• “have to have a portfolio, to have hits”
• “it’s not fun; it’s hugely interesting to talk to entrepreneurs who literally in front of you are telling you the future”.
• “spend 25% of my time in philanthropy”
• Need to be very dedicated to angel investing.
• Don’t invest in someone you don’t really like; life is too short. Have personal chemistry.
• You have to have value to add; you won’t get into the great deals [they have allocation problems; you have to fight your way in].
• Be patient;
• I recommend investing in a bunch of companies. [he invests 50k-100k]
• 10k-25k to get your feet wet.
• 1/3 of them will go out of business. Failure is part of learning process.
• Pick a sector you like; I like sectors that are Internet and have massive growth. Invest in several companies in that sector.
• Great deal flow (respect for entrepreneurs to get the access) and due diligence = great portfolio.
• Build a referral network of entrepreneurs that you can invest in with, etc.
• Reputation is very important – screw 1 entrepreneur, you’re screwed.
• As lead angel, you need to take the entrepreneur to Sand Hill Road and you help them get funded.
• 13 deals personally in 4 years.
• Plan to screw up the first 10 investments.
• If goal is making money, this isn’t your thing.
• How does an entrepreneur define success
• No signing of an NDA; if an entrepreneur requests one, they probably don’t have a clue.
• Assume the money you invest is gone; it’s like lottery tickets.
• Do I like the product? Would I be proud to speak about it at thanksgiving or to my parents?
• Can you explain it quickly?
Page Mailliard [Page Mailliard is a partner at Wilson Sonsini Goodrich & Rosati, where she specializes in corporate, securities, and venture capital law.]
• Who are clients? Do they have contracts with them?
• Is there a provision on change of control they can terminate?
• You buy either stock [shares like preferred stock] or convertible debt; either works; don’t worry about it.
• Pick the right startups. When they talk about you, it’ll be, “He invested in Google!”
• You care about valuation and amount of money you put in.
• Dilution occurs next.
• Invest 10k – 2mm; how much? If startup raising 1mm, 50k is OK – 10k isn’t worth the work for them.
• Valuation – no rational way; no answer.
• If the idea doesn’t seem a bit crazy, then you’re probably too late to the deal. It’s ok for it to be a bit crazy.
• Need tons of deal flow
• Use time efficiently; yours, the entrepreneurs.
• Deals from social friends;
• High quality deals come from other angels [they are putting their money in it].
• Don’t forward deals to other investors unless you’re investing in it.
• What’s your brand as an angel? [I’m the VentureHacks guy; I’m of Y Combinator]
• 2-3 founders.
• Don’t take board seats – waste of time.
• Very risky business
• Orbiting the giant hairball – book.
Mike Maples Jr.
• #12 – minimum number for statistical diversification.
• Met with 100 investors in 100 days
• $25k per quarter; 1 deal per quarter.
• Lived in Austin; moved to valley 4 years ago.
• If the startup cant be one of the big billion dollar businesses, not worthy of your time. We want the big deals in the end, be apart of the excitement.
• Book by ‘talo’ – ‘fooled by randomness’
• Balance your time – might spend 1 day a week with a company at first; then every other week; now at 500 people, hardly ever.
• Once a quarter, organize a lunch for 4-5 entrepreneurs; choose a topic. Get them to help one another.
• Connecting entrepreneurs with the right people is a big piece.
Panel of Dave Hornik and Greg Mcadoo from Sequoia:
• Must tell the story efficiently as an entrepreneur
• Big business opportunity.
• Don’t do convertibles.
• “how do you differentiate and add value to something?”, so that others can talk about you and recommend you.
• You need to be a connector; you need to meet people 1on1, and that’s how you meet really great people and companies.
• 40 investments; 4 exits.
• 32 investments in 18 months; 250k each.
• Big weights: founders, market scale, etc. Eventually scale tips.
• Not being sure it’s a sure shot, but taking the shot anyway.
• 74 deals in one year.
• Don’t write the first check; don’t lead the investments as a new angel. [you need a syndicate of others that’ll join you]
• Be content dealing with shit 24 hours a day.
• Why should a good entrepreneur pick you?
• There’s more money, than possible investments.
• Takes less money now to do a startup.
• Will the company benefit from your advice? [not money] If no, it’s likely a bad deal.
• Contacts, experience, advice.
• Only invest in things you know about, otherwise you’re a spectator buying a lottery ticket.
• Find people to invest with.
• “why you want to do this?”
• You’re at bleeding edge of technologies.
• Very very high chance you’ll never see the money back.
• It’s “co-opetition” – they are all competitors in the crowd, but helping you to become another new competitor.
• “More than a hobby, than a job”
• If you enjoy doing what you do, you’ll have better access to deals, and firmer friendships with other investors.
• Have to be nice.
• As an angel, you’re shepherding the entrepreneur through a process.