Angel: How to Invest in Technology Startups--Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000 - PCC - ebook

One of Silicon Valley’s most successful angel investors shares his rules for investing in startups. There are two ways to make money in startups: create something valuable—or invest in the people that are creating valuable things. Over the past twenty-five years, Jason Calacanis has made a fortune investing in creators, spotting and helping build and fund a number of successful technology startups—investments that have earned him tens of millions of dollars. Now, in this enlightening guide that is sure to become the bible for twenty-first century investors, Calacanis takes potential angels step-by-step through his proven method of creating massive wealth: startups. As Calacanis makes clear, you can get rich—even if you came from humble beginnings (his dad was a bartender, his mom a nurse), didn’t go to the right schools, and weren’t a top student. The trick is learning how angel investors think. Calacanis takes you inside the minds of these successful moneymen, helping you understand how they prioritize and make the decisions that have resulted in phenomenal profits. He guides you step by step through the process, revealing how leading investors evaluate new ventures, calculating the risks and rewards, and explains how the best startups leverage relationships with angel investors for the best results. Whether you’re an aspiring investor or a budding entrepreneur, Angel will inspire and educate you on all the ins of outs. Buckle up for a wild ride into the world of angel investing!

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Table of Contents

Step 1: Find startups

Step 2: Understand deals

Step 3: Evaluate founders

Step 4: Add value

Step 5: Learn and iterate

Step 6: Make money


Table of Contents


Step 1

Find startups

Angel investing is the act of putting money into a private business with the goal of getting back more than you invest. To get in on the best deals, you have to build a deal-sharing network with the right kind of people. A good way to start this is with syndicates.

Angel investors typically put money into companies which have some interesting characteristics:

■They tend to be less than 3 years old.

■They have little or no traction in the marketplace and therefore no sales yet.

■They are trying to find product/market fit but haven't got there yet.

■They tend to be broke and in need of more cash to keep the doors open.

In other words, angel investors open their checkbooks and put money into startups that look kinda crazy at first. They put their own money at risk in the hopes of getting in early on a company which goes supernova. Angel investors enjoy the ride as much as anything else.

If it works, angel investing can be impressively rewarding:

■Mike Markkula put $250,000 into Apple to become a one-third owner and employee number three.

■Andy Bechtolsheim put $100,000 into Google before it incorporated.

■Peter Thiel invested $500,000 in Facebook when it was valued at $5 million.

■Jason Calacanis put $25,000 into Uber when it was valued at $5 million and was operating two Lincoln Town Cars in one city.

Key Thoughts

"And that’s why angel investing is something that I believe you should consider if you want to create wealth. It can change your life if you suspend fear, squint a little, and focus on not just what could go wrong with a business but what could go right. While it’s unlikely you’ll hit a return of five thousand to ten thousand times your investment, like I did, it’s very possible—maybe probable if you do all the work—that if you operate for a couple of years, here in Silicon Valley, making fifty or one hundred individual investments, you will return more money than you put in." – Jason Calacanis

The best way to get started as an angel investor is to join some angel syndicates which are investing in startup companies. There are a number of websites which offer these investment opportunities including AngelList, SeedInvest and Funders Club. These websites are used to create an investment group (or syndicate) which will invest anything from $200,000 to $500,000 into an early-stage venture.

Put $2,500 into 10 syndicates and then learn from the experienced angels who put together the syndicates. Watch what they do and get to know how they make decisions. You should also meet with the founders of the companies you're investing in and start learning how they think. This will be an invaluable education in real-world investing which will be far cheaper than going to business school and getting an MBA.

Once you've made those ten investments, you'll be on the radar screen of other startups seeking funding. You will be invited to join the networks of your fellow syndicate investors. You will also get grafted into the networks of the founders of the companies you're investing in. To further stoke the fire, you should list your investments on your LinkedIn profile, in your Twitter and Facebook bios and on your Squarespace website.

Key Thoughts