Things I wish someone had told me before I started angel investing
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Things I wish someone had told me before I started angel investing
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Re: Things I wish someone had told me before I started angel investing
#2I was hoping for a fact like
"And this is how I made 42 investments in my first 3 years. All are now bust, and I am out 1.4 million dollars"
Obviously not fun to tell the world how much money you lost, but it would help to add color to the people behind the VCs, that developers love to see as the frenemy (terrible people out to screw you, but man their money is nice sometimes).
Re: Things I wish someone had told me before I started angel investing
#3My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating companies and the mindset should be entirely different.
The #1 thing a startup can do to survive is to be as stingy as possible with their capital.
Re: Things I wish someone had told me before I started angel investing
#4I remember Ron although I was unsure about the name. Fair winds and following seas.
Unless it's in your background and in your DNA, it seems that angel investing will end in tears.
Re: Things I wish someone had told me before I started angel investing
#5Summary: beginners almost never invest well.
And it is the same for stocks, many people think they will make money by investing in a specific company because their logic says it is good idea.
Investment is a job, and to win you need experience
Re: Things I wish someone had told me before I started angel investing
#6My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating compani…
It’s all a balance act. My last startup went bust in part due to the fact that we avoided hiring as long as possible in order to save money. In doing so we missed our inertia when we first started and we’re hot, and as we dragged on we didn’t have the diversity of talent to help do the things we were bad at (and didn’t want to do) ourselves.
Obviously super fancy offices, lavish meals, etc should be red flags, but you can’t generically say “be stingy” – it’s more like find the most efficient way to use your capital (which may include seemingly inefficient things that are actually required).
Re: Things I wish someone had told me before I started angel investing
#7>There are a myriad ways to make a company fail, but only two ways to make one succeed. One of those is to make a product that fills a heretofore unmet market need, and to do it better, faster, and cheaper than the competition. That is incredibly hard to do. (I'll leave figuring out the second one as an exercise.)
Is he implying some sort of unethical behavior as the second way?
Re: Things I wish someone had told me before I started angel investing
#8Being a good investor takes a certain kind of temperament. Can't really teach this. For most, as Buffet says, stick with the index fund.
Re: Things I wish someone had told me before I started angel investing
#9I was hoping for a fact like "And this is how I made 42 investments in my first 3 years. All are now bust, and I am out 1.4 million dollars" Obviously not fun to tell the world how much money you lost, but it would help to add color to the people behind the VCs, that developers love to see as the frenemy (terrible people out to screw you, but man their money is nice sometimes).
Looking at what other people did and how that turned out is completely useless because the things that matter are the day-to-day details which you can only get by immersing yourself in the process full-time for a long time. So sharing that data would be worse than useless. At best it would serve to satisfy some prurient interests, and at worst it would cause someone to act on what cannot be anything other than hopelessly incomplete data.
But there is one detail I will share with you: I decided to start not in high tech because I thought it was too risky, but to get my feet wet by starting with less risky investments. So I decided to invest in a real estate development in 2006, thinking that even in a worst case scenario there's an asset there that will be worth something no matter how badly things go wrong.
Like I said in the OP, you will be shocked at how things can fail. (And this is far from my only horror story.)
FWIW, I've also had some winners along the way. I'm not poor, just poorER than I would have been if I'd just put the money in VTI.
Re: Things I wish someone had told me before I started angel investing
#10The author makes good points here. While it's true that YC and other venture investors invest in many companies to increase the chances of large returns on the best of their portfolio companies, there is another significant advantage to YC having a bunch of companies in each batch - the teams that are not doing so well are a source of talent for the teams that are doing well. At some point YC can and has encouraged teams they think aren't making enough progress to join teams that are. A friend in one batch described his batch consisting of: 1/3 working on great ideas/products that could be big, 1/3 working on mediocre ideas/products and 1/3 working on bad ideas/products, and those in the bottom 1/3-2/3 still had good team members that could be sourced for talent for the best 1/3 and for previous YC companies doing well.