

Ask HN: best way to (indirectly) invest in a startup via angel/seed fund? - damien7579

Background of question:<p>I am in the fortunate position of recently exiting a business I co-founded in 2002 in the UK healthcare technology sector that sold to one of the top 3 US healthcare companies and I'm now on a short sabbatical to look at new opportunities and try new things - such as angel investing.<p>I remember one of the hardest problems we faced in the early years of my business was not technical related but fund raising as you would expect (obviously harder then due to domcom afershocks etc). So now, 8 years later, other than starting another company (or even joining another startup!), I also want to give back and invest in other startups but as I have only invested in my own I don't believe I yet qualify to be an direct angel investor as other than money I'm not sure what extra value I could bring as I mainly have very specific domain knowledge in UK primary care healthcare sector (I’m have a techie/developer background) and have limited connections outside this field.<p>In my research I have found places like angellist and startup funds like http://www.kimaventures.com/ but my question is how does one invest into a seed or angel fund as there is little or no information about how to go about it - it seems that either you know someone in this area or your outta luck? There is plenty of info on how to raise funds from angels and angellist describes an angels application requirements (3 previous investments for example) so how to do I get out of this (apparent) chicken and egg problem?<p>Has anyone on HN got experience in this particularly from the UK/EU that can input - like what angel funds in the EU/US are open to newbie angel investors.<p>I also think I would rather invest in US based startups unless others can recommend otherwise.<p>Appreciate any feedback on this topic. Thanks.
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angel1234
Way of the future may be sidecar funds that are for passive investors
interested in angel investments. The sidecar fund invests automatically in all
the deals of the angel group to which it is attached. This is a good way for
the angel group to be assured of committed capital - especially during
economic downturns where members may be less free with cash - and also allows
external investors to achieve a diversified exposure to start up investments
with a relatively small capital commitment. This is a good way for newbie
angels to learn more about the angel group and their investment process - and
if they like they may later choose to join the group and become more active
"mentor" investors.

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damien7579
Interesting concept and sounds like a good way to start as a newbie angel
investor.

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iuguy
Have you had a look at these (not that I'm recommending, but might be worth a
look)?

<http://www.angelinvestmentnetwork.co.uk/home> <http://www.venturegiant.com/>
<http://www.angelsden.co.uk/>

I believe Business Link also run a similar scheme but I generally stay well
clear of them, I've yet to see anyone from Business Link try to do anything
other than sell me more Business Link stuff I don't need.

Best of luck.

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damien7579
Thanks for the links - I came across those during my research and they all
seem to links angels to entrepreneurs/companies looking for investment. I am
more interesting in seed/startup/angle funds that pick the companies to invest
in during the early startup phase.

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iuguy
Whereabouts are you? If you're in the south, drop me an email and lets meet up
for coffee sometime. I'm not averse to investing in the right opportunity
either - might be a good idea to knock our heads together and see what comes
out.

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bootcampdk
I'm obviously biased here but I think a great way for you to get your hands
dirty would be to invest in an accelerator, such as (plug alert!)
Startupbootcamp or The Difference Engine or Tetuan Valley or a number of
others.

By invest I mean either time (as a mentor) or money (as an investor in the
accelerator itself) or both.

You get to be involved in 10 early stage startups, but you are not alone. You
can follow their progress as they get input from dozens of super star mentors.
It's actually an awesome due dilligence process as you get to see which teams
are great at generating traction.

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jeffepp
Funds are always looking for Limited Partners. You may be able to learn this
way while also investing...

Shoot me an email if you are interested -- I know a few Seed stage funds
looking for LP's.

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adaml_623
Can I ask a question back? You were obviously in a UK startup. Why don't you
want to invest in the UK?

Not judging here. Just curious as I'm scoping out the startup 'scene' in
London.

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damien7579
Good question: Yes I was in a UK startup. I feel that the risk adverse
nature/attitude we came across significantly impedes innovation in the UK
(remember this is in my experience and this was around 2001-2005). I believe
we had to work harder to overcome this and this took focus away from our core
activities at times. We often found no one was willing to invest unless you
had 5 years of track record and £1mill/yr turnover and if you where doing
something disruptive (like we were) and innovative in a new market, then it
was even harder. So I guess I feel there is more chance that good startup WITH
cash will fail due to being crushed by this problem. Plus I think the US is
known for its better startup fostering nature and work ethic as suggested in
this article. [http://eu.techcrunch.com/2009/11/20/european-startups-
need-t...](http://eu.techcrunch.com/2009/11/20/european-startups-need-to-work-
as-hard-as-valley-ones-or-forget-it/)

Wooly reasons but having said all that, times have changed and I'm not against
UK startups at all, I would just like to look at US ones first... I suppose if
a UK startup was doing something disruptive in healthcare I might be more
interested!

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adaml_623
So your point is that even if you can get the Angel cash in the UK you'll face
larger hurdles in the later stages compared to the US.

And I think you have a point about the risk adverse nature of Brits.

Thanks for the answer. Wish I had an answer to your question :-)

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damien7579
Good summary of my waffle ;) I suppose the stats of startups making it out of
the 5th year is appalling. Less than 10% as I recall which may be similar to
US but every extra hurdle in the way doesn't help either! Plus US markets are
generally larger so ROI is bigger for similar risk profile at a guess.

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victorp
You can try angel networks.

Angels join networks that search and filter investment opportunities, and the
angels choose to co-invest if there's a match.

The largest one in the US is Tech Coast Angels.

I work in an angel network, based in Chile, with angels/dealflow from abroad.
For example, right now we are closing a round in a medical devices startup in
San Francisco, where 4 angels (two in Chile, one in Mountain View and on in
Spain) are co-investing using convertible notes.

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angel1234
Don't know about US/UK but in Australia the government has set up Early Stage
Venture Capital LP structure to encourage investment in innovation.
Investments via these structures are income and capital gains tax free. Here
is link to news story regarding sidecar fund linked to Sydney Angels
<http://t.co/RoicITs>

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ig1
Maybe find a US angel group investing in primary care solutions, your
expertise in the UK market would probably be quite valuable to their portfolio
companies looking to expand abroad.

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known
<http://angel.co/>

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damien7579
Thanks for the link to angellist - something I aspire to join but as I said in
my post, you have to be approved to get listed and one of the requirements is
you're not a newbie - you must have connections to other angels - in fact you
must be referred by another angellist angel and have invested at least 3 times
before. This was revealed in this great interview with one of the angel.co
founders: [http://www.danielodio.com/2010/10/21/fundraising-hacks-
inter...](http://www.danielodio.com/2010/10/21/fundraising-hacks-interview-
with-naval-ravikant-of-angellist/)

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tomfakes
I'm in a very similar position - done an exit, taking some time off, have some
money to invest.

I have yet to find a group that doesn't advertise that they need experience. I
would guess that some of them would bend this rule if you got in touch and
networked with them and their current members and they decided you were of
sufficient quality to be allowed into the club.

We should start a 'newbie angels' group where we kick you out after you've
done 3 investments!

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damien7579
I like it :)

drop me a message offline (see my profile) perhaps we can share our research?

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dawson
Hi, please send me an email dawson @ nhs .info

