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I recently passed the personal milestone recently of 100+ angel investments. What have I learnt from the process?
I’ll share my learnings in a series of tweets over the next few weeks, so feel free to tag along or ask questions.
Let’s start with some obvious observations:
I’ll share my learnings in a series of tweets over the next few weeks, so feel free to tag along or ask questions.
Let’s start with some obvious observations:
1. To make 100 investments I had to look at 1,000s of opportunities - it takes a lot of time. 
You really need to *like* doing it to make that kind of time commitment.
You really need to *like* doing it to make that kind of time commitment.
Doing it repeatedly and having a process you follow all helps build your investing muscle. 
But you have to put the effort in or you’re just gambling...
Which is OK if that’s what you want to do.
But you have to put the effort in or you’re just gambling...
Which is OK if that’s what you want to do.
2. A wise colleague used to say “lemons ripen before plums”. 
I’ve had a handful of exits and so far and the earliest ones (<2 years) were write-offs or just returned my capital where they were acquired by Sage, Google or Facebook.
I’ve had a handful of exits and so far and the earliest ones (<2 years) were write-offs or just returned my capital where they were acquired by Sage, Google or Facebook.
Early returns aren’t the best as ideally you can hold your winners for the long term as they continue to create value, expand into adjacent markets and eventually get a public market exit or premium acquisition offer. 
3. Angel Syndicates are a great way of getting access to deals and looking at a pre-vetted set of opportunities.
By watching how others look at opportunities, you’ll learn about markets, competitors and likely exits.
Others do the work and you get to reap the benefits.
By watching how others look at opportunities, you’ll learn about markets, competitors and likely exits.
Others do the work and you get to reap the benefits.
I’ve been fortunate to follow some of the best allowing me:
* to learn about all kinds of opportunities that I would never have seen otherwise
* to get into competitive deals
* to leverage my / others networks
Syndicates aren’t perfect but they are pretty damn good.
* to learn about all kinds of opportunities that I would never have seen otherwise
* to get into competitive deals
* to leverage my / others networks
Syndicates aren’t perfect but they are pretty damn good.
4. Syndicates allow you to diversify your investments (sector / geography).
I have investments in the US, LATAM, Israel, Pakistan and more exotic locations.
Seeing new opportunities in one market opens your eyes to opportunities in others.
I have investments in the US, LATAM, Israel, Pakistan and more exotic locations.
Seeing new opportunities in one market opens your eyes to opportunities in others.
5. It’s very hard to keep track on the performance of a large portfolio.
Founders have their own communication cycle and as a small investor you may not get (any) information.
In many cases my best source of information is tech news.
Founders have their own communication cycle and as a small investor you may not get (any) information.
In many cases my best source of information is tech news.
6. What's my return / IRR?
IDK.
There is a big gap between investing in a $3M @ $8M seed round and finding out it has raised a $23M Series B (no public valuation data).
That's also before trying to factor in assumptions about exit value, liquidation prefs, other deal terms..
IDK.
There is a big gap between investing in a $3M @ $8M seed round and finding out it has raised a $23M Series B (no public valuation data).
That's also before trying to factor in assumptions about exit value, liquidation prefs, other deal terms..
From what I'm seeing the median valuation increase per round is 2x but faster growing companies command higher markups.
The largest I've had is a 18x (I guess they must be doing well).
Overall I'm happy with the performance of 2/3 of my investments.
The largest I've had is a 18x (I guess they must be doing well).
Overall I'm happy with the performance of 2/3 of my investments.
7. Angel investing is a long game and you have to be patient before you get a (good) return.
This makes it very hard to know whether you are doing a good job or could make a better return elsewhere.
My worst deals are where I've followed a celebrity investor into a hot deal
This makes it very hard to know whether you are doing a good job or could make a better return elsewhere.
My worst deals are where I've followed a celebrity investor into a hot deal
8. The most satisfying investments for me are ones where:
* I make a personal connection with the founder(s)
* I add value to the business
* I've bought into their vision
The payoff is a great sense of satisfaction when they overcome obstacles and achieve successes.
* I make a personal connection with the founder(s)
* I add value to the business
* I've bought into their vision
The payoff is a great sense of satisfaction when they overcome obstacles and achieve successes.
It might sound corny but I just care more about the folks I met at the early stages and can see the growth (personal and professional) they have achieved.
Angels fund the company, the idea and the team.
It's not just trading a stock between investors.
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Angels fund the company, the idea and the team.
It's not just trading a stock between investors.
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