Tremendous

An angel investor's take on life and business

  • The Trait of the Greats

    On Saturday, I had lunch with one of my most successful founders. As I dug into my burger, he said something that stopped me cold.

    “We give away swag bags to new customers,” David* said. “The tote bags themselves cost $0.30 each.”

    In that moment, I recognized something I’ve seen time and time again in the best CEO’s.

    They see the big picture. But they also know every detail.

    My lunch companion is running a company with millions in revenue. He supervises a dozen employees.

    But he knows the cost of a canvas tote from Alibaba, down to the cent.

    Let’s take Brett, another amazing founder I met last year. He runs a billion dollar SaaS company that’s growing at an incredible rate.

    SaaS involves a lot of metrics. And Brett knew how his company stacked up on every single one of them.

    And then there’s Aaron.

    Aaron runs a SaaS company with over $20 million a year in revenue. He recently raised a $125 million round led by one of the best firms in Silicon Valley.

    At a meeting with Aaron, one of the other investors asked about selling to the government. Aaron knew everything about government sales, from subcontractors to how lobbyists work.

    And he wasn’t even interested in selling to the government yet!

    Before I started investing, I thought I knew what a great CEO looked like. He would focus on the big picture and leave the details to someone else.

    But when I meet with the best founders, the truth is more complicated.

    They articulate the purpose of their company with the zeal of a missionary. But they also know every detail of the business.

    It’s wise to delegate to a great team. But the best founders know everything the team is doing and make sure they’re staying on track.

    Today, when I evaluate a founder, I look for attention to detail.

    Do they know what’s going on day to day? Or do they think that details are beneath them?

    I want the founders that are willing to roll up their sleeves.

    What traits do you see in great founders? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Vision Pro for SaaS

    The End of the Line

    Why AI Won’t Cause Mass Unemployment

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

    *Note: Names have been changed to protect privacy

  • Vision Pro for SaaS

    Last week, Apple unveiled the Vision Pro. The movie experience is incredible, and photos look amazing. But Vision Pro’s AR capabilities could also revolutionize the way we work.

    Imagine building a 3D CAD/CAM design for a mechanical heart valve. Instead of viewing a prototype on a 2D screen, you could see it in three dimensions.

    We could rotate and zoom the image at will. We could even blow it up to hundreds of times its actual size and walk through the valve, inspecting every element!

    Being able to view designs in 3D could also transform construction.

    TANGObuilder, a company I invested in this year, makes powerful software for structural engineering designs. Now, imagine being able to design a home in three dimensions!

    Vision Pro could even be indispensable on the job site.

    Today, a startup called Argyle uses AR to show construction teams where to put structural elements like pipes and HVAC. Argyle shows detailed AR renderings on hardware like Hololens and iPhone.

    In the future, construction workers may see their environment in greater resolution on Vision Pro. Every structural element could be crystal clear.

    But Vision Pro will have to overcome some serious shortcomings first.

    Again and again, those who have tried the headset say their faces hurt after about 20 minutes. Around half a laptop’s worth of weight strapped to your face can be very uncomfortable.

    In the near term, I think Apple will introduce a better system of headbands to distribute the weight. Longer term, hardware will get smaller and lighter.

    Another issue is battery life.

    Vision Pro requires you to lug around a little battery pack on a cord — no one’s idea of sleek. And even with that, you only get 2 hours.

    If you want more, you have to plug into an outlet.

    However, battery capacity is increasing every day. In the last decade, capacity has more than tripled.

    If Apple can address these weight and power problems, Vision Pro could be a compelling platform for work. I look forward to backing companies that make the most of this revolution!

    Would you use Vision Pro at work? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    The End of the Line

    Why AI Won’t Cause Mass Unemployment

    New York’s Best Tech Events

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • The End of the Line

    Many startups today are hitting the end of the line. The bank account is empty, the raise has failed, and it’s time to say goodbye.

    From a report out today in The Wall Street Journal:

    Fresh capital from venture investors and bank loans is scarce and expensive. Going public is near impossible. Some business models that worked when cash was cheap are unsustainable now. That means venture-backed startups are running out of money and facing hard choices. 

