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Moneyball: A Quantitative Approach to Angel Investing (Austin, TX - Aug 2012)
500.co/challenge #moneyball4startups 500 CHECKLIST Product
solves a problem for a speciﬁc target customer Capital-efﬁcient businesses - operational @ <$1M funding Primarily internet-based distribution - search, social, mobile, local Simple revenue models - transactions, subscriptions or afﬁliate Functional prototype before investment (or previous success) Small but measurable usage - some customers, early revenue Small but cross-functional team - engineer, design/UX, marketing
500.co/challenge #moneyball4startups STATE OF THE
ART IN EARLY STAGE INVESTING IS NOT VERY SOPHISTICATED AT THE EARLIEST STAGE, YOU HAVE LIMITED DATA TO MAKE DECISIONS WITH -- BETTER TO LOOK FOR DEAL FLOW VIA TRUSTED REFERRALS, USE A CHECKLIST, DECIDE YES/NO QUICKLY AND KEEP LEGAL/FINANCE SIMPLE.
500.co/challenge #moneyball4startups FAILURE RATES ARE
HIGH DIVERSITY OF HIGH VOLUME INVESTING ALLOWS FOR HIGH ERROR RATE. FUND IRR QUICKLY POSITIVE WITH SMALLER, EARLY EXITS AND PROMISING DEALS GETTING FUNDED. DILIGENCE HAPPENS IN THE REAR VIEW MIRROR, NOT THE CRYSTAL BALL.