What if investing in groundbreaking startups was as easy and engaging as scrolling through Instagram? In this episode of The Angel Next Door Podcast, host Marcia Dawood talks with Cheryl Kellond, a seasoned entrepreneur and innovator, about Play Money, her cutting-edge platform that streamlines angel investing for both investors and founders. Cheryl Kellond brings a wealth of experience, having launched three venture-backed startups, including a top-rated fitness wearable on Amazon and a healthcare fintech. Now, she’s channeling her expertise into Play Money, making it simpler for accredited investors to discover and fund promising new companies. Discover why Play Money is revolutionizing the angel investing landscape by making the process more efficient and less daunting. Cheryl shares insights on building a diversified portfolio and how Play Money aims to facilitate connections between the right investors and startups. Whether you're new to investing or a seasoned pro, this episode is a must-listen for its innovative take on simplifying and democratizing early-stage investments.
What if investing in groundbreaking startups was as easy and engaging as scrolling through Instagram? In this episode of The Angel Next Door Podcast, host Marcia Dawood talks with Cheryl Kellond, a seasoned entrepreneur and innovator, about Play Money, her cutting-edge platform that streamlines angel investing for both investors and founders.
Cheryl Kellond brings a wealth of experience, having launched three venture-backed startups, including a top-rated fitness wearable on Amazon and a healthcare fintech. Now, she’s channeling her expertise into Play Money, making it simpler for accredited investors to discover and fund promising new companies.
Discover why Play Money is revolutionizing the angel investing landscape by making the process more efficient and less daunting. Cheryl shares insights on building a diversified portfolio and how Play Money aims to facilitate connections between the right investors and startups. Whether you're new to investing or a seasoned pro, this episode is a must-listen for its innovative take on simplifying and democratizing early-stage investments.
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Marcia Dawood
Well, hi Cheryl, welcome to the show.
Cheryl Kellond
Hey, thanks for having me. Great.
Marcia Dawood
Well, I'm excited to talk to you today to learn all about the things you've been working on to help get more people into the game of angel investing, because I know we are totally aligned on that. I definitely want to see more people, especially women, get into the game. So maybe start off, just tell us a little bit about your background and some of the things you've recently been working on.
Cheryl Kellond
Yep. Hey there, I'm Cheryl Kelland. I began my career as a concept to launch product expert in Silicon Valley, but I've been a founder now for about twelve years. Play money. My current company is my third venture backed startup. The first. I've learned so much along the way too, and I think play money is really a culmination of everything I've learned at the other startups and across this journey. So my first startup was in consumer electronics.
Cheryl Kellond
It was a fitness wearable for women, weekend warriors and mother runners. We funded that company. It was so great. We funded it initially on Kickstarter. So we had this group of really impassioned backers behind us the whole way. And that backer base was incredibly important to our success as a company. We shipped a product, we became the number one rated product in the category on Amazon. We had the Kickstarter money in.
Cheryl Kellond
I was one of the first companies to raise on Angellist back in the day when it wasn't like a checkout cart and a transaction platform, but when it was a little bit magic. And I think you remember these days, right?
Marcia Dawood
Yeah.
Cheryl Kellond
On Sundays, Nepal would send out an email of these are my favorite companies on the platform. And then as a founder, your phone would explode. So my first company, I raised money for it in those days. I mean, obviously we eventually had to shut it down. Doing consumer electronics is actually incredibly expensive and hard. My second company was a healthcare fintech, that the only thing probably harder than consumer electronics from scratch is gonna say, wait, healthcare and a fintech in the middle of a pandemic. So I have some questionable decision making, clearly. But we were able to raise, we raised about 17 million in VC for that company.
Cheryl Kellond
We grew really quickly. We grew to about 10 million in ARR and an acquisition in four years.
Marcia Dawood
When you say health tech, healthcare, fintech healthcare, fintech. So what, like a platform or.
Cheryl Kellond
We were providing a benefits plan infrastructure for self insured employers throughout the industrial midwest. And we had a new way that they and their employees could pay for healthcare that made it significantly cheaper, significantly easier to access, loved the problem we were solving loved what we did for our members as we pivoted and twisted and turned. I ended up with a customer I fell out of love with. I didn't love. I didn't love mid tier hr people and their brother in law benefits brokers. They were not my cup of tea as a customer. So was not sad when we were, when we were acquired on that business. And in the three years since then, I've spent my time as side hustling as an Eirda at Techstars.