    “The Mass Extinction Event for startups is under way,” said Tom Loverro, general partner at venture firm IVP, in a recent tweet. Loverro said in an interview that none of his portfolio companies has shut down recently, but it is early days in what could be a wave of startup failures. “It’s like the entire industry went out drinking and is now suffering the consequences,” he said about the venture boom of 2021 that he believes is heading for a bust. 

    Why is 2023 seeing so many shutdowns?

    When startups raise a round of funding, it typically gives them 18 months of “runway.” This is the amount of time they have until they run out of cash, given their current monthly burn rate.

    The hot market ended around the beginning of 2022. We’re now almost 18 months past that.

    And startups are running out of cash, right on schedule.

    If this were 2021, they’d just go out and raise a bunch more.

    But today, the market for anything that’s not generative AI is weak. Non-AI companies can raise, but only if they have incredible growth.

    For everyone else, the music has stopped.

    In recent months, several companies that raised significant venture funding have folded, including biotechnology company Goldfinch Bio, wine business Underground Cellar and fintech company Plastiq. 

    California startup Zume, which was developing a robotic pizza maker and was once valued at $2.25 billion, recently entered a wind-down process handled by Sherwood Partners, a restructuring firm, according to Sherwood’s co-founder and co-president Martin Pichinson.

    Notice how companies that involve “stuff” keep popping up among the fatalities? That’s no accident.

    Stuff is really hard. Zume had to buy a bunch of robot arms and trucks — that’s really expensive.

    A software startup just needs some laptops. Their one bill — cloud computing costs — is covered with AWS credits!

    Software startups fail too. But because they scale easily and require fewer resources, they’re harder to kill.

    I had an opportunity to invest in some of the companies that have shut down recently. I passed.

    Of my 20 investments, none have shut down yet.

    But sadly, some surely will. Failure is inevitable in the world of startups.

    If the founder tried his best and kept us updated, I want to be the first check into his next company. Some of the greatest investments of all time are in repeat founders!

    For founders that are still fighting, the key is to reduce burn and hit breakeven. Then, you control your own destiny.

    Be ruthless. Cut staff. Trash pet projects.

    If you survive, you have a chance to thrive.

    And if you do hit the wall, don’t beat yourself up too much. Come up with your next best idea, and try again!

    Are you seeing startups hit the wall? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Why AI Won’t Cause Mass Unemployment

    New York’s Best Tech Events

    Meet My New Investment Analyst: GPT-4

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Why AI Won’t Cause Mass Unemployment

    When I was a kid, there were no yoga teachers. Heck, no one ever even heard of yoga in our town. Today, that little town in Wisconsin has 7 yoga studios.

    Oshkosh went from 0 yoga teachers in the 90’s to perhaps dozens today. We also added pilates instructors, meditation coaches, acupuncturists.

    But that’s not all. Strange sounding jobs involving computers popped up.

    One was called “search engine optimization.” My mom bravely waded into the nascent industry in 1999, and we were suddenly catapulted from the poor to the middle class.

    This happened as factories closed all around us. Places that employed hundreds became vast gravel lots.

    Surely the town was devastated. Right?

    Wrong.

    Decaying warehouses along the river became lovely apartments. New businesses opened and the local university expanded.

    The town’s population grew.

    Today, Oshkosh and America as a whole have some of the lowest unemployment rates on record. And yet we can’t seem to stop worrying.

    A quarter of workers are worried that AI will put them out of a job, according to a CNBC survey. In some fields, that’s as high as half.

    I don’t doubt that AI will make some jobs unnecessary. For example, an AI chatbot could reduce the need for call center staff.

    But does anyone love working in a call center? I don’t think so.

    That person can move into a more fulfilling job elsewhere. Some may become EMT’s, like my friend Matt — a job that’s deeply rewarding and almost impossible to automate.

    Others will take jobs that don’t exist yet.

    The vast movement of workers into new industries has happened before.

