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My First 50 Angel Investments

I wanted to summarize some learnings and insights both for entrepreneurs trying to connect with angels and new investors considering being an angel investor.

For Investors

Investing in startups is a long-term game. My first investment was in 2017, five years ago. If you’re looking for quick-wins, go to the horse track. Early-stage startups take the longest to mature, it’s exciting to watch these companies grow but nothing happens overnight.

Investing in startups is an outlier business. Across my 50+ investments there is a very wide distribution. The best companies can 10X-20X in value but there are only a few of these. Across 50 investments this equals 2-3 companies (approximately 4%.) This means that 96% of companies have modest returns/results.

Don’t count your liquidity until the deal is done. Companies that you thought were doing great can suddenly perish.

Being in more deals is better for your portfolio than concentrating your bets. It’s better to be in more deals with a smaller check than to be in only a few deals with a larger check. This is because a great return may be 50-100x returns. It’s a roulette wheel with each square paying out either zero or 100X, the way to win is to place a lot of bets.

Have a thesis. This is an area of focus that you’ll understand better than most. This will allow you to see the more interesting deals within the segment and allow you to make better decisions.

For Founders

Do your research. Founders who do even a little bit of homework will pass the initial filter and get more relevant help, assistance and investment. Know who you are talking to.

Don’t be transactional. I know you want money but assume that 98% of your conversations won’t lead to money. Focus on getting or giving value in each conversation. If you can do that each conversation will lead your business in the right direction.

Ask thoughtful questions. Be on the hunt for value, not just money.

Know your numbers. Understand your financial numbers, your model and how you will grow incredibly well. Founders who know their financials will give investors confidence in their ability to execute.

Generate momentum. Your job as a founder is to generate momentum and traction. This is true for your core business but it’s also true for your financing round. Your confidence in your round closing quickly can be a self-fulfilling prophecy in that the confidence helps the round close quickly.

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The future of Music is NFT’s

Neil Young gave Spotify an ultimatum, either they get rid of Joe Rogan for spreading misinformation, or he would remove his own songs from the Spotify platform as a protest. Spotify sided with Rogan.

Platforms that start to take on the role of content creators put themselves in a strange position.

  • On one hand, Spotify shouldn’t “cancel” one creator because another creator doesn’t like what the first creator said.
  • But on the other hand, Joe Rogan – isn’t just a creator. He is an extension of Spotify itself. Spotify can’t claim the high-ground because they stoped being a platform and become a creator when they signed Rogan to a multi-year, 100M contract.

If Spotify was a pure platform they would create their policies and perhaps things would be simpler but as soon as they start hiring/buying creators, the creators become part of the platform.

This happens a lot to platforms. Microsoft Windows started out as a platform but soon Microsoft was shipping its own product (Internet Explorer) within the platform. Netflix started out as a platform but soon they started releasing their own movies and shows. Apple, Google, Facebook, and other platforms have all taken a similar approach.

  • Act one. Release a platform for other creators, developers, artists.
  • Act two. Release a few house brands, apps, products.
  • Act three. Slowly push your own content displacing more and more of the creators who initially helped grow the platform.

Artists and listeners can take their music to other platforms but it’ll be the exact same problem. Platforms have an incentive to create their own house brands in act 2 and displace creators in act 3.

I don’t think much will change until the platform and the content is bifurcated. A few web3 startups are exploring this idea. If we can truly split the ideas of content creation and monetization the incentives change. This isn’t just a problem with music, this problem exists with every content platform.

The solution isn’t ready for prime-time yet but in the future we will buy and stream our music directly from the musicians and artists who create them. We’ll be able to support artists directly, and artists won’t be tied to the platform, they will be bound to their fans. NFT’s are just the beginning, get ready for the new act 1.

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2021 Roundup

What a year! I haven’t been blogging as much so this is a catchup on some recent projects, videos and activities.

Business and Entrepreneurship

I published a number of videos focusing on new business, startups and entrepreneurship.

Fun with new Technologies

This has included EV’s, Solar, Self-driving, Unreal Engine, and GPT3. I’ve also had fun building a wall mounted e-ink newspaper.

Going into next year I’m starting to think a lot more about Web3. This started with Bitcoin and NFT’s but I think I’m going to dive deeper into Smart contracts, De-Fi and more.

Investment Summary

Startups

I invested in 27 startups this year. 12 of these startups were via Techstars. Three companies had a write-up in valuation, zero companies went out of business and zero companies got acquired. Startups are hard to value but companies that get significant follow-on funding get external valuations from Series A, B or later stage financing. On paper shows I have a 252% return but in reality it’s still zero until the first actual exit event. So let’s wait and see.

