Month: June 2010
I’m on an Acela train between Boston and New York (listening to Boston’s More Than A Feeling – how recursive) on my way to the TechStars Boston 2010 Investor / Demo day. I wasn’t able to make it to Boston yesterday for the Angel Boot Camp as I was running around NYC with the CEO of a company I invested in last week introducing him to a bunch of potential customers and partners.
It sounds like Angel Boot Camp rocked. My long time friend and co-angel investor Will Herman wrote a post titled Angel Investing that summarized some of his advice. Will is finishing up his 31st angel investment (we’ve done a bunch together – including my very first one – NetGenesis in 1994) and he walks through what he’s learned from 16 years of angel investing. Don Dodge also has a great post up titled How to be an Angel Investor…and make money.
On the eve of the graduation of the TechStars Boston 2010 class, I thought I’d weigh in with some additional advice to anyone who either is or wants to be an angel investor. Some of this repeats what Will and Don said, but I’ll try to be additive (and specific). For context, I’ve made over 75 direct angel investments primarily in two time periods – 1994-1996 and 2006-2007. I’m out of the angel business as all of my investments go through Foundry Group (the VC fund I’m a partner in) but I’m an investor in a number of “super angel funds” as well as a co-founder of TechStars and I continue to regularly make seed investments from Foundry Group alongside of angel investors.
So – here’s the advice:
1. Be promiscuous: To be a successful angel investor, you have to make a lot of investments. I generally made about one investment a month when I was active as an angel. While this pace may not be right for everyone, if you are doing less than four investments a year, I don’t think you are making enough. Play the field – it increases your chance of hitting a monster and it’s a lot more fun.
2. Have a long term financial strategy: Early on I decided that I was going to write the same size initial check in every angel investment. In the first phase (1994-1996) this was $25k. In the 2006-2007 phase this was $50k (although I broke this rule by occasionally doing $25k or $100k and in several cases, even more.) I always assumed I’d double down on each investment before the company either raised a VC round or was acquired (so – when I put $25k in, I was really allocating $50k to the company.) Then, I decided how much I was going to invest over a particular time period. In the 1994-1996 time period I decided to invest $1m in angel investments. So – that gave me capacity for 20 investments (I did more – oops.) In 2006-2007 I allocated more (and did more). However, since I had a time frame and an amount per company, I had a baseline pace that I could go at before I got uncomfortable with how much I was investing.
3. Understand the difference between 0x and 100x: I’ve had two of my angel investments return over 100x each. Since I had a strategy of investing the same amount in each company, all I needed was one 100x to allow me to have 99 companies completely flame out and return 0 and I’d still break even. With two investments at over 100x, I now have a built in gain of significantly over 3x across all of my investments since I’m made about 75 of them and I’m now deliciously “playing with house money” on all of the rest.
4. Choose people over ideas: I have never regretted making new friends through an angel investment that failed. I have always hated working with people I didn’t like, or didn’t think were A+. It’s an easy filter – use it.
5. Decide quickly: My best investments as an angel were made after one meeting and I’ve often committed in the meeting. Sometimes it has taken me longer – usually a second meeting or a long meal. But there’s no reason for an angel investor – especially an individual one – to drag the entrepreneur through a long, protracted due diligence process.
6. Don’t torture entrepreneurs: Remember, you are supposed to be an “angel investor”, not a “devil investor.” If you really want to be a great angel investor, decide quickly and then help the entrepreneur get their financing done! Be a force for good in the universe.
7. Run in a pack: The best angels run in packs. They share deals. They love to work together. They don’t feel obligated to invest in each others stuff, but they often do. And they communicate with each other. If you run in a pack, different people will take the lead role in different cases – sometimes I’d be the lead investor in an angel deal and – with a $25k check pull together a $500k round. Other times I’d just be one of the $25k checks in the $500k round and pawn off the work on one of my friends. Either way, I have a lot more fun playing with others – especially when the companies win!
I’m sure some of these don’t work for everyone so I’d love to hear any criticism from other angels out there. And – feel free to add your own tips, especially about – ahem – working with VCs.
Google gave all 5000 Google I/O attendees an HTC EVO (I guess it’s a Sprint EVO) running Android. For the past two years I’ve been using an iPhone and have become increasingly disgusted by AT&T’s service which is horrible (and deteriorating) in the cities I frequent – most notably Boulder, San Francisco, Los Angeles, Seattle, NY, and Boston. So – I decided to give the EVO+Android a real shot and use it for a week as my permanent phone.
