.@dharmesh is the co-founder of @HubSpot and has done angel investments in over 80 startups.
Here are his top 11 lessons learned from this experience 👇🏽
Here are his top 11 lessons learned from this experience 👇🏽
1/ Not all investments will be 20x plus hits, but some should be.
Your returns will come from a small percentage of companies creating asymmetric (20x+) returns.
Your returns will come from a small percentage of companies creating asymmetric (20x+) returns.
2/ Picking potential winners are only half the problem.
Capital is cheap.
To stand out, you have to have some credible story as to why they should take your money.
Capital is cheap.
To stand out, you have to have some credible story as to why they should take your money.
3/ Check size.
Trust your instincts.
If you invest, but you’re trying to go in for the lowest number you can, it’s a signal that you’re not a believer yet.
Trust your instincts.
If you invest, but you’re trying to go in for the lowest number you can, it’s a signal that you’re not a believer yet.
4/ Too little or too much is suboptimal.
Create a big enough portfolio of investments that could be breakthroughs to have a chance at an outsized return on one or more of them.
Gather training data to improve your selection algorithm.
Create a big enough portfolio of investments that could be breakthroughs to have a chance at an outsized return on one or more of them.
Gather training data to improve your selection algorithm.
5/ Bigger checks - less competition.
Valuation does not vary based on check-size but outcomes do.
Incentives for both founders and investors align on higher check sizes.
On average, the quality of deals is better for investors and there’s less cat herding for founders.
Valuation does not vary based on check-size but outcomes do.
Incentives for both founders and investors align on higher check sizes.
On average, the quality of deals is better for investors and there’s less cat herding for founders.
6/ Success begets success.
Once you have a handful of these high-flying companies in your portfolio, it’s easier to get more.
There’s a positive reinforcement loop and the flywheel kicks in.
Once you have a handful of these high-flying companies in your portfolio, it’s easier to get more.
There’s a positive reinforcement loop and the flywheel kicks in.
7/ Speed is a feature.
Founders love founder investors.
Trust your System 1 thinking and make quick (usually < 24 hours) decisions.
Founders love founder investors.
Trust your System 1 thinking and make quick (usually < 24 hours) decisions.
8/ Don’t let your excitement cloud your commitment.
There may be cases where you feel over-invested, with emotion or capital.
That’s alright.
But, you should limit these and not spread yourself too thin as you’d be involved in this for the medium-long term.
There may be cases where you feel over-invested, with emotion or capital.
That’s alright.
But, you should limit these and not spread yourself too thin as you’d be involved in this for the medium-long term.
9/ Where are you going to invest?
Go local or global?
There are great companies being built everywhere.
But from a paperwork and bureaucracy perspective making investments in the US is fairly painless.
Go local or global?
There are great companies being built everywhere.
But from a paperwork and bureaucracy perspective making investments in the US is fairly painless.
10/ Outsource the time suckers.
The time required to be an investor is marginal, however, with increased investments it cumulates quickly.
Have a plan for outsourcing the paperwork and admin.
The time required to be an investor is marginal, however, with increased investments it cumulates quickly.
Have a plan for outsourcing the paperwork and admin.
11/ Side with the founders.
Being founder-friendly pays higher dividends than drilling on valuation.
The outcome for most companies will be bimodal.
Many will simply fail and you will lose your money.
Focus more on the speed and quality of your deals.
Being founder-friendly pays higher dividends than drilling on valuation.
The outcome for most companies will be bimodal.
Many will simply fail and you will lose your money.
Focus more on the speed and quality of your deals.
“Most important of all, have fun and stay solvent.
Don’t invest more than you can afford to lose.
Remember, angel investing is a long game, so even when you have winners, it’ll be 5-10 years before you see the outcome in your bank account.” ~ @dharmesh
Don’t invest more than you can afford to lose.
Remember, angel investing is a long game, so even when you have winners, it’ll be 5-10 years before you see the outcome in your bank account.” ~ @dharmesh
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