    In 1910, 14 million Americans worked on farms out of a population of around 100 million. In the 21st century, that fell to just a couple of million workers.

    And they were feeding a population more than three times the size.

    All those former farm workers didn’t languish on the dole. They got jobs in factories.

    My childhood saw the end of those factories. They either moved abroad or automated most of the employees out of work.

    And yet, unemployment is at rock bottom. Meanwhile, median wages have more than doubled since 1991, even after inflation.

    There is no limit to human creativity or human desires. As computers take over one task, we’ll create another.

    If we could look decades ahead, we wouldn’t believe the prosperity we’re about to enjoy.

    Now, let’s go get it.

    Do you think AI will cause mass unemployment? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    New York’s Best Tech Events

    Meet My New Investment Analyst: GPT-4

    Hot Deals

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • New York’s Best Tech Events

    There are 2 things New York doesn’t lack for: smoke and tech events. But with so many events out there, how do you know which ones are worth going to?

    Here are a few of my favorites:

    Entrepreneur’s Roundtable Accelerator

    With 4 unicorns, this is one of the best accelerators in existence. But it flies under the radar.

    Based in NYC, ERA does a semiannual demo day. It also holds great events throughout the year.

    Last time, I met a fractional CFO who has been really helpful to one of my companies!

    When you meet the ERA folks, you sense their seriousness of purpose. I like that.

    ERA’s next event is on Tuesday, July 11. I’ll be there — will you?

    Starta VC

    The folks at Starta are some of the best hosts in venture. Whenever you walk through the doors, you’re treated to a warm welcome.

    I’ve met some great entrepreneurs and investors at these events. They just did their Spring Demo Day, but there will be more events in the fall!

    Here’s the link to Starta’s website.

    AWS Startup Loft

    This one is new to me. But already, it’s shaping up to be very promising.

    I was invited by a great founder I know.

    And it just so happens that one of the best early stage investors in Silicon Valley is in town this week. So I invited him too — and he’ll be there!

    You can see us all tonight at 5:30. Here’s the link.

    AWS has deep connections in the startup scene, so I’m sure they’ll be doing a lot more great events.

    What are your favorite NYC tech events? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    So, How’s That Angel Investing Thing Going?

    My Top 3 Tech Podcasts

    Meet My New Investment Analyst: GPT-4

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Will CRE Cause a New Regional Banking Crisis?

    “There are no buyers for empty office space at any price.” That’s a friend of mine who works in NYC commercial real estate. But landlords aren’t the only ones in deep trouble.

    I’m writing this post from my living room. Chances are, you’re reading it at home too.

    That means we’re not in offices. And as landlords survey their barren domain, things are getting desperate.

    From a report out overnight in The Wall Street Journal:

    “What we’re seeing is the unfortunate collision of the most rapid increase in interest rates in a one-year period and the realities of how people work,” said Gregg Williams, principal receiver at Trident Pacific, a receivership firm for defaulted commercial mortgages. 

    Xiaojing Li, managing director at data company CoStar’s risk analytics team, estimates that as much as 83% of outstanding securitized office loans won’t be able to refinance if interest rates stay at current levels.

    CRE loans are nothing like residential mortgages.

    Landlords make small payments during the life of the loan. The loan is usually for five to ten years, much shorter than a residential mortgage.

    In recent years, most landlords have only had to pay the loan interest.

    When the time is up, the landlord has to pay the entire value of the building. Since they don’t have that kind of cash laying around, they usually refinance or sell the property.

    For a long time, this was a great playbook.

    But now, interest rates have doubled. Moreover, work from home is entrenched, which could lead to long term vacancies in office towers.

    So if you’re the landlord, what are your options?

    You can’t refinance. The rates are so high that you can’t afford the payment.

    And if you sell, you’ll get way less than what you owe on the loan.

    So either the bank backs off, or you walk away from the building.

    So far, the banks are playing ball.