Cheryl Kellond
So I've worked with probably 150 really early stage female founders over the last two and a half years and I became a super active angel investor.
Marcia Dawood
Wow.
Cheryl Kellond
My background in how I got to where I am and all of it is the impetus for what I'm doing now.
Marcia Dawood
So explain play money to us how you started it and what it's evolved to now.
Cheryl Kellond
Yep. So play money is like Instagram meets Angellist. It's an angel investing platform that focuses on deal flow, discovery and engagement where something like Angellist or sidecar just do the transaction piece. It's about getting the right angels in front of the right deal flow and to efficiently get the right founders in front of the right angels. Our value prop to Angels is build a diversified startup portfolio without making investing a full time job. Because for most of us who are accredited, we usually have more money than we have time. Time is a really precious commodity as well. And if you've got hobbies, a family, a job, anything going on, you don't live and breathe startup deal flow all day.
Cheryl Kellond
It is a direct output of my, of the last two years of what I've been doing. Right. I've watched these founders, oh my gosh, I have this one founder in my portfolio. She raised early money from a pre seed fund and then went out and had to pitch 100 individual angels. What a tremendous waste of time, right? And yet she needed the capital. And more importantly, those angels are some of the most valuable people on her cap table. So she didn't want to miss out on that opportunity. It just wasn't very efficient.
Cheryl Kellond
On the flip, I've got 50 companies in my startup portfolio now. And as I tried to build a diverse portfolio every year, it got really overwhelming. It became not fun because I had to do so much searching for the right companies. So we wanted to build something that brought those groups together in a really efficient, fun way.
Marcia Dawood
Well, I love that because it does take time. It takes so much time for these founders to raise money and they're trying to build their business at the same time, yet they have a full time job raise, and then they've got a full time job trying to build their business. So it sounds like what you're trying to do is get everybody on the same page and then also not have the investors feel so overwhelmed, like they have to do so much diligence before they make a decision.
Cheryl Kellond
Yeah, there's a, oh, there's a few things to unpack on that diligent side, but exactly. From the time I started my first company to now, one of the biggest changes I've seen in the market is just the proliferation of checks writers, particularly at the early stage, like twelve years ago, there was no such thing as 3000 new emerging fund managers. There was no such thing as dozens and dozens of angel groups everywhere online. All of that is new, and it's been so wonderful, and yet it's created this bit of a, like where's Waldo? Right? No one can find each other. And so it's become super inefficient. And I would say particularly for historically underfunded founders, women, people of color. Like, they're the ones having to navigate this maze of, like, where's the next angel? How do I find them? So we really wanted to make that more. It's just, it's overdue to be more efficient.
Cheryl Kellond
And then, I mean, you know this, Marsha, because you write checks too. I probably have to see 20 deals for everyone I say yes to, and I'm nothing. And when I see that deal, I want everything there on the deal so I can make a decision. I don't want to have to go bother the founder for that same information again. Someone has done diligence on them. Someone has put them through that ringer. It exists. Why should I spend their time asking for it all over? So what we're trying to do is take all the information you would need as an angel to make a decision and put it in one place on our site and leverage the work that the emerging fund manager has done or the big angel group has done, and then let each individual angel decide how much of it they need to consume before pulling the trigger on a check.
Cheryl Kellond
I mean, that's a different discussion. But if it exists, no one should be asking them. I mean, the poor founder is being asked for this stuff over and over again and.
Marcia Dawood
Exactly.
Cheryl Kellond
I mean, loud and proud. I'm a baby check writer, right? I write $1500 to $2,500 checks because I'm trying to build a diverse portfolio every year. So taking a half hour of the founder's time for a check. I may or may not write at that level. That's not the right use of my time or theirs.
Marcia Dawood
So let's walk through two things. One, the founder is going to come on to the site. How do you find them and what happens when they come on? And then we'll go through the investor. But let's start with the founder.
