What I Don’t Invest In

Being an angel investor is never boring. I see everything from spacecraft to nude resorts.


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But I can’t invest in everything!

I focus on the areas I know best. And I want to back companies building the type of world I want to live in.

Here are some areas I don’t touch:

1) Gambling. I don’t believe in it, simple as that.

To me, gambling startups are tech at its most predatory. Many people struggled to stop gambling even when the casino was hundreds of miles away.

What happens when it’s in their pocket?

In a free society, I don’t have a problem with adults making the decision to gamble. But I don’t have to fund it.

Gambling is also a tough business. You’re offering a commodity product – the ability to take a bet.

It’s a race to the bottom and margins are razor thin.

2) Drugs. There may be incredible applications of illegal drugs like psilocybin and ketamine for conditions like depression.

But I don’t have the scientific background to evaluate these claims. What’s more, in our enthusiasm, I’m concerned we may be glossing over the risks that come along with some compounds.

3) Space. Who doesn’t love spaceships?

I look forward to a world with lightning fast satellite internet for everyone and resorts on Mars.

But I don’t have a scientific background. How would I know a good space company from a bad one?

Better leave it to Elon.

4) Biotech. I would love to invest in biotech.

I find it fascinating. And its potential to improve our lives is limitless.

But my background is in software, not medicine. How will I know if a company is good or bad, or what a fair price is?

Instead, I stick to what I know. And when I see the occasional biotech startup that gets me excited, I pass it along to investors I know who are experts in the field.

5) D2C. Selling physical goods direct to consumers online used to be a great business model.

Not anymore.

Apple stopping ad tracking has caused customer acquisition costs to triple for many companies. Supply chain issues crush margins and make filling orders difficult.

Even the biggest successes, like Peloton, have been crushed. Its stock is down 90% from the highs.

I’m better off in a pure software business without the messy “stuff”.

It’s hard to succeed if we don’t focus. And in startupland, it’s easy to lose a fortune investing in exciting things you don’t understand.

I stick to my knitting and invest in pure software companies. Most sell software to businesses (SaaS), the area I worked in before becoming an investor.

This gives me the best shot at identifying a great company, since I know what great looks like in my field. It’s also easier to add value in an industry I know well.

What areas do you invest in? What areas do you avoid?

Leave a comment at the bottom and let me know!

There will be no blog tomorrow. I have an acting gig.

See you on Wednesday!

More on tech:

Andreessen Crypto Fund Down 40%

Why Now Is the Best Time to Invest in Startups

How I Help Startups

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Photo: “sand hill road sign” by stevendamron is licensed under CC BY 2.0.

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