    Only some defaults end with the lender taking the keys. Often, property owners can stave off foreclosure by paying off loans with their own cash or by extending and renegotiating mortgages. Still, debt brokers and attorneys say lenders are less patient than they have been in the past.

    What else can they do? They don’t want to own a bunch of aging, vacant office towers.

    Making a deal with the landlord solves the problem — for now. But if the landlord can never repay what he borrowed, the banks are just hiding losses.

    “The banks tend to extend and pretend.”

    Warren Buffett, Berkshire Hathaway Annual Shareholder Meeting, May 2023

    Bad real estate loans could sink regional banks. Smaller banks own 80% of these mortgages — $2.3 trillion.

    If these loans go bad, it will make the banking crisis in March look like a tea party.

    One bright spot: the office market in most cities is actually holding up.


    Nationally, the vacancy rate is only up 3.7% from pre-Covid levels. The massive outlier here is San Francisco, with vacancies up 12.8%.

    The banks at greatest risk from a CRE crisis will be regional banks with exposure to SF, LA, and NYC. One of the largest CRE lenders in New York, Signature Bank, already bit the dust in March.

    Long term, I think office space nationwide is in serious trouble. The technology for remote work is getting better every day.

    Soon, workers may join meetings from their couch on an Apple Vision Pro. The experience might be just as immersive as in-person without hours wasted commuting.

    It’s a future I look forward to. But then, I’m not a landlord.

    What does the future hold for CRE? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on markets:

    ‘There’s a Lot of Agony Out There’: Munger on CRE

    Carl Icahn Losing $900 Million a Day

    Heading Off the AI Cliff

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • My Top 3 Tech Podcasts

    At the end of every day, I take a long walk. As I gaze over the Hudson toward the city, I listen to the best podcasts in tech.

    Podcasts are one of my favorite ways to learn. I listen to them while walking, doing dishes, or even (ick) scrubbing the tub.

    The information is always up to date. You hear directly from the smartest people in the industry.

    But there are approximately 1 gadrillion tech podcasts, with new ones coming out every day. What’s worth listening to?

    Here are my Big 3:

    This Week in Startups

    If you can only listen to one, this is it.

    Every weekday, Jason Calacanis chops up the latest tech news. He also demonstrates new AI tools.

    You can even hear him take founder pitches and make investments — live! What a great way to learn, whether you’re an investor or a founder.

    Jason is one of the top angel investors of all time. His perspective on the latest in our industry is indispensable.

    All-In

    It’s number one for a reason.

    All-In is the most entertaining tech podcast I know of. The besties are razor sharp on VC and macroeconomics.

    If you want the big picture of tech, this is the place.

    The podcast also forays into politics and world news. Whenever you do that, half the country will disagree with you.

    But their views are well-articulated and reasonable. It’s a breath of fresh air compared to the usual political discourse.

    20VC

    This podcast is less well-known. It’s like graduate school for startups.

    The best thing about 20VC is there is an episode on every single topic.

    A founder I invested in wondered about how to approach PLG vs. Enterprise sales strategies. Not gonna lie: I didn’t really know.

    But Stevie Case sure did! She’s the CRO of Vanta, and Harry interviewed her on 20VC.

    Send episode to founder. Happy founder. Awesome day!

    You can do this with basically any topic. That’s what makes 20VC so valuable.

    Someone needs to digest every episode and make HarryGPT. It could answer almost any startup question with info from high quality guests.

    What are your favorite tech podcasts? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    PS: Shoutout to a great portfolio company of mine, Podium, for producing the hilarious All-In Balenciaga video! I cribbed a screen for this post. Enjoy!

    More on tech:

    Meet My New Investment Analyst: GPT-4

    So, How’s That Angel Investing Thing Going?

    Hot Deals

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Meet My New Investment Analyst: GPT-4

    I hired a new investment analyst! He’s hardworking, detail-oriented and works around the clock. For free.

    His name is GPT-4.

    This week, GPT-4 and I have been investing together. We passed on a bunch of companies but we did find one winner!

    Let’s look at two companies we reviewed this week…

    Company #1

    Company #1 is a generative AI company.

