Ep. 48: How Karen Rands Connects Founders to Capital and Grew a Network of Thousands of Angel Investors, Part 2

Transcript

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Welcome to 2026 and welcome to Scale Tales! This is a business storytelling podcast where entrepreneurs, executives and experts share firsthand accounts of those magical moments when they achieved something bigger than even they could have imagined.

It’s a new year and I’m so happy to ring it in with you! I’m Alicia Butler Pierre and I hope you are feeling refreshed, renewed, and ready to learn tips, techniques, and strategies to scale your idea, project, and entire organization through these podcast episodes. In our last episode, we left you with a cliffhanger. In that episode, Karen Rands, the CEO of Kugarand Capital Holdings, shared the fundamentals of angel investing. 

She also shared a story about a former client who leveraged his work with a large customer to self-fund his company’s scale. Things were getting really good when Part 1 ended, just as Karen mentioned she had an example to share of how angel investors can tap into their emotion and passion to offer funding. That’s where we’ll begin this episode. 

This is Ep. 48: How Karen Rands Connects Founders to Capital and Grew a Network of Thousands of Angel Investors, Part 2

Typically they start with a criteria, and if the company doesn’t make that criteria, they don’t even get to that final A/B decision, right? So it meets their criteria and then they decide. And, I’ll give you an, an example of that.

I had this one very active investor in my organization. He brought one of his clients in the financial services space. The client was somebody that had invented the first sort of satellites and stuff like that and the company had gone public and he made a bunch of money and so he kind of invested in whatever Alan invested in, and Bob invested in what Alan invested in.

And so, there had been this company coming through to raise capital. It crossed my desk at least twice before I finally agreed to go and see their presentation because I don’t know how anybody’s gonna make money on that.

The third time it came across with this very professional packet. It was really clear how they were raising their money, how they were going to use their money, how they were going to make money. It was very clear and it really had some legs on it. The thing about the shortage of capital is that sometimes companies get excluded from events, not because they’re bad, but because there were too many companies applying that month that were good and sometimes you got a gap and you just got to let a company in because it’s they want to see at least 3 companies.

The third time was the charm for this company whose funding request came across her desk twice before. Karen decided she’d vet them for herself. She never would have guessed the product these entrepreneurs were raising funds for. It was for…a vampire movie!

I’d gone to one of their pitch events, and they did a great presentation. So I knew that it would be OK, right? If I picked up the phone and call Alan and said, “Hey, hey, I got this vampire movie I want you to look at.” It was before the Twilight movies, right? He would have been like,

“Karen, I do software. What are you talking about a vampire movie? Are you joking? Is this April Fool’s Day?”

But they did such a good presentation and they were so clear on how they’re going to get to market and one of the ways that they were going to market, OK, so now this is how far back this was. This was back when AOL was still around and Yahoo had bulletin boards that people would get on and chat with each other.

So that was a while ago. Now we just do that in social media. They had this whole strategy of how they were going to utilize chat rooms for the early adopters. Their target market was teenagers, and he had two teenage boys that knew all about Saw and Cabin Fever before they ever came to market because they were in these chat rooms.

And he understood Dragon Con and Comic-Con and all that kind of stuff to create a buzz in the marketplace. So when it finally hit the theaters, everybody wanted to see it that was in your target market. They had a plan to do that, and he saw that and he was like, these guys are going to make money.

Now, they carved out some special preferential treatment to get a percentage of the merchandise on that, but it was fascinating to me. That was when I said all these investorssay they have these round holes. This is what we  invest in, and then you come along with a square peg that you whittle down that fits their hole.

They will look at deals even that are outside their space because they’re passionate about the problem or whatever the company’s doing and they believe they can make money and they will go off their norm if those two criteria are met.

Can you reveal the name of that movie? 

It was called Kiss of the Sun and never got to market. So part of the way you raise capital, particularly when something that’s kind of risky like that, you set an escrow amount that says, I’m not gonna use this money until I reach this because I know this is what I need. In a movie they have pre-production and they have to go into production so they can raised the rest of it. They also had a big investor as a super producer that was going to give them $5 million when they met these milestones.

