I made my first angel investments using AngelList Syndicates

Yesterday, I made my first two angel investments via AngelList Syndicates. I invested in two companies: Shyp and Estimote. I’m investing with my eyes wide open: Felix Salmon thinks I’m part of a crowd of idiots, while Howard Lindzon thinks people like me have a shot to learn how to use incredible tools like AngelList to successfully invest & help companies grow. I’d like to think that I’m somewhere closer on the spectrum to Ron Conway than Aunt Betty, but time will tell.

I don’t plan to stop at just two investments. I will invest in at least 5-7 startups per year over the coming years until I have a portfolio of 20-30 investments minimum. That is the number much smarter people than me say is necessary to be successful without being merely lucky. I plan to invest ~$2,500 per investment. That is a number that I wouldn’t be heartbroken about losing while I’m an inexperienced angel investor learning the ropes (see Paul Graham’s “How to Be an Angel Investor“) If my initial investments show promise over the coming years and if startups are happy with my involvement in their growth, I may choose to syndicate future investments myself to increase the impact I can have in supporting growing companies. But I’m not there yet.

Why now & why AngelList Syndicates?

  • There are 2 reasons I’ve never been an angel investor before: time & money. I don’t have the time to do full team diligence on the dozens of companies necessary to make 5-7 direct angel investments per year. Additionally, a $2,500 check size simply won’t get me direct access to the vast majority of the best deals. AngelList Syndicates changes that, giving me access to some of the most exciting startups being created and investing alongside the best angel investors. Professional angel & seed investors can do the due diligence on team, while I can do the due diligence on market. There are some very high quality companies raising money on AngelList today; why wait until tomorrow?

How did I choose Shyp and Estimote?

  • People & market. In this case, I’m one degree removed from the people running the company; the people I’m investing in are the Syndicate leaders themselves: Tim Ferriss & Betaworks. Tim Ferriss is the ultimate doer, an investor in Facebook & Twitter and an advisor to Uber & other great startups. If he tells me he is going to put a disproportionate amount of his reputation, effort & money into making one startup successful, I take that as a high quality signal. Betaworks are winners who backed Venmo, the company I work at today. Read their 2012 shareholder report here; it is gold. I’d expect them to have strong conviction in the first investment they’re syndicating; I take that as a high quality signal. Regarding market, as Peter Lynch says, “Invest in what you know”. I’ve personally experienced the problems that both companies are solving. I’ve professionally worked with many companies that would use their services while at Google & Braintree/Venmo. I like the markets both are attacking, and I believe that I understand them better than the average investor.

I’ve made the investments. What now?

  • I plan to reach out to the founders of both companies soon to explore whether I can be helpful as they grow their companies. I’ll briefly share my experience & relationships and how they might be relevant to their companies and markets. I expect that the fact they offered investment opportunity via syndicates means they are open & interested in the value a broader range of investors can bring to their companies. They can decide how active a relationship we have; public syndicates are new, and there is no firm playbook for investor/company interaction in this new environment.

I’m thrilled that AngelList Syndicates has opened up startup investing to people like me. I live & breath startups: I work at a startup, I partner with startups, and I informally advise startups. I’m excited to finally be able to invest in startups.

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3 responses to “I made my first angel investments using AngelList Syndicates

  1. Very nice, congrats on the entries. Shyp closed before I was able to join. Love the concept. 2 odd things perhaps you know..
    some companies appear to have not met the amt they are raising but arent accepting online anymore, where do you go from here?
    Also, if you back someone like tim, i see you can un-back anytime but its hard to allocate a size not having any idea how many deals he may do a month/year. best of luck Mike! congrats

  2. Hi Mike. We are working on a Wefunder application for our Sharing Economy portal that aggregates inventory from verticals such as homes for rent, boats for rent, cars for rent, etc – all into a single search site to be the “Kayak.com” of Sharing… ‘Shared Stuff, All In One Search.’ We are seeking micro investments at the level you are mentioning in your article, so can you tell us the kind of return you are expecting for levels such as $1,000, $2,500, up to $10K? It would be helpful to position ourselves for realistic investor returns / expectations. Thank you! @brightneighbor

  3. Pingback: Angel List Syndicates: Cutting Edge Financing or Bubble? | Points and Figures·

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