Cheryl Kellond
Yep. So right now, all the deals on play money are highly vetted. We are sourcing them from emerging fund managers, high velocity angel groups and super angels. We want deals on the platform that have sort of two things about them. First, they have a lead investor, and I'll use that term loosely, but a lead investor that sees hundreds or thousands of deals for every check they write, so they know what works, they can filter for quality. Right? And then we look for that lead to have done the basic hygiene of due diligence. Is there incorporation docs in order, is there cap table in order? All of that kind of basic hygiene stuff so we can put stuff on the platform as a clean and well lit place. So that's our first criteria.
Cheryl Kellond
And that remains true whether we are bringing the deals onto the platform or increasingly communities we are working with are bringing their deal flow on the platform. For us to share that deal flow more broadly with everyone on the platform, we need to make sure it's clean and well lit. So we're doing that level of checking.
Marcia Dawood
Things out of and at any given time, how many people or how many companies are on the platform.
Cheryl Kellond
So this is why I said Instagram meets Angellist, right? When you go to Instagram, it's like the most deliciously perfectly curated feed of stuff just for you. Like, I don't know if you have this experience, but every time I go on I'm like Jones or beauty Og. Like, what products am I going to buy? They perfectly target with what I want to consume. That's how we think about play money. So it's not a big we funder mall marketplace or a syndicate strip mall. At Angellist, it's every week we are going to pick one or two deals perfectly curated for what we've learned about you. Whether it's because of the industry sectors you like, whether it's we've seen you gravitate to a certain kind of founder energy because there's videos of the founders there and there's a certain kind you like, maybe it's people you follow or groups you're a part of. We're going to use all that information to curate a feed for you.
Cheryl Kellond
So again, you can build a diverse portfolio, but not take any more than an hour or so a week doing it right. I want everything to either be investable or entertaining and you learn something.
Marcia Dawood
I love that. So then let's get to the second part. I'm a new investor, I come onto the site. How do you onboard me and how do I learn to.
Cheryl Kellond
Yep. So right now, can I show off about something? So the folks on the play money site right now, 40% are excited to write their very first angel check. 40% have written between one and five checks. They're getting going and then 20% are experienced. There are six checks, ten checks, 15 checks. They've been around for a while, so we've got this great mix of experience levels and skill sets. So when you sign up for play money, you can either come on because you see a deal that someone shared with you that you like, or you can just sign up and start getting deal flow every week. And when you sign up, we start.
Cheryl Kellond
We'll do like a drip education campaign tailored to your level of experience. So if you've never written an angel check, we'll take you back to the basics on 101. If you've written a few or more experienced, we go in on teaching about portfolio diversification. So I'm not going to say a handholding experience, but something happens. We're teaching you and learning as we encourage you to lurk and learn until you find that right deal.
Marcia Dawood
And then how are the entities then structured to collect the cash?
Cheryl Kellond
These are all spds. So we've got a full deal memo on every deal. It's got really cool short form video, it's got a summary of what the company does. Really everything you need to invest is right there. We have point of view from their lead investors that we take out of the deal memo and then you can invest directly on the site. It's pretty much a two click process. We've tried to make it as easy as possible. I want it to feel like late night retail therapy or shopping, because it should, right.
Cheryl Kellond
If you're building a diverse portfolio, you should be making a dozen bets a year. So we needed to make it feel that easy. And all the investments are done through an SPV, which is sort of a mini fund just for that company. It allows the company to take in a whole bunch of smaller czech investors, but only put one line on their cap table, which makes their downstream administrative work easier forever. And I say that as a founder who had lots of individual angels on her cap table and had to execute an acquisition and needed all of them to sign things, and it was havoc on me.
Marcia Dawood
So, and then the SPV just mirrors the terms of the raise that the company is doing, whether it's price round, a note or a safe.
Cheryl Kellond
Yes. So the investors invest in v, the SPv lead, which is us, signs the investment documents with the company on behalf of the SPV. You know what the cool thing we're doing, though? We are linking the underlying investment documents, whether it's a safe note or a price drowned. We're linking that directly to the deal memo so everyone can see what the SPV is signing. And this is a direct output. And if there's something funky in there, we flag it. Oh, this is non traditional, or this is something different than the normal terms we see at this phase. But we're doing that because I have seen so many spvs over the last few years with some funky terms on them that people were trying to hide.
Marcia Dawood
Right.
