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Pop Culture Math

1 Sep, 12 tweets, 2 min read

@chadsgx

Here is how I go about angel investing.

@chadsgx’s “Pitch Your Startup Spaces,” held Mondays at 8pm, is a great resource.

I am enjoying being a regular panelist.

A thread 👇🧵

1. I invested in five start-ups at a seed stage from 2015-2019. Three are going very well, and I have added to my investment in two of those recently.

2. I have taken more concentrated bets because I like finding start-ups and entrepreneurs whom I have conviction in versus being part of a fund with questionable deal flow access and high fees.

3. You can be a great judge of angel investments, but if you don’t have access to good deal flow, it is of limited use. You may soon drop your guard for a mediocre opportunity versus sitting idle.

4. What I look for in a start-up and founder(s) is
a) significant problem in need of a solution
b) a strong solution to that problem
c) a compelling business model or discovery process towards a compelling business model

5. What I look for cont'd
d) Positive differentiation versus competitors, such that competitors will struggle to copy your success.
e) Why do I have access to a good investment opportunity?
f) A standout quality or possessed by the entrepreneur, of relevance to the business

6. If you invest in a start-up, make sure you have the funds to participate in a later round. Sometimes a later round at a higher valuation can be an even better risk-adjusted bet.

7. Invest in entrepreneurs and start-ups that will not leave you too disappointed if the investment goes to zero.

8. Avoid start-ups that are outside of your comfort zone, biotech being one example in my case. You probably don’t know the right questions to ask.

9. Have a narrow filter. My two unsuccessful investments didn’t convincingly check one of the criteria I look for up front, but I proceeded anyway. Shrewdly passing on investment opportunities is a key driver of success.

@chadsgx

10. Angel investment groups are not usually cheap to join. Find one where the deal flow is good and the membership fee manageable. @chadsgx’s weekly Pitch Your Startup Space is free.

@PopCultureMath

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