Investing real money into startups is as risky as it is respectable.
We hold entrepreneurs and the investors that back them with their own money in the highest regard. Talking on the record about one’s experiences in angel investing can be challenging. Thank you Steve London for sharing:
What does angel investing mean to you?
Angel investing is really the chance to go along for the ride as someone tries to make their dream a reality. Our assistance might be solely monetary, but more often it’s also impartial advice, offering a different perspective on a problem and hopefully plugging the entrepreneur into a different network, all with the goal of making the entrepreneur successful.
When did you get into it and why?
A few years ago, my brother-in-law Chad and I formed Six Points Capital to use as our investment vehicle. Chad had already invested in some companies and I knew that I was interested in helping small companies in some capacity when our family moved back to Minnesota. I got involved with Gopher Angels as one of its interns and that introduced me to the great community we have in the Twin Cities. Those early connections allowed me to see that being an angel was possible and that getting involved could make a huge difference in our communities.
How many investments have you made to date and how do you?
We have 8 investments to date. We aren’t lead investors, generally invest under $100K and like to invest alongside others. Angels aren’t generally majority holders, so having groups of aligned people invested together allows our collective voices to be heard in a way investing alone doesn’t allow.
What have you learned?
It’s a cliché, but the team is really the most important thing. Things aren’t always going to go well and oftentimes the basic business model is still being tinkered with, so you have to have a committed group that can figure out the path forward in a complex situation, usually with incomplete information.
We are also invested all around the country, so deal flow becomes very important. Seeing a lot of different deals allows you to zero in more quickly on what interests you and surfaces emerging investment trends. We are members of Gopher Angels (over $7M invested over the past 3 years), which is a great local network with significant partnerships with other regional networks that allows us to see a lot of really good companies. We also see good deals through YPO, which has a robust deal network.
What advice would you have for other accredited investors?
If you are interested in becoming an angel, you have to pick a deal that you like and just do it. It doesn’t really matter what the dollar amount is – putting money at risk is the best teacher. I am positive we wouldn’t do our first investment if we could do it over, but that one allowed us to do the next 7 and continues to teach us lessons that we’ve used in our subsequent deals.
Is the anything you would like add?
In addition to the more established players in town, the Twin Cities is lucky to have two new early-stage VC funds – Matchstick Ventures, focused on tech, and Sofia Angels, focused on woman-led companies. These new entrants affirm that you don’t have to go to the coasts to find great growth companies.