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What the best startup investors know that you don't

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After a year interviewing the best startup investors all over the world, Josh Maher published a best-selling book Startup Wealth How The Best Angel Investors Make Money In Startups (http://amzn.to/1NUAoz4). While learning what made them tick, Josh found financing innovation as a practice looks truly looks different in the private capital markets than it does within large organizations or public markets. Josh picks apart his findings around what startup investors look for when investing in teams

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What the best startup investors know that you don't

  1. 1. Innovation, what the best startup investors know that you don’t
  2. 2. @joshmaher | #StartupWealth | #NWANGELCONF
  3. 3. 0 50 100 150 200 0 2000 4000 6000 8000 Fundraising (millions) Raised Post-Valuation @joshmaher | #StartupWealth | #NWANGELCONF
  4. 4. Chris Stolte, Tableau’s Chief Development Officer and Co-founder Pat Hanrahan, Tableau’s Chief Scientist and Co- founder Christian Chabot, Tableau's Chief Executive Officer and Co-founder Seattle Time: 2003 – 2015 (exit in 10) Growth: 40,000% Employees: 3 -> 1947 @joshmaher | #StartupWealth | #NWANGELCONF
  5. 5. Author Investor Community @joshmaher | #StartupWealth | #NWANGELCONF
  6. 6. The Softwarization period (20th-21st centuries) Science & technology mashups Removal of intermediaries The Enlightenment period (18th century) Science & distribution mashups Investing re-born The Renaissance period (14th-16th centuries) Science & art mashups Creation of modern banking @joshmaher | #StartupWealth | #NWANGELCONF
  7. 7. The cost to build a digital business drops inverse to Moore’s Law Software enables cutting out the middle man A culture of hackers inspires rethinking in every industryStarted With: 20-21st Century The PCs & The VCs Ending With: The Singularity Period? @joshmaher | #StartupWealth | #NWANGELCONF
  8. 8. The Softwarization Man? Dan Shapiro • Consumer photo company – sold to Fox Broadcasting • Consumer buying comparison engine – sold to Google • Built a board game – licensed to ThinkFun • Wrote a book on being a CEO – published by O’Reilly • Built a replicator – @Glowforge – largest crowdfunding campaign EVER Investments Startups Jobs 22+ 3+ 70+ @joshmaher | #StartupWealth | #NWANGELCONF
  9. 9. What are we short on again? Entrepreneurs: Sunny Gupta Jane Park Marcelo Calbucci Sarah Bird T.A. McCann Caitlin Cameron Jeremy Jach Liz Pearce Tom Douglas Innovators: Worldly SaaS talent Rocket ship builders Carbon fiber Power storage Wireless Power Mind <–> Mind Cancer, ebola, malaria Fashion hub Companies: Alibaba Cyanogen Kineta Palantir Snapchat SpaceX Booktrope Docusign @joshmaher | #StartupWealth | #NWANGELCONF
  10. 10. Financing innovation w/angels $- $50,000 $100,000 $150,000 $200,000 $250,000 0 50 100 150 200 Deal Count Invested (thousands) @joshmaher | #StartupWealth | #NWANGELCONF
  11. 11. Who else invests? 0 50 100 150 200 250 $- $5,000 $10,000 $15,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Deal Count Invested (millions) @joshmaher | #StartupWealth | #NWANGELCONF
  12. 12. Who else invests? 0 50 100 150 200 250 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 VC Corporate @joshmaher | #StartupWealth | #NWANGELCONF
  13. 13. What do investors look for in a team? Builders Relation -ships Culture Appetite @joshmaher | #StartupWealth | #NWANGELCONF
  14. 14. appetite “…This idea of vision investing versus metrics investing, if you’re really more comfortable with metrics investing then don’t do angel investing. The early stage really isn’t going to be good for you and you’re going to be driving the entrepreneurs for all the wrong reasons. They don’t have metrics until they’re well into their business. A pure metrics investor should try to participate more in A rounds, or something like that, or syndicate behind people that are vision investors.” – Bob Bozeman @joshmaher | #StartupWealth | #NWANGELCONF
  15. 15. builders engineers scientists analysts testers writers designers managers “You really have to trust your gut instincts— ‘Are these people or is this a person I think has the ability to execute at scale?’ I think those are the two words that make a really good entrepreneur…” @gothamgal “…The other main thing is really going to be about the CEO; get a lot of blind reference checks on the CEO and really figure out whether they’re quality or not. We’ve all had a CEO flake out on us.” @cmirabile @joshmaher | #StartupWealth | #NWANGELCONF
  16. 16. relationships partners investors customers salespeople advisors mentors providers advocates fans “…Know who you’re getting in bed with, whether it’s the entrepreneurs or your angels.” @GeoffEntress “…Angel investors should be promiscuous. You should do more rather than less investments. You should do more that are smaller.” @bfeld “If you don't have an inside edge in terms of relationships, or information, or access to people or deals or exits or an industry more than other people, you shouldn't be an angel.” @msuster @joshmaher | #StartupWealth | #NWANGELCONF
  17. 17. culture @joshmaher | #StartupWealth | #NWANGELCONF scientific iterative authentic transparent fun competitive change the world improve the world fix one problem fix a many problems family oriented remote or in-person …[Don’t] invest in a vacuum, whether that vacuum is not understanding the larger ecosystem, terms, competitive landscape, and the market or simply not understanding the dynamics of angel investing.” @nickwyman
  18. 18. @joshmaher | #StartupWealth | #NWANGELCONF Softwarization - The process of software development, applied broadly Angels investing consistently Think BIGGER Appetite, builders, relationships, culture More Learning 12/8 Entrepreneurs: How to create an effective fundraising strategy http://j.mp/20VzNlN Investors: Seattle Angel Fund Bootcamp -> http://j.mp/20VzUhb
  19. 19. Where to find me? Follow me on twitter -> @joshmaher <-- Buy my book @ startupwealth.com “This should be required reading for all new angel investors. Josh captures the nuances that experienced investors only learn from decades of investing.” –Randy Williams, Founder & CEO Keiretsu Forum, The World’s Largest Angel Investor Network Subscribe to my newsletter for updates / http://joshmaher.net @joshmaher | #StartupWealth | #NWANGELCONF

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