A successful founder who has become a respected angel investor in Boston, Raza Shaikh is a pleasure to speak to and to learn from. Raza also has a podcast called On Boards which is great for people who are on boards or would like to be.
- Sal Daher Introduces Raza Shaikh, Founder, Angel & Podcaster
- “I started angel investing actually on AngelList a bunch of years back and realized that that’s a little hands-off and you don’t connect with the companies for real.”
- Sal Daher Speaks Up for Syndicate Investing
- Raza Shaikh’s Favorite Startups: MentorWorks the Income Sharing Agreements Platform
- “…the founder, Karthik, is a professor at Northeastern and a Launchpad member, but knowing the higher education space, he really thought that there was an opportunity for an alternative to student loans…”
- Raza Shaikh’s Favorite Startups: KUVA Is a 10X Cheaper Way to Find Gas Leaks
- Raza Shaikh’s Favorite Startups: RaySecur Uses Millimeter Waves to Scan Incoming for Hazards
- Raza Shaikh Talks About His Fund: Beacon Venture Partners
- Sal Daher Talks About Peter Fasse of Fish & Richardson Who Sponsors the Podcast
- Raza Shaikh Bootstraps His First Startup, and His Second
- What Motivated Raza to Found His First Company
- Raza’s First Angel Investment
- Raza Shaikh’s Parting Thoughts
- Raul Rosa’s Startup, PodSpot
Transcript of Raza Shaikh—Founder, angel, & podcaster
Sal Daher: Welcome to Angel Invest Boston, conversations with Boston’s most interesting angels and founders. Today, I am privileged to have as a guest Raza Shaikh. Raza is a colleague of mine at Walnut Ventures. He’s an angel investor, an entrepreneur and has a very interesting view on angel investing. Welcome Raza.
Raza Shaikh: Well, thank you, Sal. It’s an honor and privilege to be on your podcast. I’m a longtime listener and really love the podcast and really happy to be chatting with you.
Sal Daher: Well Raza, in that introduction, I forgot to mention that you also have a podcast. Raza has an excellent podcast called On Boards, which if you are going on a board or if you’re thinking of going into board, you should listen to On Boards. It’s with Raza Shaikh and Joe Ayoub and they talk to people who are board members, who have experience in governance and so forth and it’s a really, really valuable podcast. I salute you for that one.
Raza Shaikh: And Sal, I must thank you, you helped me start that podcast and introduced me to my own neighbor for the sound producing and your help was really wonderful in me and Joe starting that podcast.
Sal Daher: Well, maybe I encouraged you a little bit, but the energy and the idea was all yours. You came up with this idea, which is perfect. It’s a beautiful niche. No one else is doing that. It’s a great way, painless way, to learn about board governance, about being on a board and what you do as a board member.
Raza Shaikh: Yeah, Joe and I both thought that the topic of boards and governance for corporations, large, small, nonprofit and even startups is kind of opaque and it deserves to be brought to audience and be made more accessible.
Sal Daher: Excellent, excellent. Raza, let’s take advantage of the fact that you’ve been a member at least three angel groups in the Boston area. Could you just kind of characterize what drew you to the different groups? Launchpad versus Walnut versus Sky Ventures?
“I started angel investing actually on AngelList a bunch of years back and realized that that’s a little hands-off and you don’t connect with the companies for real.”
Raza Shaikh: Sal, I started angel investing actually on AngelList a bunch of years back and realized that that’s a little hands-off and you don’t connect with the companies for real. And I also realized that there is a good amount of work and skill in becoming an angel. And for me, joining angel group was the way to learn how to invest in companies. I ended up joining Sky Ventures Group, which is an investment group that invests particularly in life science, healthcare, medical devices, digital healthcare companies. Through my past career, I had gotten a little exposure to that world so it was interesting for me to look at those companies.
Sal Daher: I understand that you were on the informatics side at the Broad Institute.
Raza Shaikh: That’s right. I had a tremendous amount of pleasure and fun building a large scale science platform at the Broad Institute. And that got me into learning about healthcare and life science. And our Boston area region, as you know, is really a hotbed of that activity. That led me to joining Launchpad as well as Walnut. I really enjoyed the different aspects that each angel group focuses on. For example, Walnut is not only a little more comfortable for earlier stage action, but also has a much easier on ramp for entrepreneurs and on the relative scale, less formality. Really, really great group of seasoned angels.
Sal Daher: It’s a more intimate and less organized.
