"I’d rather hire one strong guy instead of two or three average people because, in a startup, you compete with your competitors; they are well established."
Jacky Chen on his experiences of being an entrepreneur and an angel investor
Jacky Chen is the co-founder and GP for Archangel Network of Funds and Managing Director of Wharton Alumni Angels. He joins (JP) Jeffery Potvin to discuss his experience and how it has shaped his lifestyle today. He shares valuable insights on startup training, the importance of team and culture, and the crucial role the founder plays in growing a business.
Jacky shares what it was like when he started his investment firm. He also talked about his investment process, and what he looks for in companies he would invest in.
Jacky Chen is dedicated to angel investment since 2014 and has built up a portfolio of more than thirty startup companies in Canada and the US. His target investments are the startups with disruptive technologies and business potential in the industries of enterprise software, ICT, AI, MedTech, and Advanced Manufacturing.
Jacky has acquired concrete business experiences as a successful founder in the startup ecosystem and an executive of Fortune 500 companies over two decades. His remarkable accomplishments range from building startups from scratch to leading a billion-dollar business with leverage of 14,000 enterprise channel partners.
The unique journey has shaped Jacky’s outstanding of investing in early startups. Jacky holds the degrees of Mater’s E.E. and MBA, and he graduated from CEIBS and The Wharton Business School of the University of Pennsylvania.
The full #OPNAskAnAngel talk
Jacky: So my name is Jacky Chen. I’m an Angel investor and also a entrepreneur, and executive for 14500, formally. And my background is in enterprise, IT industry for more than two decades, and I also started my own business. I was pretty lucky enough. Got my business acquired by their Compellent in 2011, so I think I jumped into dealing after a few years of a lockup, I’m jumping into Angel investment ecosystem. Today, I’m a general partner of Archangel fund, and also our managing partner, managing director of wedding alumni angels. So I’m pretty enjoying, enjoy investing!
Jeffery: Awesome! Well we’re excited to have you today and before we do, you got to give us one thing about you that nobody will know.
Jacky: It’s pretty challenging. I believe no much secret on that, so I believe Angel investment is more about being an angel investor. More important is your industry business experience. It’s pretty different from PEVC later stage, right? And causing early stage, no much data. You judge everything with a scratch, even no scratch based on business experience. So I believe, Angel investor is more challenging than that stage PE, or VC and PE. Probably, somebody else may not agree with that but it’s true.
Jeffery: Well, there’s a lot of risk, so we’re in the highest risk category you can possibly get into, I guess, when it comes to companies being early. So I do agree with you that, it is completely different. One is based off metrics and lots of metrics, and the other one is based of gut and little metrics. So there’s a good fine balance there. So I’d love to kind of go back to a little bit of your background because I always believe that a background is what shapes the investor, and you know, going back to your time when you were working in IT, from CIBC, to EMC, all in that fintech. Well, I guess, we call it fintech back then. It’s just financial industry but going into those areas and then driving into you know big data corporation, and all of the companies that you worked in, how do you take that IT side of things and how do you think the learning shaped what you do today? And I guess starting by the data side of it, understanding the finance, what learnings do you think that you picked up on that really helped you today in being able to see a great startup and jump in to make those investments? What kind of skills did you bring to the table when you were younger?
Jacky: Yeah, for, I’m pretty lucky in different industry and different companies. The great companies, and for like CIBC you can have like industrial financial business background in that vertical industry, right? So for like EMC, actually, I helped the EMC, started their business in China as a very small group, then help compellent to land their business in Ash Pack, as the first guy, and the McData, the same thing. Then at that time, I, especially working with Mcdadda a Colorado based public company, then I started their business in China from scratch like one guy just with one laptop, that’s all resource I have then, I fly back from North America to China to start the business. After the five years, the business growing very quickly, dramatically, in China. We still establish a leadership in different vertical industries like finance banking, telco, and government then that business wouldn’t be growing pretty. Well after five years I went the whole cycle from the first person to start a business in regional business then grew a big team. Tremendous business then McData got acquired globally after five years, then I got a chance to learn how to transit business to merge period. So then the business cycle, I learned the business cycle, I decided to build my own business. Though a lot of opportunities offered in the market to be like have me try to be executive managing director for Ash Pack, or China, Hong Kong like that. I didn’t move that direction, I moved to entrepreneur. I like start something from scratch.
