Investing real money into startups is as risky as it is respectable.
At TECHdotMN, we hold entrepreneurs and the investors that back them with their own earned cash in the highest regard.
Publicly going on the record about one’s early experiences in angel investing can be intimidating. Thank you Tim Huebsch for sharing:
What motivated you to get into startup investing?
Originally, the spark was the Minnesota Angel Tax Credit. I have had a passion for technology and business for many years so this was a great way to explore a new investment area while learning more about my community.
What action steps did you take?
The first thing I did was immerse myself in the tech startup community. I looked for as many events, gathering spots and information sources as I could find and committed to attend each event I found at least once. Some of the best include: MinneBar, Startup Weekend, TECHdotMN, Angel Polle Nation, Minnesota Cup, CoCo, Minneapolis St. Paul Business Journal and TIE Minnesota.
I was blown away by how vibrant the startup community is in Minnesota and how much it has evolved even in the last 5 years. Over this time I have made countless connections and many lifelong friends. In addition to just plugging into the community, I also reached out to some of the long time angel investors in the Twin Cities and they were extremely gracious to meet over coffee to help me learn what to look for and the questions I needed to ask from an investment standpoint.
Overall, it took me about 18 months to get into the community and build a background where I was confident that I was able to understand the process and the startup ecosystem. A person could certainly do it faster but I really enjoyed getting to understand the dynamics of the community, meet many startup founders and connect with other young angel investors where we could learn together.
How many investments have you made to date and how?
I have completed 3 investments individually and am now a partner with Matchstick Ventures who is building an investment portfolio of early stage companies.
What have you learned?
A lot – A good investment has both great people and a great idea. If I have to bet on just one, it will be the people as the ideas will morph and evolve many times as it comes to market. You have to ask many questions and get a good sense you are aligned with the founder(s) vision — It is great for a founder to want to build a business that they will run for many years but if they don’t have a potential exit strategy, it is hard for an investor to get their money back. Overall I look for founders who have a passion for their space, can clearly articulate the benefits for their customers and understands their business model.
What advice would you have for other accredited investors?
Find others who are passionate and interested in learning — Be curious and plug into the community to see the amazing things happening all around us. Don’t feel the need to invest in the first company that you see – It is perfectly fine to say no to opportunities, you have to understand it and feel good about it. Most importantly, only use investment dollars that if you lose completely, it would not impact your lifestyle.
Personally, the experience of getting involved in the startup community has been outstanding – As a manager in a large Fortune 500 company [General Mills], plugging into the startup community has made me a much better leader who can help the organization think more entrepreneurially, bring new ideas into the organization and make amazing connections.