Raza Shaikh: Yeah. If you enjoy that format, really good option for learning and on ramping onto angel investing. Launchpad on the other hand, is a generalized larger group with a fair amount of process. Although the attempt always is to keep the process really efficient. And I enjoyed that very much as well in terms of looking at the breadth and depth of companies that come at Launchpad. And I had so much fun that the beginning of 2020, I decided to join the Launchpad management team as managing director and now help with the deal flow with supporting the companies, with training of angel members, bringing them up to speed. It’s a really great community to be part of. The compare and contrast for various angel groups, if you are in the Boston area for you to join, you actually have a good choices available to you for whatever you like the most.
Sal Daher: Yeah. And in addition to those that you’ve mentioned, there are at least three or four others. Boston is not short of angel groups.
Raza Shaikh: Absolutely. And Boston angels are very accessible, available to entrepreneurs and in the true angel sense are there to help you, to fund you. And I think through your podcast, listeners know this and can connect with any of the suitable group that makes sense for you.
Sal Daher Speaks Up for Syndicate Investing
Sal Daher: Yeah. Hearkening back to what you were saying before about investing through AngelList. I have people who invest through my own special purpose vehicles that I create through my syndicate list. I think there is a role for that. And I think it’s sort of like an on ramp to angel investing. I see that as a way to follow the path that you did. Early in your career, you may not be able to be involved full-time as an angel, going to due diligence meetings and doing all that stuff and then getting involved in boards and all that, because you’re up to your neck in alligators on your job or in your own company or whatever. But when you get to the stage when you can become an angel investor full-time, then there’s that option. And you can get a headstart and you can get exposure to really interesting companies via these various vehicles.
Raza Shaikh: I think Sal, you’ve said it very well. I think for folks who want to dip their toes, let the folks who are more experienced do the actual work of diligencing the company, but want to put money in that asset class, participating in syndicates is actually a really, really good option.
Sal Daher: Yeah. Excellent. Let’s talk some startups. What are some of the startups that you’re excited about?
Raza Shaikh’s Favorite Startups: MentorWorks the Income Sharing Agreements Platform
Raza Shaikh: Sal, this is like a kid in a candy store problem. And you also want to like all your children, but two or three startups that I’ll mention that we’ve invested recently and are very, very exciting. The first one is a MentorWorks. MentorWorks has an end to end platform for originating servicing and helping the folks who get income sharing agreement, ISAs, with acceleration of mentoring to be a very viable option rather than taking student loans.
Sal Daher: How is that spelled?
Raza Shaikh: MentorWorks one word, M-E-N-T-O-R-W-O-R-K-S, MentorWorks.
Sal Daher: Excellent.
Raza Shaikh: MentorWorks actually partner with a national bank and because there isn’t much regulation, they went ahead of the curve and they originate all their ISAs on that national bank’s paper. And really they have an end to end platform where for higher education and for specific skill education, like boot camps for coding, they provide excellent ISA options. And they’re growing just really great.
Sal Daher: Do you have some stats that you can mention?
Raza Shaikh: Just this month, they’re close to closing a $50 million ISA fund. They actually had to raise funds for the ISAs themselves and for the company’s equity also. And they’ve just hit that big milestone and they also qualified as a community organization that unlocks a lot of other financing for them, for ISA origination. I think they’ve just hit that third milestone along with the work with the national bank that they did as three big things that they’ve achieved in just recent months.
Sal Daher: How did you connect with them?
“…the founder, Karthik, is a professor at Northeastern and a Launchpad member, but knowing the higher education space, he really thought that there was an opportunity for an alternative to student loans…”
Raza Shaikh: Yeah, it’s actually the founder, Karthik, is a professor at Northeastern and a Launchpad member, but knowing the higher education space, he really thought that there was an opportunity for an alternative to student loans, which is a really big problem. As you know, it has grown a lot and as a more equitable option. Karthik and I met through Launchpad and met at the same coffee shop that you and I meet near Porter Square and connected from there.
Sal Daher: Used to meet.
Raza Shaikh: The old days.
Sal Daher: I’m due to be vaccinated soon. I’ll be back at coffee shops again.
Raza Shaikh’s Favorite Startups: KUVA Is a 10X Cheaper Way to Find Gas Leaks
Raza Shaikh: Absolutely. Will be great. The next company I’ll mention Sal, is now called Kuva Systems.
Sal Daher: How was that spelled?
Raza Shaikh: K-U-V-A.
Sal Daher: Kuva.
Raza Shaikh: Kuva.
Sal Daher: Systems. Okay.