Cheryl Kellond
And if you look on angelist or sidecar, they don't usually share the underlying terms.
Marcia Dawood
Interesting.
Cheryl Kellond
So we're trying to, we're trying to educate along the way. We're trying to be super transparent. We want everyone that uses our site to leave an overall better, more educated investor again, without making it daunting.
Marcia Dawood
That's wonderful. That's what we need. Not having it be daunting, because that's the thing. I've heard so many people say it's too daunting. I don't think I could make a decision. I don't have all the information. I don't know how to get all the information.
Cheryl Kellond
Yeah. So here's the thing. When I started out three years ago now, I actually, I didn't think I was going to write checks. I was doing it so I could learn to be a better founder, so I could think like an investor, and so I could be a better mentor to the founders I was working with. But, and this sounds ridiculous now, but I didn't think, even as a then a two time venture back pounder, I didn't think I knew enough to be an angel investor. And I was sure I didn't have enough capital. But the reason I didn't think I knew enough is because the way everyone talked about angel investing, they talked about it like it was vc, right? Like you have to do a whole bunch of diligence and you have to know the market and you have to be able to add all of this value, and then you have to be able to double down on your bet or write a big enough check to put it on the founders cap table. Like, it was so overwhelming.
Cheryl Kellond
I was like, all right, I don't know enough. And also, that doesn't sound like fun. It sounds like work. And the breakthrough moment for me. And again, you probably maybe need some new hobbies. I dug into the research on angel investing and there was this breakthrough information that came out of Angelus back like in 2020, right before the pandemic, and no one paid attention to it. But what their chief data scientist did is he went through their twelve years of data on early stage investing and analyzed it all. And the TLDR out of this, the real conclusion was it didn't matter what companies you picked, the success in angel investing came all about just making enough bets.
Cheryl Kellond
It was completely a numbers game. It was to me, I was like, holy moly, wait a minute. I am already a better angel than I know. I don't have to go, I don't have to have deep knowledge of an industry, or I don't have to try to rake a tiny little new company over the coals on diligence because frankly, there's not a lot of data points on an early stage company. But as an individual who has lived on this planet for a very long time, I am full of a million data points on what problems need to be solved and my gut feeling on what kind of founders can solve them. Like, I was like, this is amazing. I am already a better angel investor than I know. So the job became just like finding things I loved and resonated with me and founders.
Cheryl Kellond
I wanted to go along on a ride with things I was going to be proud to wake up of, to be a part of. The kind of capital is so overwhelmingly powerful. It's like creating the future.
Marcia Dawood
Yes.
Cheryl Kellond
I already know what the future needs and my opinion is just as valid as anyone else's. So I'm going to help that happen. So that, that was really the thing that changed it all for me. It's not a diligence game, right? It's a stay in the game and make the shots on goal and be smart about how you budget and feel really into, feel really confident and great that your lived experience is a perfectly solid basis to be a fabulous angel investor and have power over creating that future.
Marcia Dawood
Yeah, great.
Cheryl Kellond
That was like, I was like, dude, all day, I want more of this. How do we let everyone else do it? And that's why we build play money, so everyone else could do that too and didn't have to sit on the sidelines or didn't have to make one or two big bets a year, and because then you hear people, oh, I lost all my money, or it's all tied up there. We have to talk about how the asset class really works and how to budget for it together. And the platform lets you do that really well.
Marcia Dawood
And do you have any analytics on how long it's taking people to make decisions on the platform?
Cheryl Kellond
That's such a good question. Not as many as we'd like. I mean, we're still early stage. We're getting the wheels on the bus before we know everything. But we did a survey, and 50% of the users on our platform go through most of the information in the deal memo, and they admitted it wasn't actually because they needed it, it's because they found it interesting. And so there'll be usually five short clip videos, some quotes from investors, the pitch deck. So about 50% of the people go through everything on there and make a decision. 25% of the people will go do some outside research.
Cheryl Kellond
Again, not because they need to, and not all of them actually did that outside research before making their investment. Some of them made the investment and then did the outside research because, again, it was interesting. And 25% definitely make a decision within the first five minutes. They know a few words of the founder pitch or they see the problem they're solving and they're like, that's it.
Marcia Dawood
Yeah.