So they were trying to get to $500,000. They got to $450. Very close. These guys put in, I think, together about $125 and one of their very first investors had a health issue and had to pull their money out. They’ve been three years probably in raising this capital, and, they said, “I can’t do it.”

But one of the guys went on and built the software company that those same investors invested in later on, like a year or so later, so.

Hearing Karen’s story about the creators of a vampire movie raising funds really sheds light on the fact that entrepreneurs, creators, and even executives within organizations seek funding for various reasons. It proves that if people are passionate about your idea, the problem that it solves, or in the case of the vampire movie, the entertainment it can provide, and they think they can make money from it, they might be willing to invest even if it goes against the grain of what they normally invest in. 

I’ve mentioned before that I’ve known Karen for about 20 years. Ever since I’ve known her, she’s been deeply immersed in the angel and VC investing world. As I reflected on the days when I first met her, I realized even I don’t know her backstory. How did she ultimately become the compassionate capitalist and entrepreneur she is today?

My last job at IBM, which I left in January 2000, I was the complex opportunity business manager and my task was to screen and use IBM resources and people and equipment, to help companies get to a point that they could go out and get venture capital and come back and spend it with IBM because IBM at that time realized they were missing out on some of the big boys, Amazon, eBays, all those ones that were like the heyday at the time.

Once a company standardize on equipment and they start to scale, it’s very difficult to get them to shift to other equipment and IBM didn’t really do anything for small companies. You had to be kind of big in order to get a rep.

So I was helping these companies through the teleservices. I thought I was the cat’s meow. I knew all about capital, all that kind of stuff. So I had this one client that had been finding his way to work with me through my different jobs in IBM. He had invented this incredible software package in the healthcare space that literally would save lives.

It would be transformative. Even to this day, this is one of those things where I say if there was enough capital, and if entrepreneurs got out of their own way sometimes there’s a lot of innovation that never gets to market, never gets to solve the problems we care about because of these issues.

So I left to help him go to market, be his marketing director, to help raise capital. In the process of that I got invited to this meeting of Angel Investors, and it was a network of people that invest in companies. It was called the Network of Business Angels and Investors and they had at one point in time been business acquisitions because they would do mergers and acquisitions originally.

And I remember so clearly walking out of that room. It took me a while to unpack the experience I had in the room, and understand why more people didn’t know about angel investing, why more people didn’t participate in angel investing that could.

There’s about 350,000 in angel groups in the United States. There really could be 7 million Angel Investors if you looked at the population and the wealth. And so understanding that, and part of it was I figured out that one, it was a secret, it literally was a secret.

It was against the law for companies to solicit that they were raising capital except for in these small little groups either because you already knew the investor that was a millionaire or because you were invited in through the gauntlet of an angel group that was a group of millionaires.

You didn’t have to know the millionaires because the process of going through that kind of established relationship so I walked into this room and it was clearly these people, which happened to be mostly middle aged white males that is still dominant in the Angel Investor ecosystem today and they were picking and choosing who was going to be the next big thing, because there was not enough capital in the room to invest in all the companies, so they usually decided amongst themselves which ones they wanted.

Sometimes somebody would do a sidebar and do something else. It was just, it was fascinating to me when I walked out of there I was like, Oh my God, I had no idea! I knew about banks and VCs. It totally made sense that there was somebody between a startup idea and the VC or a startup idea and being able to get a bank loan, but I, I, I never had heard the term.

That was the thing I had to unpack that I only figured out about two years ago that even for me, where I was in IBM at the time, I had never heard the term “Angel Investor.” That’s how much of a secret it was.

But I still distinctly remember walking out of the room, out of there, back into the parking deck and feeling goose pimples like I had found my place. This is what I felt like all of my career journey, my ziggy zaggy and IBM, my false attempts at starting a business and like having this thing I’m gonna invent something and, you know, all that kind of stuff because I had bought into this idea, be a successful entrepreneur is the greatest way to create wealth, but the thing that most people don’t know, and I didn’t know, is that every very successful entrepreneur, everything that you buy Apple phones…

They didn’t do it because this guy just built this. They did it because 1,000 people invested in him and they became millionaires along the way that that person became a billionaire, but we never hear about it because it was a secret. And so Jerry Martin, who had formed that group, was looking to retire and train somebody to take the group over,  and I was fortunate enough to be blessed with that, and I learned the ropes from him and talking to those angels all through that process.