When I wrote my post Open Android vs. Closed iPhone right after Google I/O a few folks took shots at me for pimping a free phone that I got at a conference. Given the amount of money I regularly shell out to screw around on hardware and software (I’m one of those guys who happily buys things just to try them out) I shrugged this off but figured it was worth pre-empting since I’m sure this nonsense will come around again. So – there’s the disclaimer – I got this phone for free (although I did sit on two panels and spent a day and a half talking to people at Google I/O.)
While there has been plenty of fan boy and anti-fan boy chatter about this phone, I can only find one thing to complain about – the battery life. It’s still running Android 2.1 so I expect there will be plenty of battery tune up in Android 2.2, but out of the box the battery only lasts about six hours. I’ve tuned my settings so I can get a full day out of it, but am still carrying my USB cord to grab some juice from time to time. There a few tricks (like charge it with it turned off) that help a lot, but it feels like the iPhone 3G did when it first came out where I was always paying attention to how much charge I had left. Fortunately this will get better with software (quickly) and – since the battery is removable, I can just carry a spare around.
Ok – that’s literally the only thing I don’t like. The screen is phenomenal. All of the apps I run on my iPhone are available on Android – I even found a few new ones. The camera is killer. The email client is much better than the iPhone. Search for anything is lightening fast. Voice recognition – er – recognizes my voice. I have a phone that tethers and – if I want – I have a hotspot (bye bye MiFi.) My applications remember their state and come up instantly because they are still running in the background. The browser is fast. Google Maps + Navigation is incredible, especially for someone who can’t read a map to save his life. I can dial a phone number, look up an address, and get directions from within the calendar. The weather app knows where I am. Google Voice works great and is tightly integrated.
And – for the payoff – I can make a fucking telephone call on this thing. I can’t remember the last time I looked back after a day and thought “wow – I didn’t drop a single call today.” Now the only dropped calls I’ve had are when I’m talking to someone on an iPhone and they drop.
I’m looking forward to iPhone 4.0 coming out so I can see how it compares. My guess is that I’ll get the Android 2.2 upgrade at about the same time so I’ll have both to play around with in June and July. The real result will be to see which phone I’m using when I get back from Alaska in August. In the mean time, the HTC EVO is a winner and – as a result – the smart phone thing is going to get interesting now that Apple has some real competition and can no longer just walk all over Microsoft and Palm.
Did I mention that I can’t wait to get my hands on an Android Tablet?
“In five years when you buy a computer you’ll get this.” John Underkoffler, Oblong’s Chief Scientist, at 14:20 in the video.
I’ve been friends with John Underkoffler since 1984 and we’ve been investors in Oblong since 2007. Ever since I first met John I knew that he was an amazing thinker. John, his co-founders at Oblong, and the team they have assembled are creating the future of user interfaces. This year has started off incredibly fast for them – they’ve spent the last five months scaling the business as the result of several large customers and are in the home stretch of releasing their first “shrink wrapped product” in Q3. Get ready – the future is closer than you imagine.
I love summertime.
Amy and I spent Memorial Day weekend in Manhattan. We stayed in Soho, hung out with some friends, ate a lot, and just wandered around. Oh – and I slept 17 hours yesterday once again demonstrating that I have amazing sleeping powers. I needed it after two full days at the Glue Conference, a day at Tech Wildcatters in Dallas, and a full week of “normal work.”
I’m on the east coast (New York and Boston) the next two weeks. One of my favorite things to do when in New York is eat – we’ve already had four great meals at Kittichai, Spring Street Natural, Market Table, and Excellent Dumpling House. Whenever I’m here it blows my mind how many amazing places to eat are within walking distance of whatever hotel I’m staying at. As Amy and I were walking down Broadway on the way back to the hotel, we both had a moment of being completely overwhelmed by the Soho and Chinatown crowd, looked at each other, and agreed it was time to get back into the isolated comfort of our hotel room.
I nourished my inner 14 year old with my friend Warren on Sunday by going to a matinee of Rock of Ages. Journey, Styx, Whitesnake, REO Speedwagon, Foreigner, Bon Jovi, Quiet Riot, Asia, Night Ranger, Twisted Sister, and Pat Benatar. Seth would have been in heaven – maybe I’ll take him the next time we are in town together.
I love the hot, sweatiness of summer. Bye bye cold and snow – see you later. Time for a run outside in Soho.