Faces of Impact: Rosalind Riley, angel investor

ClearlySo Angels member Rosalind Riley discusses the divergence between philanthropy and impact investing, and why her work in the charity sector gives her a unique approach.

By Quynhnhu Nguyen, John Lloyd & Jessica Duveen · December 13, 2018

This is the fifth in a series of interviews being conducted with members of the ClearlySo Angels – the UK’s leading group of high-net-worth individuals and families dedicated to investing with an impact lens, creating social and environmental impact alongside financial return. To read the previous interview with CSA member Barnaby Wiener, click here.

When did you start angel investing?

Two years ago, when I joined ClearlySo Angels. So not very long. That said, I have done what you might call angel investing in the theatre in the past. It’s not the same, because you just never expect any money back at all. It’s really just supporting people.

How did you discover impact investing?

I came to impact investing through philanthropy, which I’d been involved with for about 8 years. I was doing some grant-making with a small charity under the Charities Aid Foundation (CAF) umbrella, spending a legacy left by an old friend. A lady from CAF organised an event for women who were potential social impact investors, and it was through that that I met Suzanne Biegel and learned about impact investing and ClearlySo Angels.

The rest is history. My husband, who’s a businessperson, joined too and we invest, both, together and separately

What is more important to you, the social/environmental impact, or financial return, or both?

The impact. Fundamentally, I’m a philanthropist, though I do believe in business as a way to achieve aims that are essentially philanthropic. So, I do expect a return. In fact, the more I learn and the more impact investments I make, the more I’m interested in that side of it. I feel like you can’t be effective if you’re not profiting in business. What’s the point in investing in things that aren’t going to be effective? In the same way, I actually wouldn’t support a charity that I thought was not viable. So, I’m interested when things perform well, but it’s more for their own sake than because I need a return. It’s definitely first and foremost about the impact. You could see it as a way of recycling my philanthropic giving.

Is there any specific impact cause that you care about the most? If so, why?

Of all the pitches that I’ve seen at ClearlySo Angels, I’ve found the thing that grabs me the most is environmental tech, like Upside Energy. It’s just so clever that they are storing up and redeploying energy around the grid. And it’s happening almost invisibly. I’m also very passionate about social inclusion and social mobility, like MyKindaFuture, which also I invested in.

Are you willing to share a bit more about your portfolio? What you’ve invested in and what the results of that have been like?

Sure. In some ways, I don’t even think of it as a portfolio, I just think of it as a series of interesting events. In that respect, I don’t have a plan. Actually, I don’t have a budget. I’m just like, “That’s interesting, I’ll put some money into that. How much should I put in? Oh, I’ll put in this much.” That’s the depth of my thought.

Interestingly, there’re a couple of things I’ve invested in second rounds of. I’ve thought much harder about them in the second round. I think that’s because when you are in the first round, you think, “Great, this is fantastic. I think it might work, let’s take a punt on it. I really like these people, I think they’re very intelligent, they seem to have all their ducks in a row. I want this thing to happen, let’s bung them some money and let’s see if it happens.” Then, in the second round, you’re like, “Hmm, okay. Let’s interrogate this a bit more closely. Let’s see who else is coming in on this, let’s see are there any major investors, are there people in my peer group in the ClearlySo Angel group who are also coming in on it?” I feel the second round is a moment for or a bit more reflection.

How do you pick the right companies to invest in?

The first thing is that I have to be really caught by the idea. I have to really think, “Oh yes, this is good.” I like new stuff, because – especially when you’re looking at green technology – what you’re looking for is for someone to either, solve a problem that hasn’t been solved before or solving it in a way that is new. So, innovation is really key for me.

In philanthropy, you might be looking at someone who is doing something that they’ve been doing for years. They might be innovating in minor ways, but actually the fact that they’re doing it is enough.

With my investments, I’m really looking for someone to be forging a new path in some way. I can be very easily put off. This is the thing that, I do think, does come from my theatre background partly—or just the kind of the person I am—I’m quite good at judging whether a person is the right kind of person, I’m good at judging how people talk to their team, how people build their team, what their attitude is, how they present themselves. I have found that useful. In some ways, it’s a really hard thing to do. You can’t legislate for that, you can’t define it necessarily. I think you can sometimes feel that somebody is in it not for the right reasons. The thing is, you don’t get that happening very much because ClearlySo Angels are very good filterers. I don’t think many people get through who are people that you just say, “Yes, you’re not really passionate about impact”, and that’s just it, they have to be passionate about impact.

If the entrepreneur doesn’t really have that vision, they’re just doing it because they’ve got a product that works and it’s a nice product. It’s not enough, they have to be saying, “We can reach someone who has been unreachable, we can solve a problem that has been unsolvable.” That’s one of the things that makes me want to invest.

What are some of the challenges that you have found when trying to decide which companies to invest in?

I wouldn’t call them challenges, but I suppose my main thing is I’ve just had a really, incredibly steep learning curve, having not come from a business background. Seemingly simple things like learning what B2B means (business-to-business). My first couple of meetings, I did not know what people were talking about. Luckily, that has diminished because my learning curve has gone up and I have a much better understanding now.

That said, I’ve been told by fellow investors, and I can now see it myself, that having a business background is not everything, you can always pick that up along the way. It’s quite interesting, I’ve had some really nice supportive words from my fellow investors that I should stop prefixing my views on businesses with, “I don’t really know anything about business, but my opinion is X, Y, Z”. Not having business training means that you might ask questions that more business savvy investors haven’t thought of, simply because they’re making a different set of assumptions. I found the supportiveness of my CSA colleagues very helpful in that.