Raza Shaikh: Recently rebranded as Kuva. Kuva has a gas sensor that can actually help visualize a leak and leak could be from an oil and gas plant, industrial applications or ultimately even residential applications. Really innovative technology that they have productized. And it is at least 10 times, if not more, cheaper than the state of the art thermal imaging that people currently do to find gas leaks. And they are building a business model where it is a hardware as a service for as an example, one of the largest oil and gas producer in the world would have 10,000 or more sites that need continuous autonomous monitoring of gas leaks. And for those large oil and gas players, there is tremendous amount of push from ESG investors and otherwise in general, to reduce gas emissions that are just leaking around. The company has made a tremendous amount of progress in building and proving the product. They just did that recently at a gas field in Alberta, Canada. And just a really fascinating, great technology, a really great CEO of the company that has built it for scaling up. Very excited about that one.
Sal Daher: What’s the background of the founders?
Raza Shaikh: The technical founder has been a physicist and did the original innovation from the lens to all the things in the sensor that are able to sense an invisible gas leak. And actually then in a picture frame, it can actually show you as a visual way so you can actually quote unquote, see the gas leak.
Sal Daher: How did you connect with Kuva?
Raza Shaikh: Kuva originally presented at Launchpad actually a few years ago, I was a brand-new member. I participated in the diligence of the company, one of my first ones and that’s how we connected with the founders. And we have now invested at least two rounds into the company. It’s making really great progress.
Sal Daher: Outstanding. Outstanding. Very good. And the third one?
Raza Shaikh’s Favorite Startups: RaySecur Uses Millimeter Waves to Scan Incoming for Hazards
Raza Shaikh: The third one that I’ll mention is called RaySecur.
Sal Daher: Yeah. R-A-Y and then capital S-E-C-U-R, all one word. Please go ahead.
Raza Shaikh: RaySecur Uses this millimeter wave technology in the form of a desktop size device, kind of a large printer, which allows folks to scan mail packages and scan them for powders or liquids inside. It is a security appliance for physical security of the mail that’s coming in. And they are providing that to large corporations ranging from Microsoft, Apple, to any company that has incoming mail, where there might be high value targets for the bad guys. And these days we can’t escape the news where somebody has been sent a package with some powder or liquid. It’s completely safe, there’s no radiation, it’s not an x-ray based technology. And in a live video, it makes it really easy to see through the package. And not only that, they have a button on their device that connects with these explosive experts live for anything that you couldn’t figure out what that is. They can bring in and human.
Sal Daher: They can kind of say, “Look, oh, that looks like an explosive setup. Oh no, no, no, that’s just somebody’s saline bag or something that was being shipped or something.”
Raza Shaikh: And RaySecur has done a great job in innovating the business model. And they actually provide this hardware as a service to corporation. There’s no upfront fee. You just pay for using the device and the software all in one package in a per month subscription. And the company has just made tremendous strides in getting sales traction, perfecting the version of the product, streamlining manufacturing of that. It’s really just doing very well.
Sal Daher: Cool. Is this also a Launchpad company?
Raza Shaikh: It is also a Launchpad company. We were so excited. This was one of our oversubscribed rounds.
Sal Daher: Oh wow.
Raza Shaikh: And we had to actually kind of do a little cutbacks. The founders are just incredible, a really great team and have just done a phenomenal job in moving forward.
Sal Daher: Oh, fantastic. Raza, do you want to talk a little bit about your fund? What you’re focusing on and how you set it up?
Raza Shaikh Talks About His Fund: Beacon Venture Partners
Raza Shaikh: Absolutely Sal, this is called Beacon Venture Partners and it is primarily a diversification fund for angels. The idea is really that even for angels, you have to be in a whole bunch of companies. And maybe diversification for angels starts at 10, doesn’t end at 10. That’s almost the minimum that you have to have.
Sal Daher: Funny, I would say the minimum is 20. Yeah.
Raza Shaikh: No, the minimum is almost 20.
Sal Daher: At least 10, but better 20.
Raza Shaikh: Better 20. This fund has this simple goal of getting you into 20 to 30 companies over three years of its deployment of capital. It’s mainly investing in angel deal flow. Companies that come at Launchpad, companies that would come at other angel groups, at Walnut, at Sky and in the ecosystem. And for the LPs of the fund, it is basically an opportunity to in essence, write a whole bunch of small checks effectively. It is a very inexpensive fund.
Sal Daher: Let’s just mention, LPs, limited partners. These are the investors.
Raza Shaikh: That put money in the fund.
Sal Daher: It’s an opportunity for them to diversify. And instead of writing bigger checks to a few companies, they can write smaller checks to more companies.
