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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

#141

Post by Kallie898 »

taneq wrote: post #133
cbhl wrote: post #127

Earlier quoted context omitted.

A $5k check will give a super-early-stage "startup" (two or three college kids) with no salaries and about $1000/month burn rate ("living expenses" in the right market outside of SV) about four months of runway. You'd have to approach at a sufficiently early stage (like so: http://velocity.uwaterloo.ca/funding/velocity-fund/ ).

What share of the company would you expect for that kind of investment? If the amount would be trivial then why would you bother (little reward for so much risk), but if it's non-trivial then why would they accept your money, given how small the amount is compared to the value of their sweat equity? If they really believe in what they're doing, they won't want to give chunks of it away so cheaply. Conversely, if they…

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Re: Things I wish someone had told me before I started angel investing

#142

Post by majani »

rwmj wrote: post #66

I wonder how often VCs/angels are conned out of money (and I don't mean by delusional entrepreneurs, but by genuine con-artists). I assume it must happen, and with all the money sloshing around may be common.

I think the most common instance is the middle ground, where an entrepreneur can clearly see systemic issues with his/her company, but still raises funds to keep the gravy train going.

Re: Things I wish someone had told me before I started angel investing

#144

Post by Leilani99 »

soham wrote: post #138
empath75 wrote: post #112

Earlier quoted context omitted.

How is it that a $10k check even gets a startup to take your call? That pays like one engineer for a month, if that. (Genuinely curious)

There are usually several of these $10K ones, especially from angels the founders like and want to have a longer term relationships with. Also, most initial development is either outsourced or done by the founders.

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Re: Things I wish someone had told me before I started angel investing

#145

Post by david927 »

burrows wrote: post #102
lisper wrote: post #101

Earlier quoted context omitted.

The causality definitely runs both ways. If a company is perceived as an NBT, and that results in investors piling on, then the company is that much more likely to actually become an NBT. That's one of the reasons investors like to pile on: just because a prophecy is self-fulfilling doesn't make it any less accurate (just the opposite in fact).

What lesson should this teach founders; don't discount the importance of `looking like` the NBT?

Or it could show how most investors are still very unsophisticated and insecure. They don't want it to be the NBT, they need for it to be. If the music industry was this bad, you would mainly be hearing variations of Taylor Swift and Justin Bieber on the radio.

The lesson for founders, therefore, should be to avoid investors for as long as possible.

Re: Things I wish someone had told me before I started angel investing

#146

Post by [deleted] »

mstaoru wrote: post #140
empath75 wrote: post #112

Earlier quoted context omitted.

How is it that a $10k check even gets a startup to take your call? That pays like one engineer for a month, if that. (Genuinely curious)

Or it pays one skilled non-tech employee for a YEAR here in China. I'd gladly take $10k in exchange for 0.5-1% at this stage.

[deleted]

Re: Things I wish someone had told me before I started angel investing

#147

Post by brianwawok »

empath75 wrote: post #112
birken wrote: post #38

> But the cool kids don't beg. The cool kids — the ones who really know what they're doing and have the best chances of succeeding — decide who they allow to invest in their companies. The company I was an early employee of (that ended up being a "unicorn") was not a cool kid, and we certainly were begging people to invest both at the angel stage and (especially) the series A stage. And those people got a really real…

How is it that a $10k check even gets a startup to take your call? That pays like one engineer for a month, if that. (Genuinely curious)

Group investment clubs. Get a group of 20 guys each putting 10k in and you get 200k. These exist in B.F. Indiana so they must be elsewhere too.

Re: Things I wish someone had told me before I started angel investing

#148

Post by Madelyn565 »

taneq wrote: post #133
cbhl wrote: post #127

Earlier quoted context omitted.

A $5k check will give a super-early-stage "startup" (two or three college kids) with no salaries and about $1000/month burn rate ("living expenses" in the right market outside of SV) about four months of runway. You'd have to approach at a sufficiently early stage (like so: http://velocity.uwaterloo.ca/funding/velocity-fund/ ).

What share of the company would you expect for that kind of investment? If the amount would be trivial then why would you bother (little reward for so much risk), but if it's non-trivial then why would they accept your money, given how small the amount is compared to the value of their sweat equity? If they really believe in what they're doing, they won't want to give chunks of it away so cheaply. Conversely, if they…

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Re: Things I wish someone had told me before I started angel investing

#150

Post by [deleted] »

mstaoru wrote: post #140
empath75 wrote: post #112

Earlier quoted context omitted.

How is it that a $10k check even gets a startup to take your call? That pays like one engineer for a month, if that. (Genuinely curious)

Or it pays one skilled non-tech employee for a YEAR here in China. I'd gladly take $10k in exchange for 0.5-1% at this stage.

[deleted]
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