Jeffery: And did that come from your experience, when you started that company with one laptop in China, was that where kind of got you excited? Was that you were able to take this business even if it was a shell, and a license, and starting it, that was really what drove you to want to become an entrepreneur?
Jacky: Yeah, that’s true. Because I have been the cycle with, like our startup with the American company, the strong support from headquarters side, right? But that gave me a sense, how a startup works, then step by step build up your team, build up your business, then get achievement. Then I was pretty comfortable to starting my own business. That’s the way I decided, “Don’t go anymore to be another country manager or some Ash Pack executive. Just start my own business.”
Jeffery: So that experience really helped you better understand the startup world and then put together all of the elements that you needed. Regardless of, say how it was funded at the time, but your strength came from being able to be a general manager and then seeing down, and learning all of the different ropes in the business or different verticals, and then being in there and working your way up. You kind of had to build it from scratch, learn all these different facets, so it really gave you a really good understanding of what it takes to build a company from nothing.
Jacky: Right, exactly. So a lot of the things to learn and I, as I said, I was pretty lucky in work with big companies, leading companies, global, with global business like McData, EMC, and also Dell, those are great companies. They give you training nowhere you can find. This kind of training, for executive training it’s very different for normal employee. Executive training, they will put you somewhere to build how the global business work. You have a lot of insight. They’re really helpful.
Jeffery: So would you recommend to the audience, to entrepreneurs, that it’s not always about jumping in right away into a company without any experience, that it actually carries a lot of value to go and work for a big company, learn the problems, learn the things that are going on in the world before you jump into entrepreneurship and solve your own problem, learn a little bit of business acumen, learn about sales, marketing, and learn about how all of this gets put together and build relationships? Because it sounds like you built some really strong network of people that helped you not only build your company, but in the future come back to the table and work with you.
Jacky: Yeah for this question, I would say it really depends. For those company, for those young entrepreneurs once they see great opportunities, they don’t even have to finish their university. They need to jump in, to catch the wave or the opportunity, right?
Jacky: For the other industry, especially like business to business, a little bit different. Then it’s better to work with some company, professionally structured with a great team, that will be very helpful.
Jeffery: I would agree with that. I’ve, my background is a bit of both. I started off as an entrepreneur, then I went into big business, and then I’ve been an entrepreneur for 15 years straight. Yes, but through that, it’s interesting because what I didn’t know as an entrepreneur when I started, the mistakes were pretty big and pretty prevalent because you don’t know what’s hitting you, and even it was a small microcosm way back in the day, 30 years ago, but then when you got into big business you really learned quickly how to maneuver, how to build networks, and how to how to build out businesses inside of a business, and I think that became quite valuable to being able to understand how to do something going forward. But I do agree that if it’s something quick and easy b2c, get out there make it happen and then on a b2b side, where you can take that learning in and build relations, it can help you a lot further along, further down the road.
Jacky: Yeah, exactly. So for the b2b that kind of experience, it really help you, especially work with the company at certain (inaudible 10:30), and you have a position at like senior level, then you will get a opportunity to inside the business and get trained like in different sectors, how you put the business together. So that makes difference. So that can help you have your view for the long term and you can start your business, when you look at the business, you can structure for short-term, midterm, and long-term, with different view and you got understanding the customer sale, market positioning, customer sales channel, marketing, pre-sales technical support, post-sales service, and finance, and also most important part, is team. They help you get everything together and train you. That’s very, very helpful, and for you to start a business and also for our investor, to figure out how the business work and you can help you and also help you to help better of your company, and coaching the founders and entrepreneurs.
Jeffery: I like that, and I’m going to go back to the team piece because I think that that’s very crucial to a few other things I want to explore with you a little bit further up, but you’ve mentioned training a bunch of times. So how much emphasis do you see on a startup or an entrepreneur getting into business and them having to find training somewhere or get some learning? Is there something you recommend for them to do? Like you can solve a problem, but there is a lot of educational side of things that needs to come out of this and is that something that you emphasize and push for entrepreneurs to look at? Even before getting into a business and learning a market or something that they do while they’re actually building this company, building their new company?