Raza Shaikh: Yeah. And it is a very low cost fund with a lot of work that Alex Brown and myself, Alex Brown is my general partner, partner at the fund. General partner are the GPs of the fund that run the fund.
Sal Daher: Manage the fund.
Raza Shaikh: We’ve come up with some simplifications to decrease expenses. For example, we’ve kept it a member managed fund where the LPs of the fund actually do a simple vote for ratifying investment decisions for each deal.
Sal Daher: You don’t have discretion. The members vote on transactions.
Raza Shaikh: They do. And it largely actually came from the technicality that we didn’t want to spend the money to do our SCC exempt registration and this simplifies the process. And also because these LPs are mostly angels themselves, it’s a very participatory fund and there is a very quick up and down vote for investment in a simple SurveyMonkey. We don’t invest in LLCs so we avoid accounting and pass through entity complexity. We don’t invest international and so on so we’ve basically brought the expenses of the fund to a very negligible number and that works out very well for the investors.
Sal Daher: I set up a couple of funds along those lines myself. I remember we talked about this and the experience that I had was that having people respond, some of my fellow members in the fund were professional fund managers and so forth. The thing is that people are very busy and it was hard to get a quorum of people responding for things.
Raza Shaikh: We have simplified that by having a small investment committee of a subset of members of that fund. And they primarily do the decision, the members just vote up or down to just confirm the decision. We’re not waiting for everybody on a simple majority.
Sal Daher: Ah, okay. Okay. Okay. Yeah. That could be helpful. You know Raza, so that brings to mind a problem that’s on my mind right now. Some months ago, I interviewed Jeff Behrens. I don’t know if you’ve met Jeff.
Raza Shaikh: I have not met, Jeff Behrens.
Sal Daher: Okay. Okay. Jeff Behrens is a biotech executive, founder and a very interesting guy. And he also runs a shared lab space in Newton. Very entrepreneurial guy. Very, very deep thinker. And he was a CEO. He didn’t found this company. He was a CEO of a company which ultimately went on to raise something like $14 million in angel money. And they had a very nice exit, it was a multi hundred million, I think a $200 million exit and with a couple of therapeutics, cancer therapeutics that they were working on. And he just went through a lot of hoops and was never able to raise venture money for the company. It was $14 million in angel money. You can imagine how much effort it took too. It’s a lot of cats to herd.
Raza Shaikh: Absolutely.
Sal Daher: He says, “Is it me? Is something wrong with me that I couldn’t raise venture money? Because I hear of all these venture capital firms that invest.” And he actually did a doctoral thesis on this. And his conclusion was that the venture capitalists are by and large, people like Flagship Pioneering who backed Moderna. They have for some time now really not been taking pitches from outside companies. They create their own entities and they have these very, very lofty goals. They have their own processes. Flagship Pioneering prides itself on a process of experimentation with the companies and so forth. And in order to instill that process, they really have to invest only in founded companies. What that means is that if you’re a biotech startup and you’re not someone who was started by one of the venture funds or you’re not someone in the charmed circle of like a Bob Langer company, someone who has a very famous co-founder associated with it, you’re kind of nowhere. You’re going to be struggling to raise venture capital.
Sal Daher: You might get some micro-VCs to invest in you, but if you need for 10, $15 million of series A, that’s a lot of micro-VCs to put together. And oh, there’s another element to this, which is not part of his thesis, but which is something that I’m noticing. And that we’re about to have an explosion in the number of biotech startups coming along, down the pipeline, with very interesting technologies that do not require $20 million to develop. Four, five, $6 million, they can get to a point where a strategic might pick them up. For me, I think there is a real need for something that focuses the energy of angel investors on a small set of highly promising biotech startups that cannot get VC money. And then you have that funding go through the full course of what you expect to get to a major inflection point.
Raza Shaikh: Sal, I think this is a very, very important topic. I’ll put it this way, that if you expand it beyond biotech and life science, then from another perspective, there do exist companies that you can call them capital efficient companies. Let’s say that they need a lifetime raise of less than 15, $20 million, all the way to exit. From Launchpad data, I can tell you that one-third of the companies in our portfolio do go on to raise, let’s call it big VC money, another one-third maybe only raises specialty money, maybe a strategic or a corporate venture and more than a third never ever raise any money other than angels and go all the way to exit.
Raza Shaikh: I think there is this bifurcation or split in the market. I think you’re absolutely right that there is room for angels. Angels are doing the Moneyball investing game and I think that we ought to be directing our money and capital more and more towards those companies, whether it be in biotech and life science or even outside. There’s just this general thing that only some companies are suited for the really big rocket fuel rocket ship of VCs to get somewhere.
