#82 - My Angel Investing Strategy

Podcast Summary

• Becoming an Investor: Recognizing Opportunities and Taking Action: Even with limited resources, thinking of oneself as an investor and actively seeking investment prospects can lead to significant returns and success, regardless of expertise or financial capacity.

  Shaan Puri emphasizes the importance of thinking of oneself as an investor, even if financial resources may be limited at the beginning. He shares his experience of missed opportunities where he had the chance to invest in his friends' companies that eventually became successful. Puri reflects on the potential returns he could have gained if he had recognized himself as an investor and taken action. This highlights the significance of recognizing investment opportunities and having confidence in individuals and ideas. Puri's story serves as a reminder to actively seek investment prospects, trust instincts, and take calculated risks, regardless of one's level of expertise or financial capacity.

• Overcoming Financial Obstacles Through Resourcefulness and Creativity: With the right mindset and determination, you can find ways to acquire capital or resources, even if you initially lack personal funds, by leveraging your network and skills.

  If you're resourceful, creative, persuasive, and determined enough, you can find a way to acquire the capital or resources you need. This is exemplified by Shaan Puri's experience in angel investing. Initially, he felt limited by his lack of capital, but he realized that he could leverage his network and skills to secure investments in promising startups. By presenting companies to a friend who had the means to invest, Shaan struck a deal where he would receive 10% of the upside without the need for personal capital investment. This allowed him to build a portfolio of investments and gain credibility in the industry. The key lesson here is that with the right mindset and determination, you can overcome financial obstacles and create opportunities for success.

• Investing in startups: Start early, take calculated risks, and access capital.: Becoming an angel investor doesn't require wealth; start thinking like an investor from day one, find investment opportunities, approach founders directly, and be open to calculated risks.

  Becoming an angel investor and playing the high risk, high reward game of startup investing doesn't require waiting until you're rich. Start thinking of yourself as an investor from day one and find ways to access capital. There are plenty of people out there, including myself, who would love for you to bring them investment opportunities and would happily give you a share of the profits. Even young individuals can get involved. For example, a thirteen-year-old who scouted companies and sent his recommendations ended up finding a unicorn that achieved a $1.1 billion valuation. When it comes to approaching companies, it's often more effective to reach out directly to founders or makers rather than waiting for them to come to you. Additionally, investing in friends' ventures can be worthwhile. In terms of the financial commitment, an average initial investment of $25,000 into startups is realistic, but it can be done over a period of time. Overall, it's important to start early, be proactive, and be open to taking calculated risks in the world of startup investing.

• The Key Factors for Successful Angel Investing: Diversify investments, evaluate founders' expertise and dedication, and consider their track record to increase chances of achieving high returns in angel investing.

  When it comes to angel investing, diversification is key. Investing in a variety of different companies allows for favorable variations to work in your favor. Research from AngelList shows that indexing, or investing in every credible startup, tends to yield the best returns on average, much like in the stock market. When evaluating founders, it's crucial to assess their knowledge and confidence in their business. Look for individuals who have a thoughtful understanding of their industry and have already considered potential challenges. Furthermore, prioritize founders who are dedicated and focused on their venture, rather than easily distracted by side projects or splitting their attention. It's also important to ensure that founders have a realistic view of the risks and challenges they face. Lastly, considering a founder's track record of success can provide valuable insights into their potential. However, it's essential to note that successful past experiences aren't the sole indicator of future success. Overall, by diversifying investments, evaluating founders' expertise and dedication, and considering their track record, angel investors can increase their chances of achieving high returns.

• Investing in the Future: Angel Investing as a Learning Opportunity: Angel investing provides valuable insights and educational experiences by giving investors a front-row seat to the future, learning from experts, and directly experiencing the impacts of their investments.

  Angel investing is not primarily about making money, but about gaining a front-row seat to the future. While there are better ways to make money with greater certainty and liquidity, angel investing offers unique opportunities for learning about business, people, and the future. By investing in startups, you can gain valuable insights from experts who are shaping the future and learn from their updates and predictions. Moreover, having skin in the game allows you to learn through a feedback loop, where success or failure directly impacts your investment. So, even if the financial returns may not always be the highest, the education and experiential value of angel investing make it a worthwhile endeavor.