Back in 2020, John Henderson started spotlighting some of Australia and New Zealand’s best and most well-known angel investors. Our jaws dropped when we saw Rowan Simpson’s IRR over 14 years was 44%. We took notes on what makes a good angel investor from Matt Allen. And we were reassured by Suse Reynolds that angel investors could get started by putting their “two packets of chocolate biscuits worth” of investment into startups.
Since then, AirTree has run 3 cohorts of our Explorer program, and we’ve just started on the 4th! That means it's time to shine a light on our impressive Explorer alums, who founders are lucky to have on their cap table.
First up: Rohit Bhargava. Rohit has spent the last 8 years supporting and growing the startup ecosystem. He’s been a founder, ran a growth marketing agency (accidentally, he says) and more recently was part of the AWS Startups team.
But most of you will know him as the host of The Startup Playbook Podcast. If you scroll through all the episodes–coming up to 170 of them–you’ll see (and hear!) Rohit has consistently served up quality interviews with founders, investors and experts, from Jason Calacanis (Serial Entrepreneur and Angel Investor) to Holly Liu (Co-founder of Kabam) and Malcolm Turnbull (Former Prime Minister of Australia).
On top of all that, he’s just launched the Playbook Angel Network, a syndicate that invests deal by deal into startups.
Now, the interviewer becomes the interviewee…
How did you get started as an angel investor?
I started The Startup Playbook podcast in 2016 after running my own startup, StageLabel. Off the back of the podcast, founders began to reach out for help, guidance and connections. A lot of their requests were around fundraising and I started to play an ad-hoc connector role between founders, VCs and angel investors. Off the back of that, I got into angel investing.
My first investment was in a UK-based startup called Subly, which does automatic AI translations. As a podcaster, I know the pain point and challenge of creating captions, especially in different languages. I was compelled by the founder and what they were building, so I wrote my first cheque into them.
When you first started angel investing, what was your approach and cheque size?
I was under the impression that you needed tens of thousands of dollars to get started. I remember interviewing Kylie Frazer from Flying Fox Ventures for the podcast, and she spoke about the impostor syndrome you have when you first start angel investing. You think you need to come with a big cheque to be meaningful and earn the right. I definitely made that mistake with a couple of my angel investments at the start. Now, through the syndicate, we want to make it more accessible for investors to get into deals.
Our minimum cheque size is generally $5k per investment per investor, which we pool together. Founders get the benefit of having multiple value-adding angels in their corner while just having one name on the cap table
The best companies are deliberate about who they let onto their cap table. It’s a hassle for founders to get signatures and all sorts of paperwork from a lot of angels. But they’ll do it for a handful of the right type of people. There’s always room for great angels at the pre-seed stage.
It often comes down to how you can add value to the company. That could be from a deep network of relevant connections, industry expertise or even just being the first believer in the company before anyone else.
I think Rayn Ong is a great example of someone who has built an incredible track record as an angel investor simply by being the first cheque into a startup.
You were part of our first cohort of Explorers. How has the program helped you as an angel investor?
The content and community aspects of the Explorer program have been hugely valuable in my journey.
It was good to get an insight into AirTree’s process and the inner workings of assessing deals. When you're getting started as an angel investor, you have your own approach and process (or lack thereof!) around what you’re looking for. It was great to get an insight into AirTree’s decision-making process and the inner workings of assessing deals. Seeing how a VC fund goes about it gave me a more well-rounded perspective that also suited my own approach to investing.
The other thing, which seems obvious now, was seeing how many other people were interested in angel investing. Being in a community of people who are at a similar stage to you and interested in the same things is helpful. We got to share deals and see how others assess them.
You've gone from being a founder to creating a successful podcast and now building out Playbook Ventures and Playbook Angel Network syndicate. How did the syndicate come about?
I started the syndicate for a similar reason to why I started the podcast. The podcast is there for founders to learn from other people who have been there and done it. Not everything is applicable, but you're hearing from someone who has been on that journey before and can talk through the ups and downs.
The Playbook Angel Network takes a similar approach. Unless you’ve been a founder or an operator and understand the struggles, it’s hard to have deep founder empathy. We wanted to bring those people along to co-invest with us, and the syndicate helped us create a structure to do that.
I also started the syndicate because I wanted to dedicate more time to angel investing. I’ve been an LP in different funds, but whenever I've written a cheque directly into a startup, I’ve wanted to get more hands-on involved. The syndicate structure lends itself perfectly to this. Our investors are more engaged, lean in and start opening doors for these startups compared to when they’ve invested through a different structure.
What do you look for in an angel investment?
As an angel investor, I love investing very early into companies when there’s nothing to go off besides a great founder and a big vision.
I think it’s one of the most exciting phases of a company with so much opportunity to shape the future. From an investment perspective, there’s an opportunity to come in at a valuation where there is tremendous upside in backing the right companies.
When angel investing, particularly at the early stages when there are next to no data points to go off, the only thing you can lean in on is the founder. As the saying goes, “Back the jockey and not the horse”.
I build conviction in the company through the founder. “Is this someone I believe in? Do I think they can attract the right type of talent? Is there a big enough market that this will be huge if they win?"
Does your approach and what you look for differ in the syndicate?
As an angel, I tend to over-index on the founders and make almost entirely gut feel decisions. With the syndicate, we have more of a system and process that we go through. But the core philosophy of finding founders with big visions is the same.