That said, some companies to highlight:

  • OwnUP – Save on your mortgage
  • Firefly EV – Small business EV mobility
  • EVQLV – Using AI to discover antibodies
  • Dvinci – Helping solar installers deploy solar
  • DentReality – Use AR to help you find things
  • Statera – Healthcare pay transparency
  • Unstack – High performing landing pages for Shopify
  • NudeBarre – Inclusive Intimates for all sizes & colors
  • HyperSpec – Autonomous driving vision technology
  • IronYun – AI enabled security and vision

Many others I can’t talk about yet. Follow TechstarsBoston for updates on graduating startups.

Stocks

Stock equity growth of 170% from same time last year, driven largely by Tesla and other consumer oriented tech companies. This was totally ridiculous. This happens to capture a trough to peak, actual sustained results are closer to 40% return (still not too shabby). I talked about what I look for last year in a video called TAGMA. Tesla was the best performer by far but other companies I’m tracking closely include Cloudflare, Shopify, Apple, Microsoft, Square, Nio and Backblaze.

I did start the year with Zoom and Peleton. These were classic pandemic stocks that I thought could keep innovating but have since backed off these. They are great technologies and I use them both but I have not seen strong continued consumer innovation.

The easiest way to become a millionaire is to start investing. I made a video on this but then I put it to the test by setting up an account for my 13 year old. She invested a bit of her savings, picked two ETF’s without my help and had a 31% return, beating the S&P that had an impressive 27% return.

Crypto

On the Crypto front I had a 66% annual return. This would have been larger but I added to my position late in the year driving the total % return down. This was driven largely by Bitcoin and Ethereum. I’ve been divesting from Bitcoin because it has underperformed and had less developer/app adoption.

Text-free version of the Dogecoin logo : dogecoin
Doge It up!

I played with Doge and Shiba for fun this year but this has been a small novelty and not a serious position.

In general I think this is still a big growth sector. The technology is interesting but the user experience and user interface of most products is bordering on unusable. Companies that make crypto usable by norms will be huge winners.

Other projects I’ve started tracking for next year include Solana for its performance and Algorand for its proof of stake approach. I’m also planning on diving deeper into NFT’s next year.

YouTube

I got to 10,000 subscribers! This has been rather amazing given that I only do this as a side hobby. A few videos have done particularly well and this has driven a lot of adoption. Hoping to get to 100,000 next year.

  • Revenue is around $200/month in passive income.
  • Around 18,000 views per month. This is more exciting for me than revenue.
  • Over 500K views on my most popular video

I’m excited for the coming year. Thanks for reading, following & subscribing.

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Joining Techstars

I’ve been angel investing for the last few years and I love working with founders, and entrepreneurs but some of that changed when I recently accepted a role to run the Techstars Boston Accelerator program.

So why? Why join a company when I could just angel invest and work with entrepreneurs on my own? Two key reasons, and these are reasons appropriate for founders too.

  • You can do more with a team. Yes, you can go it alone and there are plenty of successful solo-founders but I’ve found that you can accomplish a lot more as a team than you can on your own. For me the Techstars team will allow me to accelerate and invest in significantly more founders and companies than I could on my own.
  • You can do more with a community. As an individual I’ve established many amazing relationships in the Boston community but the Techstars brand and reputation is so much larger than any one person. I’m inheriting the power of amazing mentors, unicorn companies, past and present founders and partners who are cheering for us. It’s exciting and humbling. A community is so much stronger than anything that I could do on my own.

Ok, ok… Team and Community. Sounds nice… but WHY?

I asked myself this question, why do I like entrepreneurship, founders and investing? The answer for me was that I wanted to leave the world better than how I found it. Entrepreneurs and startups are best positioned to create meaningful change. If I can accelerate companies that do one of the following, I think I’ll be helping to make a long-term difference.

  1. Save Lives – Companies that are doing the difficult work of developing technologies, medicines and other innovations that directly save lives or reduce suffering.
  2. Save the Planet – We all share this marble called earth and there are many things about it that we know need fixing. This covers sustainability and clean-tech across a number of technology sectors.
  3. Companies that profoundly change the way we live and work. This is the future of disruptive technologies, both the ones that are already in progress like crypto, robotics, remote-work and AI and future technologies that will change humanity for the better.

Hope you’ll join me for the journey. Know a company that fits one of the above three? I’d love to talk to them.