    It has an interesting concept and a few paying customers, but the details were sketchy and it seemed a little too early for me. I like to see companies at $200-500k ARR before investing.

    The valuation is a very reasonable $8 million post-money.

    Nonetheless, my decision was pass. But let’s see what GPT-4 thinks…

    I prompted GPT-4 by telling it that it was the world’s best angel investor. I often like to assign it an identity so that it will act accordingly.

    Next, I explained that I would be feeding it a deal memo.

    Let’s see what it says!

    It hallucinated some very prestigious backgrounds for our founders! Hey, what founder doesn’t need a little extra credit, right?

    But it got the other details dead on.

    So what’s your decision, GPT-4?

    GPT-4 didn’t give us a decision, only a bunch more questions. Just like a real VC!

    I’m so proud!

    But let’s force his hand by explaining that this is all the information we have:

    GPT-4 is a pass. And for the same reasons.

    This deal memo was very short on specifics. It said the company had a few paying customers, but never provided any numbers.

    Given that they only have a few customers and just graduated from an accelerator, I’m guessing revenue is minimal. It might be a couple thousand a month at best.

    I could chase down the exact numbers. But if I spent all day pestering founders for specifics, I’d never sleep.

    GPT-4 may not need it, but I do!

    In some cases, I do ask for these specifics. But I didn’t see anything compelling enough here to warrant it.

    Company #2

    Company #2 is a really cool marketplace that uses AI in an innovative way. It has strong traction, growing revenue revenue rapidly month over month.

    It’s also operating in a huge market. The founder is very ambitious and has founded several companies in the past.

    Valuation is also reasonable.

    I’m in! But before we sign and wire, let’s see what GPT-4 thinks…

    This deal memo was very detailed and much longer. Given GPT-4’s character limit on prompts, I had to enter it in a few prompts.

    GPT-4 understood it perfectly and gave some interesting results:

    GPT-4 is in! And for some of the same reasons.

    Traction is strong. The team has very relevant experience and a clear plan to dominate their market.

    With my new analyst’s confirmation, I requested an allocation!

    Time to Give My New Employee a Performance Review

    GPT-4 really impressed me in its ability to digest data on companies and draw sophisticated conclusions.

    It spotted a profound lack of information on Company #1. And in Company #2, it identified the strong traction, big market, and great team that makes a winning bet.

    Best of all, it had the guts to commit right away when it saw something special. Maybe it really is the world’s greatest angel investor!

    Any mistakes it made were minor.

    It hallucinated some team educational backgrounds, but it got almost every other detail right. And in any case, I don’t really care where or if people went to school.

    GPT-4 is an amazing tool for individual angels. Most of us can’t afford to hire a team! And it’s great to have someone to check your thinking against.

    But even if I had a huge staff, I’d still augment them with GPT-4. Just as in chess, I think the best investing will be done not by AI or by humans, but by humans and AI working together.

    GPT-4 had a great first week! I can’t wait to unleash him on more startups on Monday.

    Have a great weekend everyone!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    So, How’s That Angel Investing Thing Going?

    Hot Deals

    What Can Angels Learn from Warren Buffett?

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • So, How’s That Angel Investing Thing Going?

    Two years ago, I started funneling money into the riskiest asset class on the planet: startups. This morning, I sat down to take a hard look at my performance.

    Miraculously, I’ve actually made money!

    Total Performance

    My portfolio is up 3.4% since April 2021. The NASDAQ is down about 7% over that period.

    What surprises me most is of the 20 investments I’ve made so far, not a single one has gone out of business!

    Performance Breakdown

    Let’s break down the outcomes so far:

    Acquired: 2

    Sold shares via secondary: 1

    Markups: 2

    Markdowns: 0

    Fatalities: 0

    Company By Company:

    Growing revenue 3x YoY or more (crushing it): 5 – I’ve reinvested in 2 of these so far, and plan to reinvest in all of them

    Modest growth: 6

    Going sideways: 4

    Revenue down: 2

    Conclusions

    The companies that are killing it are mostly investments made in 2021, not 2022. They’ve had more time to mature.

