LARRY NG ‒ NYA MEMBER SPOTLIGHT
As a serial entrepreneur involved with four FinTech companies (Wall Street Systems, Tradeweb, MarketAxess, and Moneyline Telerate), two of which are now publicly traded and two that exited to strategic buyers, Larry Ng has no shortage of experience. Being an entrepreneur mentor in FinTech Innovation Labs, NYA Members personally asked Larry to join New York Angels in 2017. Outside of angel investing, Larry developed Abby the Pup, which has provided millions of children around the world with free public domain education materials for preschool. In this interview, Larry shares about his non-profit as well as discusses the benefits of the NYA sidecar fund and how startups often fundraise too prematurely.
How did you first meet New York Angels, and why did you decide to join?
Given my experience in the fintech space, I was a mentor for an organization called FinTech Innovation Labs, which is a private-public partnership that cultivates financial technology in New York City startups.
New York Angels Members would regularly come to the FinTech Innovation Lab to look at our deal flow. Elaine Gilde, Jeff Seltzer, and Bruce Gallager approached me and asked if I would be interested in joining NYA. After I talked to them, it was an easy decision to join.
What do you enjoy most about being a New York Angel?
Unlike my other ventures, New York Angels has experts across many domains. My background is in financial technology, so I typically look at deals on the fintech side because I have domain knowledge. I invest in what I know.
I am a big fan of NYA’s sidecar funds, where a New York Angel Member can co-invest alongside the fund. I find that the other New York Angels with domain expertise are good at filtering out the good deals from the bad. I'm surprised how well those side funds have done and how well they've been managed. In essence, I invest personally in the things I know, and anything I do not know, I invest in their sidecar funds.
What do you look for when you are investing in a company?
Unfortunately, a lot comes from gut. I don’t really do a detailed financial analysis. My bet is typically on people. Do I like the management team? Do they know the space? More importantly, do they have integrity? Will they let us know when things go wrong, and will they stick with it when things go bad?
Then, I also assess their business model. Do they have a large enough TAM where they could scale the business? But that's secondary to the management team. I really bet on the jockey.
What do founders appreciate most about working with you?
I am on a board or a board advisor to a number of startups right now. They like that I am a straight shooter. If I think they are doing something bad or something is not going well, I will let them know up front. I am pretty good at delivering bad news to the founding team, and they respect that honesty.
I also have helped many founders navigate successful exits. A lot of new founders have not done that before, so they rely on board members to help them navigate that process. I am in the middle of a deal right now. We are working towards an exit in March of this year, so the CEO is calling me at least twice a week for advice.
What is the difference between companies you see at Screening versus those who make it to Due Diligence?
As I mentioned before, the management team and the business model are critical for success. The vision of the founders and the integrity of the founders are the main criteria that separate the companies that make it past Screening.
When you look at your past investments, what is most critical for founders to deliver a successful exit?
It really runs the gambit. There's no one answer for everything. Sometimes it can be circumstance more than what the founder does. If a company is doing very well, you will receive in-bound, unsolicited offers to buy the company, especially in tech. A legacy company might want to leverage a tech company's expertise they don't have in house. I have seen that happen in a couple of my deals.
There was an exit I was involved with where they actually fired the CEO. I had to represent the CEO shares as a board member because the other board members trusted me. He still had a successful exit, and he thanks me all the time for seeing him through this.
What advice would you give founders starting to fundraise?
Many startups fundraise too prematurely. At minimum, they should have an MVP, a working prototype, and some indication that customers are interested. I like to invest near the beginning of product market fit, when the founders have put in sweat equity, built prototypes, talked to customers, and there is interest, maybe some betas going. That's more interesting than someone with just a pitch asking for money because they have a great idea.
Ideas are easy. Execution is very difficult. I am a big believer in founders putting in sweat equity to move the company along before they ask for outside money.
What advice would you give investors who might be interested in joining New York Angels?
New York Angels is a great group. You have ex-entrepreneurs and ex-finance leaders that really know the investment space, especially early-stage. You learn a lot from the community. Looking at the deal flow and the comments about why NYA Members pass or why they like a company, that education alone is worthwhile. It helps you see how other people think about the investment thesis.
What is one little-known fact about you that has contributed to your success?
Early in my career, I started giving back because I've been very fortunate in my life. I was a trustee for my undergraduate school, Cooper Union, and for a number of years, I was the chief fundraiser, head of development.
A few years ago, I did something that has been the most rewarding for me personally. I created Abby the Pup, a non-profit to provide free public domain education materials for preschool. The organization is named after my daughter's dog, and it has taken off. Millions of children throughout the world are benefiting from these materials every day.
I think giving back helps you get a sense of what's truly important in life. That has helped me on the business side too, because at the end of the day you have to deal with people and work with other good people.
Recently, I also wanted to give back to my local community. I live in Forest Hills, Queens. Queens is the most diverse urban area on the planet. I created a sculpture and donated it to the local park. There is a website called queens-nyc.com, and you'll see the whole story behind it that celebrates Queens' diversity of people and cultures.
How did you begin your career?
I was very fortunate because of my educational background. I started as a microprocessor chip designer for IBM. I designed microprocessors, but honestly, I just couldn't cut it. Those guys were too smart for me. So, I went to business school. The combination of Wharton’s finance degree with a quantitative engineering background gave me a lot of flexibility in terms of career choices.
I always had entrepreneurial aspirations, so my first job with a finance degree and engineering background was as a marketing manager for CBS Records. That was when Michael Jackson became hot. I did that purposely because I knew at some point I would start a company, and I did not want to land my first job out of business school on Wall Street. I wanted to pick up marketing and sales experience, and that led me to understand product market fit. I basically moved from a chip designer to peddling records for CBS Records.