Jacky: Yeah for that question, I believe, as a startup, founders, once they started their business and they start their business, they may not have much time to sit in like a school to learn a lot of fundamentals, right? Then I believe if they pre, they are preparing to to start a business, better to be in advance to get some solid background in business. If they could like even in b school. If they don’t have that luxury opportunity, then after they started their business, I believe a lot of opportunities can help them. For example, they can work with incubators. I’m very, very proud of the ecosystem of Canada. For example, some incubators like a communitech, mars, a lot of this then dmz, a lot of in startup incubators, they can help them structure their business pretty well, and most important is they can find a lot of experienced advisors, and also Angel investors to help them. Those Angel investors are willing to help. That’s kind of giving back. They are very happy to do that. They’re trying to do that as a fund, right? Leveraging that resource. That’s very important for them.
Jeffery: Agreed, and I wholeheartedly agree with that philosophy. It’s interesting to say that is that when I started my first company, I was finishing off a BA. Like I just started it, so I did them in tandem because one I wanted to start the business I figured there was no way I would have enough stuff to do in an early stage company. So I did a degree at the same time and it actually drove me to work twice as hard because one, I had to finish exams and build a company, and build a company at the same time. so I found that it was very packed but I loved it but the learning was there. So I was getting that extra learning. So I can totally understand where, you’re coming from that if you’re going to plan something, figure out either, can I get enough learning if I don’t have it? Can I build that in to the system that I’m going to build so that way I’m further ahead than anybody else when I get into this market?
Jacky: Yeah, exactly. I believe, you build your strong foundation before you start your business, right? This is great approach.
Jeffery: I like it. So now, let’s kind of go back to this team part because now you’ve got this training, you’re learning, maybe you can talk a little bit more about the team side because I know that came through all of the things that you’ve done and all the roles that you’ve been in. As being a country manager, you have large teams that work for you all the way through and you built them from zero on your team, and a laptop all the way up. So how much you emphasize on team and culture in growing that business?
Jacky: Yeah, for in the early stage most culture will be bring from entrepreneur, right? When you talk about the culture, your personal co-founders or founder’s culture would be part of cornerstone of the culture. So for the culture, better to be opened so that your employees, your team, can see the future. Not just someone hold something together, hold something internally, but be open and try to leverage the talents of your team. And for team, most important is the founder or the co-founders. They are the cornerstone, as I mentioned, and the other thing you need to build your team step by step. In very early stage, you don’t have to get a full functional team and when you, for example, you only start stage, you do a lot of R&D, you may not need a great sales guy to help you. But in, let’s, when you, once you get your product ready, definitely you need that. And some entrepreneur may think about, “I’m still doing R&D, why I need a business guy?” They may mixed business guy with the sales. It’s different. So when, once they start up their business the ultra entrepreneur themselves have to be a business guy, business vision. So I, when I look at the team as a startup, like before I invest, I always look at the team’s background first. When I receive the pitch and deck, when I go through that, then I jump back to look at their background in, and then google it, and check their background with different approach, and try to understand the founders, where have they worked, how they did, and do they have industrial experience. Can they, can these guys lead the business to be a successful venture?
Jeffery: So does that then, when you’re looking at this team, do you try to focus more on co-founders teams that have two or three founders in them? Does that become a more applicable business that you want to invest in? Or you’re just looking at the general team that’s there if it’s four or five people and just figuring out how they all kind of connect to each other, and seeing how that team can operate and grow? Because you know that that team is going to have to change over time. It’s going to continuously grow and move. So is it more of just understanding where they are? Can they solve that early stage problem? And if there’s co-founders then that’s just an added bonus.
Jacky: Yeah. Team, in early startup is dynamic, but for founders and co-founders, they are the fundamental, right? They are the foundation. So I, when I look at the team, I look at the background of the founder or co-founders. So that’s the most important, for their team, anyway, they build with different approach based on their business requirements, right?
Jeffery: So now, let’s go back into, go a little bit back again and now take a look at the companies that you built over time, how much emphasis did you put on team versus great product? And was your team able to shift that product? So did a lot of it come back to you hiring A people, and working, and building a B product and turning it into an A product, was that kind of the mentality that you went to market with?
Jacky: Well market, from our, my business is more like service kind of business. So I was, as I said, I was pretty lucky. I learned a lot from the global leading companies. Before I build my business, I have planned that for quite some time and every single corner to reveal that different way, so that is make our my business very stably grow at that stage. So when I look at the team, for startup, I try to hire someone like technical support. They can learn a lot but for sales and the business to try to break the eyes of the market, you have to get a strong team. Startup you have to have a strong team. I’d rather hire one strong guy instead of two or three average people because in startup, because you compete with your competitors, they are well established. How can you completely defeat your competitors, only you have a strong team and your great products? You can win.