    All but one of the companies going sideways are investments made in the last year. These startups may not have had time to hit their stride yet.

    In time, I think some will.

    Many of the “modest growth” and “going sideways” companies were very early stage when I invested. Most had revenues of just a few thousand per month.

    Meanwhile, the elite group had more revenue to begin with. They were usually in the $250,000 to $1 million ARR range.

    You pay a little more to get into those startups, but thus far it’s been well worth it. I’ll be doing a lot more investments like that in the future.

    Caveats

    This “return” isn’t that meaningful. I can’t actually get the money out for another decade or so.

    Angel investing is a long road.

    But we have to take our pleasures where we can. And seeing this portfolio perform well so far puts a smile on my face!

    I expect my returns to fall precipitously in the next few years.

    Years 2-5 as an angel investor are known as the “J-curve” or the “trough of despair.” Companies you love fall apart, while the winners haven’t won yet.

    Even the best portfolios tend to get crushed in that period. I’m ready for it.

    Outlook

    Of my top 5 companies, all seem likely to continue their growth. Of the rest, I can think of at least 4 that could go out of business soon.

    For the sake of the founders, the teams, and of course myself, I hope they don’t. But like it or not, failure is an integral part of startupland.

    Wrap-Up

    I make about 10-12 investments per year. I plan to continue at this pace for another 8 years, bringing me to 100 companies over a decade.

    If I can 3x my cash, I’ll be very happy with this experiment. That would put my tiny “fund” firmly in the top quartile of VC funds.

    But I’m stubborn. I’d really like to see 4-10x.

    Any advice for the future? Leave a comment and let me know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Hot Deals

    Heading Off the AI Cliff

    What Can Angels Learn from Warren Buffett?

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

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  • Hot Deals

    I was working late into the night, researching a very hot deal. It was 2021 and I was amped — until I found out I couldn’t get an allocation!

    I was really disappointed. The founder was first rate and the co-investors were Silicon Valley legends.

    Surely I was missing my billion dollar opportunity!

    Fast forward two years…

    The company I was so excited about got sold for a small sum. This “acquihire” provided a soft landing for the team and got the investors their money back.

    But those billions remained elusive.

    We investors think we need to win allocation in the hottest deals. But my best performers were pretty chilly when I found them.

    My Top Performers

    Let’s take my #1 performing company. Even though I invested in 2021 at the height of the boom, the round wasn’t the least bit competitive.

    It grabbed some solid investors. But most anyone who wanted a piece could’ve walked into that deal.

    They just couldn’t see it.

    How about #2?

    I almost passed on #2, but the founder scheduled a second call with me to show me just how special his product was. I’m very grateful to him — he was right.

    And #3?

    This marketplace had great early traction, but again the deal wasn’t remotely competitive. Anyone who contacted the founder probably could’ve invested.

    In all three deals, I got the full allocation I wanted.

    My Hottest Deals

    When we turn to the hottest deals I’ve been in, the picture is much less rosy…

    Deal # 4 was a great company with strong early traction. The investors included a scout for one of the best venture firms on earth.

    I could only get some of the allocation I asked for. I took it, grateful to get anything!

    Deal # 5 was a very innovative SaaS company. The round was hot — again, I only got part of what I asked for.

    Despite very hard work by the founders and teams, neither of these companies quite caught on. They were acquired for small sums and I got my money back, but nothing more.

    Wrap-Up

    Looking at every company I’ve invested in, not one of the hot deals has performed well.

    Meanwhile, the big winners got a cool reception from VC’s. Perhaps what they proposed was too radical.

    But it worked.

    Better yet, because I got the full allocation in the successful companies and didn’t in the others, my returns are better!

    I’ve invested in 20 companies so far. The sample size is hardly scientific.

    But I’m done worrying about getting into the next hot round. Instead, I’m looking for great businesses that need someone to believe.

    Do you like hot deals, or do you avoid them? Leave a comment and let us know!

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    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order.