. We all use platforms like Gust, which hold incredible historical data: financials, applications, outcomes, follow-on rounds, and more. There is a huge opportunity to apply AI to that data and identify patterns in successful early-stage investments. Imagine supplementing our screening committees with insights from AI trained on tens of thousands of past deals.
This is not something one group can do alone because it is such a heavy lift. If we collaborate across angel groups, we could create a tool that transforms deal screening for everyone.
What advice would you give to founders who are starting to fundraise?
Spend as much time as you can on your financials. Many Gust applications I see are weak with very rounded numbers and little detail. I understand that founders do not always have specific information yet, and importantly they are not pretending to have detailed information. They still need to think deeply about their capital needs, cash burn, seasonality, working capital components. It isn’t just about expenses, it’s about redeployment of capital and how you manage cash in the real world.
A good cash flow statement can set a company apart from other pitches. I look at finances from an operating background, not a Wall Street point of view. Other angels, who are from Wall Street, understand even more that financial analysis is an important part of a founder’s success.
What advice would you give to angel investors considering joining NYA?
Jump right in and join NYA or another angel group. Try before you buy if you want to be sure, but angel investing through a group has many benefits versus investing alone. New York Angels has great deal flow and smart members, but more than that, the true benefit is the friendships you can make. When I started, I thought NYA would be a hobby with some decent investments. What I found were great friends, and people with shared interests who were smarter than me. Meeting and learning from other people has been the best part of NYA. It gave me a new chapter in my life that I really didn’t expect. If you happen to win with some good investments, that's great. We all hope we do, but the real reward is in the relationships.
What’s something from your background that has been helpful in your career?
In college I worked as a technician and engineer in commercial sound, installing systems in stadiums and airports. It was my college job, but the company happened to be bought by Paramount Pictures. At the time they were competing with Dolby for theater sound, and they did not like paying licensing fees. So Paramount spent a lot of money on our little company, and eventually I ended up running that little division in my early twenties. That was a fun career experience that taught me how to run a P&L, how to manage people, and how to handle budgets and cash flow for a seasonal business, plus other lessons I would have never gotten from another experience. I went to business school, then joined P&G, and then when I had my own company, I hit the ground running because of that formative experience. The single best thing that happened in my entire career was getting an opportunity to run that little tiny division when I was in my early twenties.
What broader impact do you hope this conversation will have on the angel investing community?
I hope this sparks more conversation. The question I keep coming back to is: What can angel groups do together? Not just for NYA but across the ecosystem. I hope this helps open up more opportunities for collaboration among all angel groups.