Jeffery: That’s a good point.
Jeffery: Hire less but hire talent. Eat the cost and build the value into the company, so that you can grow.
Jacky: Yes, that’s an approach.
Jeffery: Yeah,I like that. That’s good, and it kind of actually, it coaches nicely or it steers nicely into kind of all the things that you’ve gone on to do in the better part of the last, I’d say five, six, seven years that you’ve been making investments, because you go on boards and you do a lot of things in the startup space. And I wanted to kind of dive into more of that side of it because I know you’ve had some recent successes with HT Base and a few other companies. Now, those were short-term builds and you came in early, and you went right into the board, what got you interested in taking that step to join that team? What was the component that really triggered you to say, you know what, taking your background again, this great tech background and building companies where you’re able to see something and say, “I want to be in this,”? And what drove that? To you was it again, the team or was it the structure, was it the product, what got you interested in jumping on these boards?
Jacky: For that business, sometimes you need to, it’s really the great time when we meet. We, like it’s kind of connection because when the founder pro paging our g10 event, I actually, I was traveling. I didn’t have a chance to listen to the pitch. When I come back, I look at the pitch & deck, “Wow, that’s great company,” and their business right in my domain, enterprise software for cloud enterprise, cloud business. Then I try to understand how the solution can work. That way, the solution looks great. I just can’t believe this is real, then I challenge the founder, I say, “I have to look at the demo.” He reluctant to show the demos that, “It takes a lot of time. I can assure you my, like system, lot more demo like some interface software, interface like that.” I said, “No, I need to see, test every single functions.” Then the founder was convinced, he spent quite some hour like two or three days to build up a demo system. He then, after some time he said, “Jacky, do you know that day? I built that the system, life system only for you to do the due diligence.” Then after that due diligence, then he tried to ask me to be part of his team, “Can we do, be a partner? To do business together?” I said, “Oh, no. I just create a business from there. They run, I help them run business, dollar business. I don’t want to be run, still or work in the office anymore. I want to be an investor.” So then he invited me to be his board member he said, “Anyway you need to help me something. I need your help.” Then he got like, both said, “Then investors got (inaudible 24:15) right?” And the funny thing is that when he recommended me to represent his thunder team in the board, then the lawyer said, “No, no, no, you’re wrong. He is an investor. Investor, he represents the interest of investment. Why he can be a representative from your founder’s side?” He said, “Anyway, I have already reserved a board seat for investors but for Jacky, I need to have him on the board.” So that’s kind of, you know each other. Suddenly, we like, when we talk, we became like, quickly become like friends.
Jeffery: Awesome! We, when I saw HT Base’s pitch in 2016, and it was one of the first part of the angel groups, not when I was doing it myself, I saw them pitch and I thought, “This company’s awesome. I would really like to learn more about them.” But because it was the first one that I had done through an Angel Group, I thought, “I can’t jump on the first company. This is way too fast.” So I stopped myself and I didn’t go forward. Even though, I liked it, I didn’t want to jump in because it was my first real pitch and in the angel world, so I thought, “Okay, I gotta, I can’t jump on everything. I’ll hold back,” and I’m glad that they exited. They were a fantastic company and I’m glad that that worked out. And that you were able to be part of that board which again helped them better understand their business, and build out a tech that you could be part of and he built it just for you so that you could understand it and they could, you guys could connect there. I think that made a big difference for you as an investor to come into it, but also for him to better understand what he was selling. So a great opportunity on both sides.
Jacky: Yeah, exactly. That’s how Angel investment works, right? Angel investors always willing to help and also for coachable founders, they really need to find some resource from Angel investment ecosystem. For that business because my background with the deal and also managing like a decent business also partners, enterprise partner side, and then when we talk, he immediately realized, he needs to get some partnership globally, then set up like a global OEM partner with the Dell. Where is my, where I worked with for quite a few years. My company was acquired by Dell, and then we approached the market strategy, then help him access the market in the US for customer then also approach investors in US side. That’s why we the business got pretty quickly exit when they try to rest in front of series A.
Jeffery: So you’re able to, you were able to help them out quite a bit?