Sal Daher: Right. It’s funny, the numbers that you cite from Launchpad because Launchpad is a very capable, very professionally run angel group. If you look at the entire universe of startups that started with angel funding, something like only 8% ever get funding from venture capitalists. Launchpad companies are exceptional because they’re well selected. They’re well supported.
Raza Shaikh: Well, I was actually counting the one that had the exit.
Sal Daher: Okay, counting back from the exits.
Raza Shaikh: Or positive exit.
Sal Daher: I think in his work, Jeff looked at the whole universe of companies that started out funded by angels. What percentage got to VC money? And it’s really only 8%. Even for the general, the whole population of companies, it’s only 8%. When you restrict it to life science companies or biotech companies, it’s only 4%.
Raza Shaikh: Wow.
Sal Daher: It really shrinks down. What it means is, and one of the things that Jeff points out is that particularly for life science companies, the tempo of investing in life science companies is very different because a hardware company is kind of a little bit, sort of halfway like that. But a software company, it’s basically a problem of the founders, if they’re capable, if they have sufficient funding, they can solve most software problems. It’s a matter of just execution. Well with life science companies, it’s science. There’s science involved. Stuff can go wrong. You need to get samples,.
Raza Shaikh: There’s product risk.
Sal Daher: Yeah. A company I’m on the board of today, and I was just talking to the founder and he says, “Oh,” he’s out in Purdue, in Lafayette, Indiana. “I’m driving to Indianapolis to pick up some samples today for our lab.” This is what he does. He had to scramble to get human samples. In this case, blood of expectant mothers for them to do tests. And I think that there is a certain amount of formation of angel investors and I think you need also to focus on having a longer term perspective and not be sort of one and done, which is you invest in one round and that’s it, you’re never heard from again. Which kind of works in software because a 22 year old with a brilliant idea raises 500, $600,000 and goes off with it and is really, really capable and finds a co-founder and so forth and then succeeds or doesn’t succeed.
Raza Shaikh: It’s binary.
Sal Daher: It’s binary. They don’t want to give him another check. Whereas with a life science company, the technology is constantly evolving and developing and growing and so they need a more sustained funding sources. They need the angels. The angels also need to support them in terms of helping them hire people, in terms of helping them get connections for strategic partnerships and all of that. I’m just thinking that I’m now only writing checks in the life sciences. I don’t write checks outside life sciences. And specifically, my screen is potential platform technology, strong patent and protection and a technology that can be developed with at most, $6 million that can be raised by angels over multiple; staged based on milestones.
Raza Shaikh: A good capital staging plan.
Sal Daher: Yeah. Yeah, yeah, capital staging plan.
Raza Shaikh: Sal, I agree with you a lot. I’ll also give you this data point that in a given year, Launchpad members collectively deploy between eight and 10 million, but in most years, 70 to even 85% in some years goes to follow on funding. Real businesses, whether it be software, life science, medical devices, hardware, does need that sustenance in funding behind a good capital staging plan, along the journey of the company. It’s just super important. You can’t get away with once and done with most of these companies of this kind.
Sal Daher: Well, the companies that Launchpad is investing in are a little bit different from the companies that Walnut is investing because Walnut tends to come in earlier. You tend to see more of these software companies. I’ve had Christopher and Ham on the podcast to discuss their book with Joe Mandato.
Raza Shaikh: Nice.
Sal Daher: Which is really a tremendous book. I really respect the guys at Launchpad tremendously.
Raza Shaikh: I would say, I think the difference is that product risk versus not taking the product risk. Launchpad often invests once the product is there, whatever the product means, whether it be a software product and they’ve kind of proven that it can be built and it can go into initial market. But I think when you are taking product risk, hey, can you even build this? Then I think it makes sense to do small and have a binary yes or no at the end and go that way.
Sal Daher: Excellent, excellent. Raza, I’m going to do a brief promo for the sponsor of the podcast and then let’s talk about how you got to the point where you became an angel investor. Your entrepreneurial career and so forth.
Raza Shaikh: Good plan.