Why did you become an Angel Investor? How did you learn how to become an Angel Investor? Why did you invest in this deal and not that deal? I used all that knowledge when  it was time for me to take it over to create the original series of e-books back when ebooks were just PDFs you emailed people because they gave you your email address. Ebook was not something you bought at Amazon at the time. I used this knowledge because a wealth manager had come to me and said,

“I’ve got people that want to learn how to be Angel Investors and there’s no training out there. There’s no information out there. How do they learn how to do that?”

So I took what I had synthesized from all those investors that I had questioned over the years, all the entrepreneurs that have told me their stories of how they got at capital and just the process being in the room, having a seat at the table, and I put that into an outline that became the precursor five chapters that ultimately came inside Secrets to Angel Investing,

I grew that group to be a top 50 in the US, one of the most active in the Southeast, up until about 2012 as I weathered the storm of the Great Recession, finally pull it into the marina and anchor it up I was done.

Karen may have been done with managing that particular organization, but her work with Angel Investors was far from over. 3

“Hey Janet!

Hey Alicia! What’s up?

Well, there’s something that’s been troubling me. You know, I was chatting with a founder the other day, and he said, ‘I feel like I’m building the plane while flying it.’ Have you ever felt that way?” 

“Oh, absolutely! Fast growth can feel like total chaos—stuff falling through the cracks, everyone scrambling.”

“Exactly! That’s why I’m so passionate about what we do at Equilibria. We give founders of fast-growing companies the tools they need to document and improve their key processes so scaling doesn’t feel like a disaster.”

“So basically, you guys turn the chaos into flow?”

“Yeah, that’s a good way of putting it. Imagine your team working in sync, operations running smoothly, and growth feeling exciting instead of exhausting. That’s what Equilibria is all about. I just wish more people knew about us!” 

“Well, where can they go?” 

“I thought you’d never ask. Head over to EQBsystems.com. Seriously, if you’re ready to stop the chaos and start flowing, EQBsystems.com is the place to go. Because growth should feel good.” 

Karen Rands’ work as a compassionate capitalist in the angel investor community began at IBM. She eventually left IBM and led the Network of Business Angels and Investors – and the group thrived under her leadership until the Great Recession that took place between 2007 – 2009. Little did she know that economic downturn would open the door to bigger and better opportunities. Here’s Karen.

It just got worse and worse and worse. I learned a lesson in that process is that my particular investors, except for that guy I talked about before, the satellite guy, they were all people that had day jobs.

They ran a company. They were a partner in a firm that they had to make sure their own businesses didn’t suffer during the Great Recession and so they would come to the meetings, but they weren’t investing because they couldn’t do the due diligence, they couldn’t do the work on it, and so we just stopped. We got less and less and less. It’s already frustrating for entrepreneurs to not get the money that they’re looking for and then to not get like no money out of the group, I think that was embarrassing to me because one year we put like $9 million to work.

But all was not lost and whatever embarrassment Karen felt dissipated as she immersed herself in the next chapter of her career.

The state of Georgia had done the Invest Georgia exemption, which is now the best kept secret that I’m trying to undo with my framework, and make more people aware of it but then the JOBS Act was coming out.

I had this perception that all these people would jump into investing in entrepreneurs and they would do it on emotion, which is one of the number one reasons why you fail in your investments as an Angel Investor, and then the bad reputation it had as being gambling, the redhead stepchild of assets, would be further cemented instead of it being changed because it’s an empowering, uplifting and profitable way to invest. The reason why millionaires do it when they can do anything else is because of the money they can make and the way it makes them feel.

And so I wrote a book, 300 something pages in there with a glossary, and it’s tied to a resource portal that has thousands of thousands of dollars in value in it because of the resources that are in there, the worksheets, the sample contracts. Rebooted my podcast, The Compassionate Capitalist Show, to interview some of these investors that I knew on their best practices and talk about the book and start to try to get in the earbuds of executives out there that this was possible, that you could be happy in your business. You don’t have to sell it. You can start investing in other businesses, the right side quadrant, be a business owner that invests in other businesses.