Jacky: More than ten times return.
Jeffery: Awesome, brilliant! And again, it’s utilizing that team mentality, you being part of the team, indirectly, in a different fashion. But being able to bring them to table and then being able to work with them in the background to help them get exposure, and a lot of startups they don’t really understand, and I was, we had a discussion, I was, I had an interview the other day with an investor from Montreal, his name is Michel, and he does a lot of board seats and executive training and you know, he defined the same was that a lot of startups don’t really understand what the strengths of a board are and it’s not just about opening doors and doing sales, but it’s also helping you better understand governance, and understanding the product, and the modeling that you’re going after, and approving the direction of where that company is going to go in the next one to three years.
Jacky: Yeah. That’s great point. So further following on your point, I believe, I’m happy to remind our entrepreneurs or founders, they got some information said, “I’m the founder. I know the business best, and nobody knew the best my business than myself. Why I need a advisor?” This is not correct conception. They do know that business like their product better, but for the whole market positioning, strategy, the whole ecosystem resource, and your investors, really can help them. The other side, is a couple of founders, some founders told me, “I got some advice from like some other people even in law firm.” They say, in early startup, as an early startup, like your seed stage or pre-seed stage, why you need a board? You don’t want them to control you. That’s wrong concept. I would say, in early stage for the board, it’s not try to control you. For, that’s why that we call early stage investor, Angel investor, they are helping you and they have, they are very friendly. It’s different from what’s so-called like venture capitalist, it’s greedy. No, for early stage Angel investors, they’re different.
Jeffery: I agree with that, and it it fit well with even how Michel was framing it, that really at the end of the day, that early stage board, maybe it’s not friends and family that’s a bit early, but going even into a seed round and having that board, it allows for the company to vet problems, look for solutions, and lean on their board, which is usually made up of angel investors to be able to guide them in the direction that’s going to better serve their product or their service, so they have a better outcome and a quicker exit or at least a faster growth trajectory when they’re solving the problems that they are.
Jacky: Yeah, exactly.
Jeffery: I like it. No, that’s super valuable. So now let’s kind of fast forward a little bit more. You’ve been doing a lot more on the venture capital side, you’ve had some great successes, you’ve created your own investment firm. How do, how is that working? What are the spaces that you guys are going after? And what things do you look for from the startups that you want to invest in?
Jacky: Yeah, so for Angel, as I said, and Canadian Angel investment ecosystem is very powerful. The syndication and definitely is the top. No other country can have that corporate culture. As our Canadian startup, Canadian Angel investment ecosystem, and we can see a lot of Angel investors in different industries and different stage work with the startup companies, and they help them, and these Angel investors, they stay together, connect it together, as the angel of angel platform groups like a GTAN equation angels. So their shared information, then share experience, and then we found we for Angel investors, they always spend some time occasionally, look at this deal that deal, and as their interest with their available time and we found, if we set up a fund based on ecosystem, can help the Angel investors get some investment more diversified and more get more involved with the investment. Like a DD, more DD, and also have more rights. Like information rights, pareto rights, normally a single Angel investor can have. So then we decided to start a startup Angel investment fund. The other thing is, for inves, for entrepreneurs founders, they’re asking for fund, early stage fund. They present to the ecosystem, then we can write a large check to help the startup companies to get funded and as I talked, Canadian ecosystem Angel investment community are well connected, and we also talk with other Angel funds, and your Angel investors, and even VC funds groups. We put together to fund the deal. So that’s a great approach for us to start our Angel fund. So for our Archangel fund, we focus on invest only in Canadian companies, helping Canadian economy transit to innovation economy. So this is our purpose. So and for the funds we focus to work with like a Canadian credit, accredited investors only, to help them diversify their investments and also help Canadian entrepreneurs to start a business not only with the fund itself, but also we help them grow their business into North America, even globally with our approach.
Jeffery: Awesome! That’s fantastic, and awesome to hear great support in the ecosystem. So we’re gonna kind of transition a little bit and the question that what I’m gonna throw at you is, in the time that you’ve been investing and all the great things that you’ve seen, is there one story that kind of stands out, that really pops in your mind about what it took to be an entrepreneur? That you saw a company that did, you know, they struggled and they made it work. They figured out how to get around all of the adversities and now they’re successful, or even if it went the other way but they learned a lot. Is there a story that just pops in your mind that you can share about, just what it takes to be the vigor the hard work it takes to be an entrepreneur that you’ve seen and you know, you saw a founder and she was awesome, and she did x or he did why, whatever that might be that just pops in your mind that you might want to share.