Sal Daher Talks About Peter Fasse of Fish & Richardson Who Sponsors the Podcast
Sal Daher: Okay. The sponsor of this podcast is Peter Fasse, a partner at Fish and Richardson. Peter is a renowned patent attorney, who has done a great deal of work with life science startups and also life science multinationals. And Peter also is an angel investor who has been very helpful in getting quite a few of his startups funded, has been very helpful I know of one particular startup I’m on the board of this company, Savran. He’s also helpful in getting them connected with strategic players and so forth. Peter is just a tremendous resource for a founder and intellectual property is extremely important for a life science company. A software company, a patent is not going to get you a lot. People can write code around and so forth. You’ve got to build a moat some other way. But with a life science company, your patent portfolio is everything. It’s the thing that has enduring value. It protects you from competition and allows your investors to realize an important return. And I say this, not just because Peter is a sponsor of the podcast, but that he’s just a tremendous guy. I highly recommended him.
Sal Daher: Anyway, so Raza, let’s talk about your entrepreneurial background. Give us a little bit of your story. When did you come to the States? Were you born in the States?
Raza Shaikh: Yeah. Well Sal, I landed here as an immigrant. I came on a H-1B visa here to the States. I jokingly say I was a high tech laborer doing programming and coding and consulting.
Sal Daher: High tech guest worker.
Raza Shaikh: High tech guest worker.
Sal Daher: H-1B is a high-tech guest worker.
Raza Shaikh: That’s probably a more accurate term, but I stayed. I did consulting for a while. My original training is computer science and software. Half of my career was actually back in Lahore, Pakistan working mostly for venture backed and other US companies as a developer on that side of the world. I landed here, did some consulting, got really bored with it and jumped into my first startup.
Sal Daher: When was that? When did you first come to the States?
Raza Shaikh: 2002.
Sal Daher: 2002, wow.
Raza Shaikh: I’m not as fresh off the boat anymore.
Sal Daher: 19 years. I came here as a boy in 1966. I was 11 years old.
Raza Shaikh: No, I was much older.
Sal Daher: I remember that day, probably not as jarring, but when you’re 11, the change in your life is just.
Raza Shaikh: No, I still remember.
Sal Daher: It really is. Anyway, so you would go out of the consulting.
Raza Shaikh: Yeah. I got out of consulting. I joined a startup as an early employee and we were starting with software, but soon got into hardware and that company was making robotics and software for protein crystallography automation. Specialized market in drug discovery. That company has done tremendous. I actually know which streets in Cambridge the trucks are not allowed to drive because I would drive the truck to deliver the robot and install it. I had a tremendous run with that company.
I ended up at the Broad Institute of MIT and Harvard, right after that. And the Broad Institute, many of your listeners because of the life science interest may know ,it was a reasonably new spinoff out of the Human Genome Project. And it’s a very fundamental science research organization to know about human disease and biology guided by the genomics information.
Raza Shaikh: I helped my team build a large scale; I jokingly call it the factory of science because we would do two million experiments a year. It’s a robotics hardware, software, data analytics platform for doing two things, small molecules synthesis and a high throughput screening. And we would basically charge everybody around the world and scientists to run their experiments on our platform.
Sal Daher: Oh wow.
Raza Shaikh Bootstraps His First Startup, and His Second
Raza Shaikh: And that was just a real great experience building that with my team. This is around the time when the iPhone came out and I started a company doing apps and games. I call them ringtone apps, 99 cents. That did fairly okay. And I started with my partners the last company that I started NorthBay Solutions with. And NorthBay started on this premise that at that time, I think 95% of the IT spend was not on the cloud, but we could see that at some point this equation will be flipped. Everything that is being built now, and everything that has been built will move to the cloud. And we could see that the enterprise, large enterprise, needs help moving to the cloud.
Raza Shaikh: We aligned ourselves with Amazon Web Services and really grew with that. The company has just grown tremendously. Bootstrapped, profitable it’s been just really a wonderful company helping large enterprise, especially on the data, machine learning and AI side of the house and on the cloud. This is around the time when I started getting involved with startups in our area. I actually connected with John Harthorne and Akhil Nigam of MassChallenge in the first year. And Todd Vahid. This is so, so interesting and so exciting, became a judge at MassChallenge and a mentor to companies and started learning what does it mean to do a startup? And little by little, as I mentioned earlier, started investing into these companies, got involved with angel groups and now here I am doing it a whole bunch of my time and just having a tremendous blast.
Sal Daher: Raza, I’m always curious what got you to take that step to become an entrepreneur? You’ve been working in a startup and then you went to Broad. Tell me that part again.
What Motivated Raza to Found His First Company
Raza Shaikh: I think the very first company was really just actually came from boredom, meaning I was working, the company at that time was a consulting company and they would put me anywhere and everywhere where a warm body is needed to do some programming or some work for some IT governance or some boring business application or warehousing. I actually really got bored with that. And that’s when I was like, oh, I need to do something. And the first exposure with the protein crystallography automation startup was just so great that the bug bites you and then it never leaves you.