You may not be feeling fulfilled on it instead of a midlife crisis of getting a sports car or, having an affair or quitting your job to start a business. Go out and put your money to work investing in businesses that you’re passionate and help those entrepreneurs that really, really, really wanna work those 70 hours a week to build something because they’re passionate and help them do that because you can replace money, you can’t replace the time, the 10 years it might take you to build a business to get to that.

This idea of channeling your passion for solving problems while also growing your money by investing in other businesses led to Karen writing her second book. 

Every time I would talk about the book at an event, some millennial would raise their hand and say, “Hey, how do I learn how to crowdfund invest?” And I don’t talk a lot about crowdfund investing. I just talk about it as being a catalyst, in the first book. So that was why I wrote the second book to have a relatable story that was more digestible, that women, people of color, Millennials, Gen Xers, people that feel like they’re sort of been left out of the march towards wealth that they struggle to figure out how to invest with impact, they wanna have hope for the future that they’re solving some problems that they care about and feel like they’re involved. They’re leaving a legacy with what they do with their money and that they can actually do it.

Anybody can do this, and when everyone can invest in entrepreneurs, innovation wins, entrepreneur wins, everybody wins because we share in the success. They build the company on the shoulders of the investors just like every tech billionaire out there you know about.

Companies that are solving problems with products are easier to get capital because they can go and get money from the people that would want to buy their product, their customers become their investors. Businesses that want to expand in other locations in the community have a way to be able to raise capital too.

To me, it’s such an exciting time because anybody can invest in any business and then businesses can raise capital from anybody. There’s still limits on income and how much and who and which kind of offering that gets worked out in the details when you try to figure out your strategy. But that was the big difference.

And that big difference is evident as Karen holds up both of her books, side by side. Her latest book, Inside Secrets to Crowdfund Investing: Follow Jane’s Journey. See How a New Generation Builds Wealth with Purpose, Passion, and Profit is noticeably thinner than her first book. Karen knew that in order to get your attention in a world dominated by social media her book needed to be streamlined, focused, and entertaining.

One’s 198 pages, one’s 320 pages. The crowdfunding one is told through the eyes of Jane, a fictional character, and her journey to build a portfolio of companies with the $20,000 that she had been trying to save up to buy a real estate rental property and decided to do this instead.

Karen’s latest book is also a testament to her ability to synthesize the firsthand knowledge she’s acquired since she wrote her first book. That knowledge largely came from her relentless networking and countless conversations with entrepreneurs and investors alike. This enabled her to know exactly how to structure her book and write it in a way that makes sense. When I asked her how many people she thinks her work has impacted, here’s what she had to say…

In the decade that I ran that Angel Investor group because we had an event every month for the first five years, let’s say, until we started like taking off summers. But, on average we would have 5 companies pitch and I’d look at like 10 companies at least for applying on that and the 10 companies that applied went through the screening process.

We had on average 35 to 40 investors in the room and there was probably a core group of 10 that were there all the time, so do the math on that. That’s thousands of investors and, I have over 12,000 connections on LinkedIn. At least 40% of that are somewhere in the capital space.

Impressive, right? Impacting thousands of entrepreneurs and investors did not happen overnight. And interestingly, Karen’s noticed a persistent pattern over this 24-year span. 

The irony of it, so when I, sunset the group because of the Great Recession most of my investors at the time were a decade older than me, because just the nature of how the guys that were in there and where they were in their life and so on and so forth.

So when I wrote the book Inside Secrets to Angel Investing, it was about 5+ years, after that. I thought, “Oh, I’ll get back into helping companies raise capital.” guess what? They were 10 years older than me and they’re still 10 years older than me! And so that just means that that network I had were ageing out of the investment process they were like, “Oh, Karen, I’m waiting for exits. I’m not doing any new investments.”

We get to be 65, 70, you got a limited life. And I was like, OK, I got to start focusing on the 45 year olds, which is why, you know, targeting the accredited adjacent with the new book and the course that teaches people how because, if people don’t know how they are reluctant to write a check out of their own checking account.

It takes education and a strategy to build the portfolio, which we’ll talk about in the next, segment.