Jacky: Yeah, at first, I believe, as I said, I always believe in the team. The right team, definitely, can be good jockey because they can pick up different horse, right? Once they find their product not that fit they can tune that. So that’s why I focus on team, and also team when I look at the team, I will check their background industry background and business background, and also they are soft characters. Like soft qualities, like teamwork, openness, coach ball, like this. Once they have these qualities, I believe, anyway, sooner or later, the founder and the team will be successful.
Jeffery: And when you were working with, say, HD Base or cheater networks, did you find that those founders carried those same characteristics for you as an investor?
Jacky: Yeah, totally. For the founder, every founder has their own different style. So for HD Base, when you talk, he listened then he moved very fast. He may not immediately respond to you say yes or no, but when he takes some time to digest that he believed his right, then he moved immediately. Even we said for this kind of business you have to be in Silicon Valley, have some kind of connections. You have, if you can get like global OEM with Dell, that would be a great endorsement for your business for the future. He did that. He moved very quick, very fast and with his own approach. Sometimes he feel uncomfortable, say, “Oh because, family in Canada, in Toronto and kids are very young. So if I spend so much time in Silicon Valley. That’ll be challenge. How can I do that?” Then sometimes, you need to help them to be more comfortable, sometimes you need to push them because you know, once he needs to be successful, he needs to do something. Then you can help them to analyze his personal goal and business goal for short term and long term. And for a young entrepreneur you can even fail, they can still start up another business. You need to try, then coachable is great, and most important is, the founder got the strong background of the industry, the technologies. That’s great. For like cheater networks the founder is well, has solid background in the industry for more than two decades, even three decades. So that’s the great foundation to build up his business and the other thing, he is willing to share the happiness and challenges, as well, and also willing to listen, ask, “Should I do this? Should I do that?” I believe, if the team, the founders, or founder or co-founders, have this kind of quality, the business will be successful, way more chance to be successful.
Jeffery: I like that. Some good advice, a good story that if you share more, you’ll get more back. You just have to feel the comfort level and make it happen, and if you’re not, you need a little push sometimes and having an advisor like yourself, giving a push is going to be even more helpful for the founder.
Jacky: Yeah. Exactly, totally.
Jeffery: Love it. All right, we’re going to transition now into our rapid fire questions. All right, ready to roll?
Jacky: Go on.
Jeffery: All right, how did you get started in investing in startups?
Jacky: Oh, this is a funny question. So actually, the, my first Angel investment is like 15 years ago because one of my friends started his own business. He tried to help, said, “Jacky, would you like to help?” I look at that what they are doing, so then I didn’t ask any further information. He just talked to me, “I’m doing this enterprise security software. Then can you help me?” Then I ask, “How much?” “I need this amount of money.” Then I just invest because friend, right? Like typically, that’s exactly the 3F, part of 3F. I’m the friend and the four at that time, then that business is going pretty well. Now, that gave me the confidence in the future. After I left the deal more to enjoy the investment space, I like startup. I like work in that kind of environment. So I officially, started my own Angel investment.
Jeffery: Awesome! So you had a good first investment and that made it work.
Jeffery: I love it.
Jacky: That one turns out to be a long investment. It has been more than 10 years already, and the good news is that, this year it could go IPO. Now it’s planning. I keep a secret. I’ll let you know who it is.
Jeffery: Oh amazing! Yeah let me know, that’s amazing!
Jacky: Yeah, so for Angel investment, sometimes you need to have patience. To wait when it grows.
Jeffery: That is true. Well that’s a lot of success. That’s brilliant! I love it. So what is your favorite part of investing?
Jacky: Favorite part of investment, you mean like-
Jeffery: Favorite part of why you do this, why do you like working with startups? Why do you invest in them? What’s your favorite part? Is it the founders, is it the team, is it the product, is it the service?