Sal Daher: I can just imagine you’re driving in that truck with robots. By the way, why is it that it could drive through certain streets? I was curious about that.
Raza Shaikh: Well, you live in Cambridge so you know that certain parts, the height.
Sal Daher: We have potholes, yes. There’s something called a pothole.
Raza Shaikh: Well pothole and some streets are bends and other things are narrow enough that you wouldn’t be able to back in the truck or the famous memorial drivers store driver, that your truck would get stuck.
Sal Daher: All the time. It gets stuck in the tunnel.
Raza Shaikh: You know every year there’s somebody who has successfully stuck their truck under that tunnel.
Sal Daher: Crunch!
Raza Shaikh: That’s the reason too. I get to learn which streets you can’t go in Cambridge because a lot of our customers from Biogen to Genzyme, to all of those companies that would be the buyers of those gigantic robots would be there and I would drive a big truck to install the robot.
Sal Daher: Were you kind of moonlighting when you started first company?
Raza Shaikh: Yes, I was doing it in parallel to my work at the Broad and just built that on the side. The Broad had a pretty liberal moonlighting policy, all those scientists and researchers always do multiple things.
Sal Daher: Oh, they have to. To get top people, you have to allow them little leeway.
By the way, did you run across Gillian Isabelle while you were at the Broad?
Raza Shaikh: Absolutely. She was a dear colleague.
Sal Daher: 2006, 2010.
Raza Shaikh: She was a dear colleague of mine around those times and afterward for Enlivity we also connected. And I’ve heard her talk on your podcast episode. What a great work she’s doing.
Sal Daher: Yeah. It’s tremendous, tremendous. Gillian Isabelle, and she has basically a product that helps people who are undergoing chemotherapy put up with the side effects, to heal sores in their digestive tract and their mouth and so forth. That’s amazing. To look at you, you’re a young guy, you’ve lived three lives already. You’re like a cat that’s lived three of its seven lives.
Raza Shaikh: Sal, as you know, a lot of people that are successful will tell you that they’ve been mostly lucky. And I have no doubt in my mind, I consider myself luckiest person on earth. As an immigrant, Boston has been extremely welcoming. I’ve made great friends, done great work here. It’s just such a unique place but I’m just super lucky to be here.
Sal Daher: Well, luck favors the prepared. We cannot underestimate the value of randomness in startup life or just in your life in general. Really fascinating. You built this business and then you have these startups and you started investing and what was the first angel investment that you made? Would you care to talk about that?
Raza Shaikh: That’s a good question.
Sal Daher: What got you over the threshold?
Raza’s First Angel Investment
Raza Shaikh: Well, actually yeah, my first angel investment was a small gaming and apps company called Bite Factory. And they were building at that time, what was very popular Facebook games, on flash. And I put in a really small amount into that company. Did all right but games are a little hard thing that ultimately people get bored. May or may not go exactly where you want it to be. It’s a hit driven business.
Sal Daher: Yeah. It’s a highly competitive business. It’s hard to get tons of money on them because there’s always somebody else coming up with the latest fashion in gaming.
Raza Shaikh: I had met these founders; they were kind of really a young and we’re trying to do exciting. They had a title called Cat Wars and another title called Dog Wars and they wanted to build a title called Lead Will where it was a farm bill for weed farming but just easy, fun. And I thought it was cool and interesting and put some money behind it. That was actually my first angel deal.
Sal Daher: Great. Raza, we’ve covered your angel investing. We’ve covered some of your startups. We did the promo. Now we talked about your career in startup and so forth. We’re kind of wrapping up the interview. Why don’t you just think about what you want to convey to founders, the investors and people who want to be founders or work at startups that are listeners to the podcast?
Raza Shaikh’s Parting Thoughts
Raza Shaikh: Sure, Sal. I think to the founders, I want to say, I think a lot of people don’t know but the professionalized angel groups or angel groups in general are a really good source of capital, both in terms of the money, but also the value that the angels bring to you in the early stage. I see that a lot of the time when people think about angels, they are mostly for founders and individual of high net worth comes to their mind. And that’s what they’re thinking, perhaps when they’re thinking about angels. But it’s a very underrated and I would say in some ways, underutilized resource for founders, which is angel groups.
Sal Daher: Yes. If I can complement the point you’re making here, in my experience, a lot of the angel investors that I work with are founders, people who founded multiple companies and they have a lot of experience. Please continue.