One of the things we talk about internally is “unreasonable founders who’ve made an unreasonable amount of progress”. And unreasonable is a good thing; they’ve been able to pull together incredible partnerships or build traction, despite having limitations around resources. When we look at investments, we over-index on their ability to execute, hustle and get things done when they don’t have much to play with.
We also look at a founder’s ability to tell a great story. It’s difficult to achieve anything meaningful and at scale on your own. So founders need a good story to attract not just investors but early team hires and customers in the absence of data points.
Has there been any startups you’ve passed on that you wish you hadn’t?
I had some opportunities early on that I passed on because I didn’t think of myself as an investor and didn’t feel like I had the resources to invest.
The first was a friend who I studied engineering with at university. When he first had an idea for his startup, he called me to ask how he should go about finding a technical co-founder, amongst other things. I had several opportunities to invest, but it wasn’t on my mind at the time. He’s gone on to do incredible things–Mastt raised their Series A in early 2022.
Another miss was a startup founded by a friend who worked for me at my agency. We spoke about investing early on, but I didn’t follow through. He ended up moving to Germany and exiting his company within a pretty short time frame.
There have been many other founders who I connected to VCs and Angels that went on to do quite well!
A lot of these misses were due to the fact that I didn’t feel or think of myself as an investor and didn’t feel like I had hundreds of thousands of dollars to invest into companies at the time.
A big part of launching the Playbook Angel Network was to make these opportunities more accessible to others in a way that I wish I had available to me a few years ago!
How do you go about deal flow? Do you get a lot of inbound deals with your podcast?
When I started the podcast 6 years ago, I didn't envision it becoming a vehicle to launch an Angel Network, but I've been fortunate with how things have played out. The podcast is a great vehicle to build relationships and start conversations - which has helped us get exceptional investors and deal flow!
Although I haven’t mentioned the Angel Network on the podcast as yet (aside from my last interview with Jackie Vullinghs!), our first 31 investors were all “friends and guests” of the podcast, and the majority of founders that have reached out to us are regular listeners of the podcast.
Because of the podcast, we've been let into oversubscribed rounds because they were fans of the show and wanted us and our investors in their corner.
The public nature of having a podcast has allowed us to build relationships at scale and create a differentiated value-add that we can provide to our portfolio companies. We believe this will allow us and our investors to get into the best pre-seed and seed-stage companies.
Your podcast is an amazing platform for founders–is that part of the value-add for your angel investments?
The Startup Playbook podcast is a large part of the 3 core pillars of how we think about adding value.
The first is the exceptional group of angels we have in the Playbook Angel Network that know what it takes to go from launch to exit and we want our portfolio to be able to tap into their experience and insights.
The second is the great relationships we have with the leading VCs in Australia (including AirTree). We want to use our relationships to help our portfolio companies bring on the right strategic investors on their cap table sooner so they can go back to focusing on executing their business rather than fundraising.
And lastly, we know that at the early stages, one of the most difficult parts of building a company is getting your word out there. We want to leverage our community and content distribution channels to help our portfolio companies open doors to potential partners, generate new leads to potential customers and help them attract talent by positioning them in the right way.
On top of all of this, we focus on an operator-led model. I am a former and current founder and James, our Investment Manager, was the co-founder of a direct-to-consumer brand that’s currently going through an acquisition. Our own experience combined with our investor network of “Friends and guests of the podcast” helps us to provide relevant advice, insights and connections for the founders we’re investing in.
Our goal is to provide an outsized impact for the size of cheque we provide to companies.
How can people join the Playbook Angel Network syndicate?
The first part, which is unfortunate but part of the platform we use, is they need to qualify as a sophisticated investor. I have a personal gripe with the structures in place and would love to find a way to get more people involved who don’t qualify as sophisticated investors.
Our value-add to founders is tied to the investors we have investing alongside us, so although we don’t have a specific criteria we do set a high bar for investors in our network. One of the key questions we ask is, “What are the areas that our founders and portfolio companies can come to you for help with?”. We’re looking for someone with a point of difference or who offers up a new angle. For example, one of our investors doesn’t come from a traditional startup background but he is connected with the majority of tier one insurance companies and banks. He opened up meaningful and valuable doors for one of our portfolio companies.
We also ensure there is alignment between the types of companies we like investing in and their expectations for what angel investing means = a long-term investment!
How can founders reach out to you? And what does the process of first meeting through to money in the bank look like?
People can reach out to me directly via LinkedIn or email. We direct founders looking for funding (as well as investors interested in joining our network) to our website, where there’s a form they can fill out if they’re interested in receiving investment from us. Having that information means we get a good understanding of the company upfront and helps best utilise the time we have with the founders.
In the first meeting we want to get to know the company vision and team. In the following meetings we like digging in deeper into specific areas of the company to understand how they will execute, the type of resources they require and getting to know the founder(s) in more detail.
Alongside us, we’ve got a pretty incredible advisory board who help us with due diligence and we go to them for their perspective and advice. On our advisory board are Jackie Vullinghs (Partner, AirTree), Wendell Keuneman (General Partner, Tidal Ventures) and Lauren Capelin (Former Principal at Startmate).
Our process generally takes about 2-3 weeks from start to finish. If we don’t invest, we try to give one or two specific reasons why we couldn’t build conviction through the process.
What does the future look like for Playbook Ventures?
Our goal is to be the first place that pre-seed and seed stage companies in Australia go to when raising their round of funding. We’re excited at the potential for Australian companies to make a dent on the global scale and want to play a helping hand from the very beginning of their journey.
We’re just getting started ourselves and have some plans around interesting funding models and content that we will be rolling out in the near future…watch this space!