When did Angel investing become a commodity?
I really starting angel investing about 20 years ago. My good friend started his second company and not only did I invest, but I also got on the board. Now, that is not the norm but that is how I began. Fast forward and over 120 investments later, I built a portfolio around a thesis and rolled up my sleeves with the intent of making investing a full-time job. I wanted to put capital into the start-up world with the intention of making an impact and in turn making returns on my investments.
There is a lot I have learned over the years. The biggest frustration has always been getting behind something I believe in with a small check. When 3-4 companies launch in one space, it is the one that gets the most capital behind it from an institutional investor that make it seem like that one will be the winner. It isn’t a foregone conclusion but it does make it more difficult to raise capital for the underdogs. I happen to like underdogs. Although remember, nothing is a success until it exits and success is relative. If the company took money in at too high a valuation, to begin with, a successful exit does not equate successful payback for the investors.
In 2010, Angel List launched. I never got excited about the platform for the simple reason that I do not want someone to follow my investment without doing their own personal diligence and making up their own mind. I always felt that investing was not something to be taken lightly, regardless of the rate of failures vs success and just investing besides me or taking a piece of a company where I get pro-rata rights when the companies are worth more so that I can keep an added piece of free ownership on top of that never sat well with me. I get that many do not have the deal flow and this is one way to get it but if you want it, you can find it, you just have to work it. In hindsight maybe it would have helped me get the funding I needed/wanted for the companies I got behind but it wasn’t how I wanted to play the game.
Everyone seems to be getting into the investing space even if the companies are ridiculously overvalued when they begin. Can someone explain to me why an idea, 2 co-founders, a deck and the beginnings of a business without a real product yet is worth $7m?
Fast forward, this past week something popped into my box called an Investor Premium Program. The concept is that you pay a yearly subscription of $2500 to get deal flow. They do the work for you so due diligence, collaboration with other investors and pre-screening is made available for you. All you have to do is pay the annual fee and then of course invest.
Just to note, not everything goes up, plenty goes down and more is going to go down in the years to come probably sooner than later. After reading about this subscription opportunity to deal flow, I asked myself the question “when did angel investing become a commodity”? I truly believe we will all find out, it isn’t.