Angel Investing

My first angel investment was in 1999 in UPOC, where I served on the board. The concept was before its time, and there were people on the board who couldn’t see it and didn’t do their job. The founder wanted to bring in a CEO, and the person the “majority” of the board chose was a huge mistake; it was like watching a train wreck in slow motion. The person whom the founder and I wanted was nixed. I might be going out on a limb here, but I am pretty confident that the business would have had an entirely different outcome if they had chosen him.

After this investment, I began to focus on angel investing broadly. It was 2007 and the beginning of the second stage of building internet businesses. I developed a financial thesis and started to put capital into the entrepreneurial world, primarily supporting female, Black, and brown founders. I have a few white men in there, too, but they are a different breed in a good way. Fast forward, I invested in over 150 companies, sat on multiple boards, was extremely founder-friendly, and along the way, I created many lasting relationships and learned a shit ton.

During this time, I spoke to investors doing the same thing as me or wanting to make angel investments. This type of investing is high risk. Companies evolve, and all of my investments were the company’s first capital raise, so the chances for success with zero institutional investors sitting around the table are lower. Now that I have stopped angel investing, I will likely see a 4-5% return on all the capital I put out there. More than likely, it was because I was so early in the game of the start-up world.

I saw this full-page ad in NY Magazine the other day. Now, investing appears to be mainstream. Even YCombinator has over 10,000 applications a year; roughly 2% get accepted to the accelerator. The good news is that each accepted applicant receives a chunk of change to help them build and prove their concept.

I have seen that ideas are everywhere, and sometimes cash can be flush, but it is all about execution. That means building a cohesive team, making bets, and evolving daily. The idea that someone could pitch to a group of “legendary” VCs on television for ten minutes and become the next unicorn doesn’t add up. What exactly does legendary mean? The VCs I know are not spending time filming for every Wednesday episode.

This has been going on for some time, beginning with Shark Tank, and some could say that most of the accelerators are a bit sharktanesque. It is not easy to be a generalist these days, as it was when I began investing. Now, committing to a vertical with a thesis in an area is what I would do if I were starting today. Although every company has the same issues at the beginning, you do have to understand the space.

Investing is never going away. I wonder how many people will lose their shirts and how many people already have lost them.