Raza Shaikh: Yeah, and I want to say it to the founders that, really learn about this resource. It is also, Sal, you and I talked earlier in the podcast that a lot of companies, although they are high growth companies, they’re still more suitable. They may not be suitable for VCs and may actually be more suitable for angel dollars all the way to exit. And I often see that founders may not recognize that this is a really great pool of money and help that’s available to them.
Raza Shaikh: I want to give a shout out to all angel groups and for founders to learn about them and find out which one is suitable for them. At least in the Boston area, we have a great, great organization called The Capital Network, a nonprofit whose mission is to teach founders the art and ties of fundraising. They have a great resource where you can learn about the suitability of which angel groups might be suitable for you. And they teach you what angels are looking for in diligence, for example, how these groups compare and contrast. And I think for the founders, there’s just this incredible resource available. I basically want to kind of megaphone that through your podcast, Sal.
Sal Daher: Excellent. Listeners should know that I’m nodding enthusiastically to all these things that Raza’s saying in enthusiastic agreement. Yes.
Raza Shaikh: And I think for the angels that are listening to your podcasts, Sal, I think Ben Littauer would maybe say that there’s nothing angelic about angel investing. Meaning these folks are investing for returns, but we know that we are also investing for altruistic reasons of really being able to help startups. And I think angels also, we each have this spectrum of being involved all the way from just the one extreme of just a desire to put money in this asset class, to being hands on all the way to being a board member for these companies. I think angels also, I want to give a shout out for angel groups, for folks to see which one is suitable for you and for your style. It’s a really great way to learn from each other, how to invest in great companies and build a good portfolio for yourself.
Sal Daher: Excellent. It’s an excellent way to share the due diligence burden and so forth. In radical agreement with all of this. Reminds me of one thing, do you want to put in a plug for boards, given that you’re actually, you’re the co-host of On Boards?
Raza Shaikh: Sal, I do want to mention the On Boards podcast, just putting it in context for angels. I think this is one of the ways that angels help companies is to be become a board member or a board observer or part of the board of advisors of a company. And my cohost, Joe Ayoub and myself, we talk about governance topics for private companies. That includes startups that are venture backed or PE backed or angel backed, all the way to public companies, nonprofits and ESOP companies. How does governance work? And how to be an effective board member and how to make your board one of the most effective assets off your company. I think that’s one area where board members do make a really big inflection point differences for the organizations that they’re serving on the board of. And I think angels ought to be thinking, learning and maybe willing to serve on boards for companies.
Sal Daher: Outstanding, outstanding. If you’ve don’t have any other thoughts, Raza, we can wrap up now.
Raza Shaikh: Yeah, I think Sal, thank you very much for having me. I think this was a really great conversation.
Sal Daher: I love it. And I got a chance to pick your brain on some things that I’m kind of scratching my head on. Great.
Raza Shaikh: Yeah, we could definitely continue the conversation as well. Sal, I want to thank you for doing this podcast in the first place. I think you’ve done a tremendous service to the community. This is really nice of you to do all this.
Sal Daher: I learn so much because unlike you, I didn’t build companies from the ground up. I was an investor for decades. And so all this nitty gritty stuff of building software or building hardware, I never had that experience. For me, it’s a way to learn about these things from my guests. I always like to have guests like you who know a whole lot more about these topics than I do. Every time I’m listening, I’m learning. And I come out, I actually listen to the podcast again and read the transcript just to check in and so forth, but I’m absorbing more stuff. I learn so much from this podcast, and so that’s the main reason I do it. I’m just very grateful that you could make the time to come on.
Raul Rosa’s Startup, PodSpot
Raza Shaikh: And I wanted to give a shout out to Raul. Raul, we’ll learn about your startup and maybe it’ll help people do good podcasting.
Sal Daher: Oh, Raul. But Raul’s startup is PodSpot.
Raza Shaikh: PodSpot.
Sal Daher: And he has two manifestations of it. One, he is installing it at a coworking space. He has a setup for co-working space, but he tells me, he’s also going to create a desktop podcasting station that you can open up, with dedicated equipment, nothing that crashes, nothing that goes beeps and whirs. It’s all solid state. And then it’s just dedicated and it’s really easy workflow. I can’t wait to get my own unit and I’ll be sending it out to my guests. Raul, keep this in or take it out, depending on whether you want to reveal what’s going on with PodSpot.
Sal Daher: Very good. Raza, thanks again. This is Angel Invest Boston, conversations with Boston’s most interesting angel investors and founders. I’m Sal Daher.
Sal Daher: I’m glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.