The document discusses common misconceptions or "white whales" that angel investors often pursue, such as chasing disruptive technology claims, believing there is no competition, expecting high IPO outcomes, seeking 100x returns, continuing to invest in failing companies, and not learning from past mistakes. It provides advice for angel investors to do thorough due diligence on technology and markets, understand alternative options and competition, focus on building strong companies and viable business models over lofty exit expectations, diversify their investment portfolios, and avoid repeating past investment errors.

1. “Moby-Dick; or, The White
Whales of Angel Investing”
In Herman Melville’s
“Moby-Dick”, Captain
Ahab was chronicled on
his relentless pursuit of the
white whale, “Moby-
Dick”. To his eventual
demise, Ahab pursued the
“White Whale”…
Are angel investors, other
early stage investors and
even entrepreneurs, equally
possessed in the chase of
their “White Whales”?
“Call me Ishmael” and
let’s pursue some of the
“White Whales” of early
stage investing…
“White Whales of Angel Investing”
©2011 Tech Coast Angels

2. A White Whale: “Disruptive Technology”
“White Whales of Angel Investing”
©2011 Tech Coast Angels

3. A White Whale: “Disruptive Technology”
 Clayton Christensen’s book “Innovator’s Dilemma”:
…really becomes the “Investor’s Dilemma”.
 Many companies claim “disruptive technology”…
…few companies deliver “disruptive technology”.
 Do “disruptive due diligence”: research technology
and market – become comfortable with assumptions.
“White Whales of Angel Investing”
©2011 Tech Coast Angels

4. A White Whale: “No Competition”
“White Whales of Angel Investing”
©2011 Tech Coast Angels

5. A White Whale: “No Competition”
 There’s always other fish in the ocean.
 If not direct competition, a “substitute”?
 Investors should welcome competition…
…it shows there is an existing market.
“White Whales of Angel Investing”
©2011 Tech Coast Angels

6. A White Whale: “The IPO”
“White Whales of Angel Investing”
©2011 Tech Coast Angels

7. A White Whale: “The IPO”
 Initial Public Offerings are very few.
 Most start-ups won’t scale to IPO.
 Merger or acquisition: most likely exit.
 Focus on business model and growth.
 “Great Exits” find “Great Companies”.
“White Whales of Angel Investing”
©2011 Tech Coast Angels

8. A White Whale: “The 100X return”
“White Whales of Angel Investing”
©2011 Tech Coast Angels

9. A White Whale: “The 100X return”
 Most exits are small; failure is common.
 Investment portfolio increases odds.
 Pursue great teams, big ideas, big markets.
 This “whale” can be elusive, but then
again…“Lightning does strike somewhere.”
“White Whales of Angel Investing”
©2011 Tech Coast Angels

10. A White Whale: “Good money, after Bad…”
“White Whales of Angel Investing”
©2011 Tech Coast Angels

11. A White Whale: “Good money, after Bad…”
 Bad investments generally remain “bad”.
 This “Whale” consumes capital ($).
 Remove emotion, re-evaluate business.
 Ahab’s lesson: Mistakes happen…
… learn from them, don’t repeat them.
“White Whales of Angel Investing”
©2011 Tech Coast Angels

12. Who are the Tech Coast Angels?
A is for Angel
Tech Coast Angels, www.techcoastangels.com, the largest angel investor
network in the United States, provides funding and guidance to more
early‐stage, high‐growth companies in Southern California than any other
An angel investor is typically a
investment group. Since its inception in 1997, TCA members have focused on
building valuable companies, personally invested more than $100M, and
helped portfolio companies attract more than $1B in additional capital, mostly
wealthy private investor who
from venture capital firms.
invests their own money in
TCA members give companies more than just capital; they also provide
counsel, mentoring and access to an extensive network of potential investors,
private companies called
customers, strategic partners and management talent.
TCA has more than 300 members, including its venture capital affiliates, in five
“startups”.
networks in Los Angeles, Orange County, San Diego, Westlake/Santa Barbara
and the Inland Empire.
“White Whales of Angel Investing”
©2011 Tech Coast Angels