the advice you give is often the most important thing. It creates a much greater pool of investable ideas—things that can be businesses for the long term.
We are a pretty active early-stage investor; over the last 18 months, almost two-thirds of our investments have had some amount of angel investment in them. As far as what we look for in our interactions with the angel community, the important thing is to talk to us early. Many of you may end up in companies where we become the Series A investor. Again, engage with us early. Don’t wait until three weeks before the road show. Give myself or a partner a call and let’s talk. The benefits are bidirectional. We get to see the company early and to build a long-term relationship and get to know the business, and the advantage to us is that we can very quickly give you feedback about the questions we ask when a company is ready to raise a Series A..
Mitch Kapor on why to be an angel investor:
After I left Lotus, I had the opportunity to get involved in starting a Jewish deli in Harvard Square. Alan Dershowitz and some others were starting it. I was nervous about it. They sent me the paperwork, and the general manager felt like a crook. The deal was unfairly slanted. I said, I could see doing this if I thought it would make a lot of money, even if it wasn’t much fun. Or if it was going to be a ton of fun, I wouldn’t have cared about losing the money. But if it was going to be in the quadrant of “not fun” and “losing money,” then no. There are two reasons people do angel investing: to make money and to have fun.
The opportunity to share some of your hard-won lessons, to work with people and to tell them the kinds of things I wish someone had been around to tell me, all makes a huge difference. I say that if you are going to angel invest, get involved with people you like who are doing really interesting things, because life is just too short to do anything else. The other thing I’ve found that is really meaningful to me is to find ways to be genuinely helpful. To do that you have to take a self-inventory of what you know and what you are good at and what you are not good at. Nobody is above average at everything.
…Once you get to the point that you are not starting companies, [angel investing] is a way of staying in the flow and understanding what’s new. It’s exciting to work with people on the cutting edge, who are usually in their twenties and doing crazy, risky things, some of which will turn out to be huge, some of which won’t. Being an angel is an opportunity to participate in this great ecosystem of innovation we’re creating, which is the envy of the entire world.
Andrea Zurek (XG Ventures) on five important guideposts for angel investors:
I was very fortunate to be one of the original hires at Google. We had an amazing liquidity event at Google, but to be honest we are all way too young to just retire and play golf. We feel we need to give back to the community. I personally enjoy learning, and the point that Mitch talked about was to be able to add value and also have fun.
At a high level, I wanted to talk about some useful guideposts: risk, time, knowledge, money, and people.
Risk: Even though I’m female, I enjoy some male-dominated sports, and one of them is racing cars. I’ve raced professionally for the last four years. There’s a lot of risk involved with that, but you just have to get in, and experience it, and learn by doing. Of course you are going to have some accidents, but
