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How to be an angel
Naval Ravikant

- Serial entrepreneur (Epinions, Vast…)

- Investor (Twitter, SocialMedia,
  Mimosa, ~30 others)

- Advisor (XFire, Mercantila…)

- Venture Hacks
What do you need to be an Angel?

- Access to capital

- Proprietary dealflow

- Good judgement
Dealflow

Bad

- Social friends are usually the worst source

- Don't forward deals you wouldn't do

- Non-standard models lead to adverse
  selection; don’t be an incubator, a chairman

Good

- Other angels, quid pro quo

- Brand your advisory services
Pitches

- No business plans, exec summaries,
  NDAs

- A high-concept pitch, elevator pitch,
  and demo is all you need

- Maybe a 10-slide deck

- 20 minute pitch; listen, don't talk
Evaluating Startups: Team

- Invest in teams of 2-3 founders; five is
  unstable, one is too hard

- Best combination is one founder who can
  sell and one founder who can build

- No to teams with all business guys or
  lawyers, or outsourced development

- Team matters more in enterprise deals,
  traction matters more in consumer deals

- Intelligence, energy, and integrity
Evaluating Startups: Customers et al

- Ignore all companies that have not made early
  and meaningful contact with their customer

- On the Web, this means the product has been
  released



- Look at 20 companies before you make your
  first investment; 100:1 is a good ratio

- Find a thought-partner and give him/her an
  effective veto
Saying No

- Say no fast, over email before you meet

- Say no at the meeting; when in doubt, say no

- Don't use more than 2-3 hours of the
  entrepreneur's time or 2 weeks of yours

- Only invest in people you’re excited about

- Swings you don’t make don’t count against
  you

- Try to add value at every meeting
Saying Yes: Terms

- Biggest risk is downstream financing, try to
  invest with VCs
- Give them rights to invest in the next round so
  they don’t drive up the valuation in this one


- Capped convertible debt or priced equity

- Investing with groups of angel leads to better
  decisions and keeps entrepreneurs honest
- No board seats
- Seed investors buy 5%-20% of the company
Economics

- Don't do this to make money because you
  probably won't

- Even if you have a fund (goodbye carried-
  interest)

- You're a patron of innovation

- Assume your investments are lost on the day
  you make them

- Balance your portfolio with ultra-safe
  investments
✌
    venturehacks.com
twitter.com/venturehacks

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How to be an angel investor

  • 1. ✌ How to be an angel
  • 2. Naval Ravikant - Serial entrepreneur (Epinions, Vast…) - Investor (Twitter, SocialMedia, Mimosa, ~30 others) - Advisor (XFire, Mercantila…) - Venture Hacks
  • 3. What do you need to be an Angel? - Access to capital - Proprietary dealflow - Good judgement
  • 4. Dealflow Bad - Social friends are usually the worst source - Don't forward deals you wouldn't do - Non-standard models lead to adverse selection; don’t be an incubator, a chairman Good - Other angels, quid pro quo - Brand your advisory services
  • 5. Pitches - No business plans, exec summaries, NDAs - A high-concept pitch, elevator pitch, and demo is all you need - Maybe a 10-slide deck - 20 minute pitch; listen, don't talk
  • 6. Evaluating Startups: Team - Invest in teams of 2-3 founders; five is unstable, one is too hard - Best combination is one founder who can sell and one founder who can build - No to teams with all business guys or lawyers, or outsourced development - Team matters more in enterprise deals, traction matters more in consumer deals - Intelligence, energy, and integrity
  • 7. Evaluating Startups: Customers et al - Ignore all companies that have not made early and meaningful contact with their customer - On the Web, this means the product has been released - Look at 20 companies before you make your first investment; 100:1 is a good ratio - Find a thought-partner and give him/her an effective veto
  • 8. Saying No - Say no fast, over email before you meet - Say no at the meeting; when in doubt, say no - Don't use more than 2-3 hours of the entrepreneur's time or 2 weeks of yours - Only invest in people you’re excited about - Swings you don’t make don’t count against you - Try to add value at every meeting
  • 9. Saying Yes: Terms - Biggest risk is downstream financing, try to invest with VCs - Give them rights to invest in the next round so they don’t drive up the valuation in this one - Capped convertible debt or priced equity - Investing with groups of angel leads to better decisions and keeps entrepreneurs honest - No board seats - Seed investors buy 5%-20% of the company
  • 10. Economics - Don't do this to make money because you probably won't - Even if you have a fund (goodbye carried- interest) - You're a patron of innovation - Assume your investments are lost on the day you make them - Balance your portfolio with ultra-safe investments
  • 11. venturehacks.com twitter.com/venturehacks