Cheryl Kellond
So it is not a no. People are not wringing their hands, and we are purposely leaving deals on the site for only three weeks because we want you to be able to say hot or not, don't belabor the decision. If you were belaboring the decision, you are probably writing a check that is too big for your budget.
Marcia Dawood
Interesting.
Cheryl Kellond
Yeah.
Marcia Dawood
Only three weeks and then the deals down.
Cheryl Kellond
The next one. Yep. Then the deal is down. And we've got ways for you to get in on it because the founders usually leave them open because they're raising from their communities. But the kind of behavior we want to incent is we don't want it to feel like work. The minute you have ten deals back up there, backed up there feels like my inbox, I'm panicked. And so we have one user, I think she invests as she sits in the airport and travels. I want her to be able to sit down, play her game of wordle, learn about two companies on the site, if she likes one, jump in that level of decision making and processing, because it doesn't really take any more than that.
Marcia Dawood
And then does everyone who comes on the platform, do they have to be an accredited investor.
Cheryl Kellond
Yes, you have to be accredited. And it's all through self attestation. So we ask you that question when you sign up, you tell us yes or no and proceed from there.
Marcia Dawood
So all of these offerings are 506 B under the.
Cheryl Kellond
They are. We're doing 506 B.
Marcia Dawood
Right.
Cheryl Kellond
We haven't moved to 506 C, which means someone has to submit paperwork to show they're accredited. We're trusting you at this point.
Marcia Dawood
Right. We've talked about 506 B and 506 C on the podcast before, and we know that the 506 C just means there can be more general solicitation, but with that comes paperwork.
Cheryl Kellond
We looked at all of those solutions when we did our platform. And the real thing that's made us say, you know what, we can start, which is 506 B was because right now there are 24 million accredited investors in the US. That's one in five households. We are not talking about a small part of the population. And I think there's, I think the latest numbers show that about 50,000 of them are on Angellist. So we have a whole big market out there.
Marcia Dawood
Right.
Cheryl Kellond
That's not currently in the game. That should have a say in the future. And what gets built and both the financial upside and the what gets built and who gets to build it? Part of it.
Marcia Dawood
And we're trying at the Angel Capital association to also have there be some type of an education component to the definition. So I sit on the SEC advisory committee, and so we've had many conversations about that, trying to do that.
Cheryl Kellond
That would be. Oh, my gosh, that would be a game changer. Because you know what? It's the education that makes a lot of difference. Because I've seen investors that are plenty accredited doing stupid stuff.
Marcia Dawood
Yes.
Cheryl Kellond
And we have a few more experienced investors on the platform that the information about portfolio diversification and how diversified you have to be was a game changer. It changed their whole style of investing and huge difference. So I would love if there was just an education component, because then we can educate on budgeting and timeframes and diversification, all things that us gals seem to natively know, maybe so.
Marcia Dawood
Yeah.
Cheryl Kellond
Which is why the platform is actually resonating really well with women. Yeah, I love that, taking the access and intimidation piece out. But it also, I mean, we're better investors. The data shows women are better investors, period. Well, this lets us invest the ways that we know are better. Right. Diversification is right in public markets, works the same way in private markets. So I think that's a piece that's resonating and letting it catch on.
Marcia Dawood
So interesting. I'm really fascinated by what you're doing with play money. Not only to mention that you're a mom of four and you've done like a whole bunch of Ironmans and you're just like, I think in a minute, maybe.
Cheryl Kellond
Oh, my gosh. Yeah. I don't know if I see it that way. But you know what? I am so excited to put our 1st $1 billion of capital in motion. That's my goal, right? That's the next goal, the next milestone. So yes, that probably speaks to we are a little ambitious.
Marcia Dawood
I love that. Well, Cheryl, thank you so much for coming on the show today and explaining all about play money and how we can get more and more people to have a diversified portfolio and get in the game.
Cheryl Kellond
They should. So everyone should go to letsplaymoney.com. it is free to sign up and lurk and learn. And our education, I gotta say, it's banger. It's pretty good. It's worth it just for that. So obviously, lots of people signing up lurk and learn.
Marcia Dawood
We'll make sure to put all the information in the show notes and get all that to you. So thanks a lot, Cheryl.
Cheryl Kellond
Thanks for having me. Bye now.