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I am a junior angel in Silicon Valley. AMA

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Re: I am a junior angel in Silicon Valley. AMA

#61

Post by joshu »

patio11 wrote: post #38
joshu wrote: post #35

Earlier quoted context omitted.

Incidentally, I have sent at least three startups to your blog, just for an example of crisp thinking they needed to emulate.

Thanks, that is a wonderful compliment. If you have something specific you like crispified, I'd be happy to do a summary post about it. (The user experience of accessing my blog for the first time is terrible if you're not coming to a particular article, since it degrades into "what am I thinking about this week" and doesn't usually include context for the last four years.)

Not really.

I wish you'd do something bigger. You certainly have what it takes. I hope appointment reminder turns into that thing. (Also, ++ for using Twilio)

Re: I am a junior angel in Silicon Valley. AMA

#62

Post by gruseom »

joshu wrote: post #59
gruseom wrote: post #52

What's something a startup has done that most surprised you by working when you expected it not to work?

Startups don't generally tell me about their decisions often enough for me to be able to benchmark this, I think.

Well that brings up my other question, which I wrote and deleted: what's the median frequency with which you talk to startups you've invested in, and how does that change (in a given case) with time?

Re: I am a junior angel in Silicon Valley. AMA

#63

Post by joshu »

timcederman wrote: post #56
joshu wrote: post #39

Earlier quoted context omitted.

According to Fred, 2 in 3 startups return even or fail, and 1 in 3 succeed. Assuming I'm doing as well as he is (which I doubt) and that an exiting startup gets 10x the input, the formula suggests 25% or so. This seems high. Also, startups are not independent bets. Who knows? I've done 34-ish investments. One small exit. Two are doing very well. Two or three dead companies (sometimes, it is hard to tell.)

34ish and you say you're a junior angel? I guess that makes me a junior associate at best.

I can't or won't negotiate terms, lead a round, syndicate a deal, or sit on a board.

So that makes me subordinate to people who do these things; they are therefore my senior.

Re: I am a junior angel in Silicon Valley. AMA

#66

Post by joshu »

gruseom wrote: post #62
joshu wrote: post #59

Earlier quoted context omitted.

Startups don't generally tell me about their decisions often enough for me to be able to benchmark this, I think.

Well that brings up my other question, which I wrote and deleted: what's the median frequency with which you talk to startups you've invested in, and how does that change (in a given case) with time?

They typically stop talking to me after the next investment (usually, when they have a Board of Directors they are responsible to)

Most startups do not update the non-board investors much.

I am on IM most of the time. There is a "Founders" section in my buddylist.

Re: I am a junior angel in Silicon Valley. AMA

#67

Post by staunch »

joshu wrote: post #57
trevorturk wrote: post #50

Earlier quoted context omitted.

Why do you think that?

The point of raising funds is to hire people who can accelerate the growth of the business. $200k gets you a person or two, which doesn't do very much. So you find yourself raising again pretty much immediately. The fundraising process is a colossal waste of your time. An entrepreneur going this route is not making good trade-offs. In my experience, most of these companies fail.

What if a product is doing pretty good, but it's not enough to support two founders yet? If they can put all their effort into the company it would accelerate growth (from 25% + 25% to 200% founders). And if that only takes $200k how is that different?

Re: I am a junior angel in Silicon Valley. AMA

#69

Post by joshu »

dzlobin wrote: post #68

This applies to me personally, but I'll ask out in the open: Are you interested in advising young startups?

I don't really do advisory boards. It has different compliance hurdles due to my work situation.

Also, in my experience, startups are bad at fairly compensating their advisors. I'd agreed to seven or so advisories in the past and actually gotten paperwork for shares just a single time. One startup actually had me come in twice for advice and then later told me they decided not to have an advisory board.

Re: I am a junior angel in Silicon Valley. AMA

#70

Post by joshu »

staunch wrote: post #67
joshu wrote: post #57

Earlier quoted context omitted.

The point of raising funds is to hire people who can accelerate the growth of the business. $200k gets you a person or two, which doesn't do very much. So you find yourself raising again pretty much immediately. The fundraising process is a colossal waste of your time. An entrepreneur going this route is not making good trade-offs. In my experience, most of these companies fail.

What if a product is doing pretty good, but it's not enough to support two founders yet? If they can put all their effort into the company it would accelerate growth (from 25% + 25% to 200% founders). And if that only takes $200k how is that different?

If $200k is good but $500k is not as good, it smells like a lifestyle business. That's not bad, but it's not a good investment for me.
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