Question of the week

Images-1There are parts of this question that I get asked often. 

I am considering developing a
portfolio of angel investments? How much have you invested in total?
What is the avg. size of your investments? What kind of IRR are you
looking for?

First of all, I'd love to see more investors get into the angel investing market, particularly women.  I am not going to share the dollar amount that I have invested in total but I am going to talk about my strategy. 

I invest in people first, businesses second.  I want to get in at the beginning when the valuations are low.  Low meaning nothing over a $5m post valuation.  So after the round is raised the company is not valued at more than $5m.  I put in anywhere from $25-50K.  I want to own 1% of the company from the get go.  Even when there is a convertible note, I am assuming that the note will eventually convert because they will be able to raise a Series A.  With that being said, although I am not a huge fan of the convertible note, I do it on occasion and it must have a cap so that when we do convert I am able to own my 1%. 

Why that amount?  The reason is that I expect the company will continue to grow and I want to put in my pro rata share at every round.  If I put in $25-$50k from the onset then when there is a $10m round I can afford to keep my 1%.  If it started with $100K, it would become too expensive for me to put money into that round.  Also, this way I am consistent with my investments.  You never know which one will hit it out of the ballpark.  I can't make that choice at the beginning so I am consistent with the percentage amount on every investment.

What kind of IRR are you looking for?  Certainly I believe that every company that I have invested in and have got behind will have some type of return.  I am fully aware that the odds tell me it is not possible but I am a believer in everyone I have invested in.  I am not a passive investor but really roll up my sleeves and help, listen, mentor and do anything I can to help the company grow.  I care about each and every entrepreneur I back.  I preface this up front because even if the IRR is at 2% and another one is at 10%, I am happy because that entrepreneur saw success.  I am probably not the norm on this but it is more important to me to see each of these entrepreneur work seriously hard to execute on their dream. 

I love being part of it. 


Comments (Archived):

  1. awaldstein

    Rather than a simple ‘congrats’, I’ll just say ‘thanks’!You bring a unique voice. That’s why i keep coming back.Have a great weekend.

  2. William Mougayar

    I admire people that started blogging a long time ago and stayed with it consistently. The routine of doing something that nobody asks you to do, but that you want to do is amazing.I started blogging around 2001 using with Userland’s software, but was not regular and didn’t keep it up.Aside from being a wonderful way to express yourself and share with the world what you know or have learned, the biggest benefit I think is that it keeps you connected with your readers, and you meet a lot of interesting people that way too.

  3. JLM

    .Reinventing yourself is a fabulous insight for you and thanks for sharing it with others. That is the secret of life, we can be whatever we resolve to be.Bonus question — who said that?Stonewall Jackson and it is chiseled into the arch leading into the barracks at VMI. “You may be whatever you resolve to be.”For four years I looked at that quote with the unthinking ignorance of a child and then I got a chance to live it and I finally understood it.You got the same thing but you did not have to do the same number of push ups. Good for you.Blessings on you and your family and that guy with the other blog and everyone you touch.You MAY be whatever you resolve to be.Well played..

  4. Rohan

    Very nice! Loved the post, Joanne.

  5. Abdallah Al-Hakim

    Keeping up a high quality blog site is admirable. While it is not the same as blogging – I have taken to commenting to replace the guilt I felt from not keeping up with my own blog posts. Still, writing a blog post once in a while would probably be a good idea for me 🙂

  6. rachel

    …and a damn good blogger at that! Cheers and Happy New Year!

  7. JimHirshfield

    You leave off superhero, I hope your kids don’t when they think of you.

  8. ope_b

    Thank you. I’ve been a long-term reader and love this blog. Whenever I’m tempted to give up my own blog because I’m too busy, I think about bloggers like you. If you can find the time, then I have no excuses

  9. Christine

    I am so happy to have discovered your blog this year. I think my favorite is the one which links to Jonathan Richman “Summer Feeling”. I spent the rest of that night playing Modern Lovers tracks and having a ball. The youtube video of Egyptian Reggae is priceless. I have two startups, one of which is human (one year old girl) and you are the best mentor I’ve never met. Thank you Joanne.

  10. Erin Newkirk

    Fascinating! Wonder what RS would have done without Gotham Gal?

  11. kenberger

    Fascinating strategy, v cool that you’re sharing it.”Too expensive” is particularly interesting. I assume that’s in part relative to the total dollar amount whose size you’re not sharing.PS: I’m attending Scoot’s launch next week. Big fan.

    1. Gotham Gal

      nice on Scoot! i figured you’d love it.

      1. kenberger

        well my company’s main location is Saigon, where scooters dominate the roads, which only increases my bias ;)if only regulation here in the States were more pro-motorcycle like in Vietnam. Fred and I have been chatting about it, love to help on this mission.

  12. William Mougayar

    Cool disclosure. I’m in there … somewhere 🙂

  13. LE

    “I am not a passive investor but really roll up my sleeves and help, listen, mentor and do anything I can to help the company grow.”I think this is great. And you do that (in addition to the reasons you stated) because you can and have real experience in business and AFAICR your parents had a business as well. That’s a big advantage. And much more fun then just being passive.The reason this is not the norm is that from what I have seen, a large amount of investors and people in the startup world never dealt with real world problems or opportunities in business.