Speaking of education, aside from Karen’s two books, she also has a podcast as well as a course where you can learn more about connecting with Angel Investors or becoming an Angel Investor yourself. The next segment that she just mentioned is available on our private podcast portal. More about that later, for now, let’s learn more about these other resources Karen has for you. 

The Compassionalist Academy, it’s intro all the way through advanced, so like the basics of stuff all the way through to advanced topics. There’s 1,000 minutes of content at least, and, compassionalist.academy.

“Compassionalist” is a smash up of compassionate capitalists, so it’s my new word, compassionalist. The podcast is the CompassionateCapitalistShow.com. It’s on every platform. Apple, Spotify, Pandora, Audible.

Both books are on Amazon. You can find them under my name, Karen Rands, or you can search on the title Inside Secrets to Angel Investing or Inside Secrets to Crowdfund Investing.
The first book is only available in paperback and Kindle. The second book is, is paperback, Kindle and hardback and Audible coming soon.

Karen, it has been such a pleasure catching up with you. Congratulations on 24 years in the business, grinding it out, making it happen, being a rainmaker, trailblazer. I can’t thank you enough, and it is an honor after 20 years to be able to officially interview you. Thank you so much for coming onto the show and yes, we are going to do part two.

Thank you, Alicia. This has been delightful. I’ve loved talking about this stuff, and I thank you for the opportunity.

As a reminder that part two of our conversation with Karen is available on our private podcast portal. You can access the link to that portal in this episode’s show notes. Wow, there are so many lessons learned from Karen during her scale tale that it’s difficult to know where to start. Here is a recap of some of those lessons. 

1. Design and build business infrastructure. This includes having systems and processes that allow you to be able to leave the business without it falling apart. This is what makes your business sellable and scalable.
2. Educate yourself in the world of investors. Buy Karen’s books so that you understand the different types of investors, how they work, and what they typically look for. Remember, Angel Investors typically write smaller checks at the seed stage when valuation is low, whereas VCs write much larger checks when companies are already making several millions with higher valuations.
3. Know your numbers before you approach investors.  Karen mentioned ARR or Annual Recurring Revenue. You’ll also need to show current social proof that there’s demand for your product or service along with other key financials like net profit, operating capital, EBITDA and Debt to Equity ratio. These numbers weren’t mentioned in this episode, but I thought I should mention them to you anyway.
4. Make sure your product or service aligns with what investors value. Angel Investors look for a core set of criteria like market size and revenue potential when evaluating companies and causes to invest in. However, their emotion and passion for the problem the company or cause is solving also plays a role in their funding decisions.
5. Raising capital means being “married” to your investors. They will have ownership in your business so that means they will also have a say in how your operate and manage the business. They expect accountability, progress reports, and regular meetings.
6. Get an anchor client. If you decide that angel or VC investing is not the best way for your organization or project to raise capital, then consider securing a larger client, like a corporation or government entity, that can make larger purchases. The profit from each of those purchases can serve as the additional capital you need.
7. After you’ve successfully secured the capital you need to fund your business, you scale it, and you exit through succession or selling it, then you may consider becoming an Angel Investor yourself. If you do, keep in mind the power of portfolio investing. Successful angel investing is a numbers game; it requires investing in a portfolio of companies rather than just a few since business exits can take several years.

A special thank you to Karen Rands for educating us on angel investing and giving us ideas for how we can fund our ideas, projects, and organizations as a whole. You can connect with Karen on multiple social platforms and sign up for her course, listen to her podcast, and buy her books if you want to learn even more. Links to all of these resources are available in this episode’s show notes as well as ScaleTalesPodcast.com. 

Karen mentioned an exclusive Part 2 discussion where we dive into her framework for building community-based funding. You won’t want to miss that deep dive into how that process is structured. That information is available in our private podcast portal. A link to that portal is also available in the show notes. You can even earn PDUs and continuous education credits from listening to this episode through our portal.

Thank you for listening! If you learned something valuable from this episode, please leave us a five-star rating and review wherever you’re listening.

I’m Alicia Butler Pierre and I produced and narrated this episode. Additional ad voiceover by Gladys Jimenez. Audio editing by Olanrewaju Adeyemo. Music production and original score by Sabor! Music Enterprises. Video editing by Gladiola Films. Hashim Tale designed this episode’s cover artwork and created the show notes.

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