Above: Angel investor Jason Calacanis
The angel investor Jason Calacanis got in on the ground floor of Uber, Thumbtack, and other highly successful software companies, multiplying his $100,000 investment into $100,000,000 in just 6 years. With results like that, you know I had to read his book!
The idea of helping, even in a very small way, to build the future appeals to me a great deal. And if my investment multiplied many times over, well, I wouldn’t mind! 🙂 In this superb and brief book, Calacanis lays out a detailed game plan on how to achieve results like his.
He suggests beginning with syndicate deals, in which an angel investor invests alongside more experienced angels. You can begin with as little as $1,000 per investment, and such syndicates can be found at AngelList, SeedVest, and elsewhere. In fact, the author has his own syndicate, here. Unlike most investment managers, the syndicate lead only gets paid if he scores for you. There is no management fee at all, but the lead does keep 20% of any profits for his/her trouble.
You can build your skills, experience and connections in those syndicate deals, and then move on to deals on your own. Calacanis explains that you have to evaluate the founder himself/herself more than the product. It’s the person behind the company that will make or break it. Products can change a lot more easily than people can. What are is the founder’s chances of suceeding in this business, and in life?
I was struck by how similar the approach to finding investments is to podcasting, journalism, or for that matter, blogging. Calacanis advises asking short questions and writing down the founder’s answers at length. Then, you write deal memos when you invest, to lay out the thinking behind the investment. These could help remind you of your reasoning if times get tough for the company, and also guide future investments.
There’s a ton of actionable details in this book, and I won’t get into all of them here. But if you’re even remotely considering investing in early stage companies, I strongly suggest giving this entertaining and highly readable book a look!
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