Sapna Shah is an angel investor, retail expert, and three-time entrepreneur.
Here is what Sapna had to say when we asked her about investing in yourself:
How did you decide to make the transition from the corporate world to the startup world?
I was at Linens ‘n Things working in business strategy and development, and a private equity firm bought the company. It was clear that the strategy group was not going to be kept on, so a colleague (and friend) and I started looking for retail jobs in New York City. Then, another friend we both knew suggested we start our own company because we knew a lot about retail and publicly traded companies—this specialized knowledge was valuable to Wall Street. My colleague and I went for it! It was scary and panic-inducing at the beginning, especially not having a paycheck. However, we got our first Wall Street client and went from there.
What are the three most important skills you utilize as an angel investor?
It is a mix of hard and soft skills. One, you need to have a strategic view of the market. Since I’m focused on the retail market, I know the space. I am aware of what’s currently going on in the industry, which gives me a good idea of the market potential for a startup’s success. Two, you have to understand business analytics. Not just financial modeling, but understanding how a business’s numbers come together. What does website traffic look like and how does that relate to revenue? Three, you need to have people skills. If you are an investor in a company, you might work with that company for up to 15 years. You might be asked to help with hiring or serve on their board, so it’s those soft skills that are really most important.
What does the angel investment process look like from the time you first meet a company to when you invest in a round?
The process is very fluid. It typically doesn’t happen in one meeting. It is usually a lot of face time and really getting to know someone. When I meet a founder, I ask these questions: Do they understand this market? What problem are they trying to solve? Do they have experience? Do they have the grit and resilience for when the going gets tough? How much money will they raise? Who will they hire? What is their sales process? This takes multiple meetings and phone calls because I really want to understand how the founder is thinking. The last part of the process is the financial due diligence. I ask founders for a financial model to show me how they will get to a successful business. If there is a fit and everything has gone well, I move forward with legal documents and finalizing a deal. This process can take anywhere from a few weeks to six months, and out of the 1,000 companies I meet with each year, I usually invest in two or three.
How do you identify industry trends and potential ventures that will be a good fit for your portfolio?
Since I am focused on a specific market (retail), I have an idea of how trends will go, but I also do a lot of research. I come up with a hypothesis on where I think the world of retail is going and find companies that are moving in this direction. For example, right now, I am looking for something in the menopause space. Companies also come to me with new ideas that I never even thought of, and those could be a fit in my portfolio as well.
You also started the Retail X Series. Can you tell us more about this venture and how people can get involved?
It’s my labor of love. People were asking me questions about creating financial models and making B2B sales when they had never done so before, and I wanted to direct them to events or resources to help them answer these questions, but that didn’t seem to exist, so I created one. The Retail X Series started as an event series, but has evolved to an ecosystem for early stage founders who are creating the future of retail.
What is the most important lesson you have learned throughout your career journey?
If you had asked me what I was going to do as a senior in high school or in college, I would have given you a lot of different answers and none would have been correct. In high school, I would have said I was going to be the CEO of IBM. Your career is really long and you have so much time. There is so much out there you don’t even know about and new industries that will be created. Plan shorter periods around what you are interested in and what you like to do when trying to figure out your career path.
Sapna Shah is an angel investor, retail expert, and three-time entrepreneur. Through Red Giraffe Advisors, she makes pre-seed investments in startups that are creating the future of the retail, including B2B retail tech/fashion tech, marketplaces, DTC ecommerce, and consumer brand sectors, with a particular focus on startups that have female and/or underrepresented founders. Select investments include: Silk + Sonder, Stantt, Dough, Robyn, Findmine, Modalyst, Monica + Andy, and Iterate.ai. Sapna is also the founder of Retail X Series, a retail startup boot camp program for pre-seed stage founders who are revolutionizing the future of retail. Sapna also hosts the Retail X Series podcast. She currently serves on the Board of Directors of the NY Tech Alliance. Sapna has also served on the Board of Directors of New York Angels, one of the most active angel groups in the world. Prior to Red Giraffe Advisors, Sapna co-founded and led Retail Eye Partners, a successful independent Wall Street equity research firm for eight years. At Retail Eye, Sapna assessed the monthly and quarterly performance of major retailers in the specialty, big box, and department store sectors through intensive channel checks and analysis. Simultaneously, in 2012, Sapna co-founded a menswear e-commerce retailer, Mind the Chap, and led the Marketing and Web Development areas of the company. She also has over eight years of experience working for retailers in the specialty apparel and home furnishings sectors. Prior to the founding of Retail Eye Partners, Sapna was Executive Director of Strategy and Customer Insight at Linens ‘n Things, Inc. In this capacity, she was responsible for customer targeting and segmentation, market and consumer research, corporate strategic planning, new business rollouts, and competitive benchmarking. Prior to Linens ‘n Things, Sapna was Director of Strategic Planning & New Business Development at Ann Taylor, where she worked on launching Ann Taylor’s e-commerce site, developing a color cosmetics line, visioning the store of the future and improving store operations. Sapna also has experience at Gap, Inc. Previous to her career in retail, Sapna worked in investment banking at Punk, Ziegel & Knoell, and at Morgan Stanley as a credit analyst. Sapna received her B.S. in Economics from the Wharton School as well as a B.A. in East Asian Studies from the College of Arts & Sciences at the University of Pennsylvania. She received her MBA from Columbia Business School.
If you are an early stage entrepreneur in the retail space (B2B, DTC, etc.) and would like to schedule a virtual meeting with Sapna, please visit http://www.redgiraffeadvisors.com/officehours/.