Has your take on a founder ever stopped you investing in a company that otherwise looks like a good investment?

I think it’s too soon in my investing journey to say, but I don’t think I’ve really encountered that so far. A couple of times, I’ve been like, “Don’t be so effusive”, but that hasn’t stopped me, because what they’re doing is so often amazing. In the end I think that personality is key to pushing through a particular agenda and actually makes the social impact more effective.

What I have seen is pitches where I’ve just thought, “I’m not convinced, I don’t think you’re an impact business, I think you’re just a businessman. Your product is probably a perfectly feasible product, but I don’t think it’s an impact product”. That actually went hand in hand. Ask me that question in a couple of years, and I would have a different take on it, probably.

Are there any other warning signs or red flags that make you feel like, maybe, you shouldn’t invest in something?

Sometimes I see a really big blind spot in what they’re doing, for example I’ve found myself asking, “If this is something that could affect lots and lots of women, why are there no women in your team or on your Board?”. So, I then think, “Is this just a bunch of scientists–possibly male scientist–who have created something great but haven’t thought about it from all angles and crucially from the perspective of the end user or beneficiary?”. If I’m confused by terminology, that’s fine. I can learn the terminology. But if I’m confused by the clarity of what they’re trying to achieve, that turns me off straight away. I kind of think, “I may not be experienced, but I am quite bright and if I don’t get what you’re doing, it’s not because your product is bad, it’s because you’re not explaining it right, which makes me question their clarity. If something feels sort of fudged, it’s like, “Is there something you’re not saying because you think I won’t like it? I want to know things, even if you think I won’t like it. You might be surprised, I might like it.”

Is there any particular sector that you think has passed, or that you think you’ve missed an opportunity to invest in?

It’s interesting actually, transport is something that I think is incredibly important. It’s one of the things that comes up all the time in charitable applications, people are always applying for money to transport people from one place to another. Like volunteers to go and help people, or people to access services. Young people need to access training programmes and things like that, but they can’t go because there is no transport. I would love to see that solved somehow. I think people are working on it, but I don’t recall seeing anything come up specifically targeted at that. They tend to be about environmental efficiency, rather than about widening accessibility and all the knock-on effects that that can have. That’s something I would love to see looked at.

What should a founder look for in an angel investor?

Money. That’s what we’re there for. I do think it’s great when founders come to a group and say, “Is there any advice you can give us?”, (aside from the capital). I guess there are other things, like values that align.

In ClearlySo Angels, and the impact world more broadly, investors usually have the same values, in that the capital is fairly patient, instead of expecting a quick return. But ultimately, I don’t think it really matters if I have the same values, as long as I’ve got money. They can get advice from other people. You don’t have to be giving money to be useful, you can be on an advisory board. Surely, what they’re coming to us for is a financial commitment. I think the great thing about ClearlySo Angels is they (founders) know they’re coming to a group that’s going to be open. They’re not knocking on the doors of traditional finance.

What should a founder look for in a Board member?

The Boards that I sit on are all charitable Boards. Obviously, you need a wide range of people; someone on your board who is financial, you need someone who is–hopefully, either–legal or not too stupid about those things, you need someone who is connected to your sector. So, ideally, a Board with a variety of skills, experience and contacts.

A lot of what you’ve said is kind of, “The impact matters. You’re doing it, more, for the purpose of impact than financial return. Obviously, both would be great.” Do you see a big difference, then, from impact investing versus philanthropy?

Yes, I do, but interestingly I do think my attitudes overlap. When I’m looking at an application from a charity, it is now informed by the business vision that I have gained from ClearlySo Angels. I suppose that’s informed my philanthropy more than my philanthropy has informed my impact investing in some ways.

I think the thing about impact investing is that it’s more likely to be innovative than philanthropy. I support a lot of philanthropy that is literally just buying people’s paperclips, which is slightly unusual in the philanthropic world in some ways. My philanthropic donations are mostly to charities that are looking for core funding and project funding.

I think, in impact investing, a good pitch is just so exciting. I love to hear about it, that’s the difference for me I think. You’re always funding innovation, where in philanthropy it’s more about maintenance. Also, to be honest, you’re hearing about such terrible problems when you work in charity. You’re hearing about deprivation and violence and cruelty and people’s difficulties in the world. Whereas there is a positivity about social impact investing that is incredibly life-enhancing and uplifting. I think, “Gosh, I’m paying to make a machine to create this, that, and the other, or to recycle or to do a task that will improve people’s lives and possibly save the planet”. I think it’s always a bright spot, it’s got that sense of fun about it.

Do you like founders to have to either put their own money into the business or have gone through the friends and family round first before investing?

That’s something that I’ve heard other investors talk about. But, for me, I just think that the entrepreneurs are usually breaking their arses to get this done. They’re spending their whole lives working on their product and working on their marketing, applying for grants here and there, etc. I feel like I’m investing in ideas, and my co-investors are my ClearlySo Angels people and those other angels around the world. So, no, whether the founder has invested themselves or not is not such a concern for me.

Okay, great. I think that concludes all the questions I have. Thank you so much for your time.

That’s okay. I’m very pleased that I could be of help.

Interview conducted by Quynhnhu Nguyen and John Lloyd of ClearlySo; editorial support from Jessica Duveen of ClearlySo.