Jacky: Yeah that, for me, even I work with global large companies, I started so many times like original like original business. Like a founder startup, right? I like the challenge. It’s pretty fast moving. Exciting. It’s very different from the style and when I was in Dell, managing billion dollar business. It’s very different. I like startup ecosystem much better and the number one is, you have fun because you look at the early stage company that even like just idea, they try to make something happen. Then you help them just like you see the seed in the soil, then put water watch it every day, take care of it, and then you see the plant grew up, then the blooming, you will be excited! Exciting. So that’s why I like it. Then the other thing is when you look at the investment then for the industry report, you can see that Angel investment is risky, and the other side is very profitable, is you can’t find any other investment more profitable than Angel investment these days. And for risk I believe, once an angel investor has strong business background, you can look at the team, look at the business, look at the market, you will know how it will go in the future. Mostly, the risk can be mitigated. It’s very different for like later stage companies, they depends on data. They even can hire graduate student to help them do the analysis, but for early stage Angel investment, no way. You have to depends on your own experience and also the ecosystem share their experience among the Angel investors. Those are business veteran. So you build a business help the entrepreneurs with your experience then you can mitigate it, risk. And also after the many years of work, then I got some at least become a accredited investor, have the capability in front point front side and also experience side. So I decided to move in.
Jeffery: I love it. It’s a good story and hopefully, it motivates more people to do the same because we need more investors. All right, how many companies do invest in per year?
Jacky: It really depends on the year. Normally, I would invest like five companies to eight companies. But sometime in a year, you can’t find a single good company, startup. It’s weird. I don’t know why. But sometimes you will see quite a few good deals coming. So far I have invested around more than 30 companies. Yeah most in Canada, some of them in the US.
Jeffery: Awesome. I love it. Above average. Any verticals you like to focus on?
Jacky: I focus on, not much focus on vertical industries, but I do focus on some technologies I can understand. For example, enterprise software, like enterprise ICT, medtech, AI, like a cleantech, also advanced manufacturing. For this technologies, I can understand, I would invest. And the other thing, is I would work with our team, fund team, or our investment groups to go syndicate. So we share the idea then we felt, I feel that I’m comfortable with that deal, then I will move in, I will go in.
Jeffery:: Perfect. I like it. Any, outside of the team, is there anything else that you look for when making an investment? From the paperwork to the product, is there anything else that stands out outside of the team factor?
Jacky: Team, what’s the specific question your-
Jeffery: Well, if you look at making an investment into a company, we know you’re looking at teams. So outside of the team piece, is there anything else that you want to make sure that someone does or the company does for you to make an investment?
Jacky: Yeah, for the, yeah, definitely. Because of that I will use a metrics to look at that before I evaluate the company, I’ll look at the market potentials. If the marketplace is there, then I move into due diligence. If not, I don’t look at that company, business at all. Then once I move into due diligence, number one, team. Then will be their product and the market, their product, their market and sales accommodation, finance, and also term, and investments, because even a good deal, good business, if you don’t have a good term sheet then turn out to be not a good investment. So I look at the term as well, also other investors. Who are the investors, lead investors, or Angel investors.
Jeffery: Perfect. I like that. Any type of, on the term side, do you have any preferred terms? Is it equity, is it safes, is there something that you like better when you’re making an investment?
Jacky: Yeah, for Canadian Angel investment ecosystem, I believe, most, what I see is Angel investors prefer, like one is convertible note, the other side is preferred share. This is not only just in Canada but also in North America. Best American Angel Association, their report for 2020 more than 50% of Angel investment is in convertible notes. And another 40%, 41 or 42, I can’t remember exactly, its preferred share.
Jeffery: Great stuff.
Jacky: For safe, safe turn out to be less than 2% actually. In the market of voice, safe is so loud but it turned out to be in the report. When you look at that only less than two percent.
Jeffery: I like it. It’s very supportive. I don’t think anybody’s a fan of a safe because it’s very one-sided. So I do agree with that. Do you guys, do you like to lead rounds and do you take board seats?
Jacky: Yeah, for lead round, when I look at the business, it’s within my domain, with my knowledge and experience, then I would lead the round because for Angel investors, for the deal, any deal leader, lead investor to help the staff, the investment. So I like to do that. So once I’m comfortable, I have the confidence and I’m capable, competent on that. So for the second question, you mentioned, board seat. For some company, if I can really help them, I would like to be sit on board. And some if can’t, I may not sit on board because I can’t help them that much so, and sometimes I sit on board, sometimes I prefer to be a board observer because board observer, legally allowed you to provide advice to the company. As a board member, normally, has a liability. So it’s different.
Jeffery: Very true, awesome.
Jacky: Either way. So..
Jeffery: Well, they’re both good options and either one works. So I like it. Very good answers. All right, we’re gonna shift a little bit more into the personal side, Jacky.
Jeffery: First question, what is your favorite sports team?
Jacky: Favorite sport?
Jeffery: Favorite sports team. Team or sport, either one.
Jacky: Sport team, last challenge, probably, I look at the golfing, golf a lot but they like engineering, mostly individual players.
Jeffery: Yeah, who’s your favorite player? That works.
Jacky: McCroy? (inaudible 51:50)
Jacky: A few years ago.
Jacky: They played like Glen Abbey, just beside our house. So..
Jeffery: Yeah, he’s good too. Yeah.
Jacky: Yeah and also you can, you can’t forget that like tiger oats, he is the hero all the time. Not only, but his way with the social to be-
Jeffery: As a phenom, he’s really good. On all counts, he’s good online and he’s good on the golf course.
Jeffery: I like it. I like it. All right, what is your favorite movie and which character would you play in the movie?
Jacky: That’s challenge. So I look at a lot of movies, but I can see the first and also the most important movie to me at that time is, probably, you have not heard of that called Shaolin Temple.
Jeffery: Shaolin temple.
Jacky: That’s a Kung Fu Chinese, Kung Fu temple. The first chinese Kung Fu movie in China when I was kid.
Jeffery: I’m gonna look this up. I think I’ve seen this but I’m gonna look it up.
Jacky: Yeah, that one.
Jeffery: And which character would you play in the movie?
Jacky: That one is like a hero. So I don’t know, I can say that. So-
Jeffery: The lead character?
Jacky: Character is Jack Lee. He is the number one, the champion of chinese Kung Fu competition at that time.
Jeffery: I love it.
Jacky: Because that, at that time, when I was in primary school, I, every day I started very early before the day break to learn Kung Fu, practice my Kung Fu. Chinese Kung Fu.
Jacky: Even in very cold winter, freezing winter.
Jeffery: I love it. That’s awesome. I’m gonna look that up. I’m gonna see if I can find that movie. All right, all right. Last question is, what is your superpower?
Jacky: So power. I don’t have much superpower.
Jeffery: You do, you do.
Jacky: I believe my soul power is to learn from others and give me some advice, how to go this way, that way. From my whole career even from my school, I met a lot of great teachers in my career, a lot of managers, advisors, friends, they help me. That’s very very important to me. They guide me to the right direction, to go move forward step by step. That’s the superpower I learn from others.
Jeffery: You’re a quick learn, a good study.
Jeffery: I like it. Well, Jacky, we appreciate it. I always say I’m not gonna take notes, I got lots. But big fan of all the things you’ve done. You’re an icon in the environment, keep being a rock star and investing. You’ve done a great job. We’re all fans. Thank you very much again for joining us today and sharing with our network, and we like to leave you with the last word. So anything that you want to share to entrepreneurs or to investors, I turn it over to you but thank you again for joining us today, Jacky.
Jacky: Yeah, thank you so much for having your time, and I, is excited to talking with you share the idea about Angel investment, and also startup ecosystem. You are the icon investors as well, and also the like meteorologists, you’re everywhere. You’re excellent in our ecosystem. We really need your support to push and you are the promoter for, of our ecosystem. Really need your help so..
Jeffery: Thank you.
Jacky: Let’s keep in touch. So I would like to share anything what I have so our Angel investment ecosystem and also our startup community. Thank you.
Jeffery: I love it. Well, Jacky, we will stay in touch 100% and thank you again.
Okay that was great! A big fan of Jacky, we’ve, Cheetah networks, we invested with Cheetah networks. It’s my first time using this background screen, it’s kind of interesting, I guess. the glow that hits around you but either way, it was awesome that we got to chat with Jacky. I’ve been following along in his investment journey and he’s made some pretty fantastic selections in the deep tech space, and they do a lot of great things. So he made some great comments on you know, even just in his background on being able to to listen and learn. But the whole thing you talked about today was just about teams, making it about your team. Building a fantastic team is going to help you overcome so many problems and barriers in your business, and having that trust, and having that ability to grow forward. It’s fantastic. So keep learning, building out great teams, and outside that, share, like, tweet, push it along. Thank you very much for joining us.
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