Have any other investors posted similarly concrete perspectives/guidelines? I've seen some fluffy PR ones on VC sites, but never anything this clear or honest.
Does anyone have links to good ones? Will any additional angels write up their own?
Thanks for this, Gabriel. Very interesting/helpful.
It seems like this investment thesis(low valuation, not in the bay area, willing to give up a board seat) is aimed at investing in second-tier startups. It would be interesting to contrast this strategy with that of most other investors, who are actively trying to fund the best/category leader startups.
I'm not interested in second-tier startups, and I disagree with your premise that those things equate to second-tier startups. It all depends when you get involved. And FWIW I'm no longer interested in board seats though I think they are completely misunderstood by first-time entrepreneurs and it is good to have an active investor (hence party rounds suck). As for valuations, the key is ownership %. You can get there a number of ways (put more money in, advising relationship, etc.), but if you are super early you can also get there with a low valuation (and I'd argue it makes sense since the risk is much higher).
"Not in the Bay Area" strongly implies "low valuation" for a variety of reasons. #1 on the list is the lack of competition by overfunded VCs throwing cash at startups, driving up valuations. Since an investor's returns are strongly influenced by entry price, investing in the Bay Area raises a higher hurdle for exits than similar deals elsehwere.
Outside the Bay Area, since it's harder to get VC funding for even good companies, fundable ideas are more likely to be "real" companies. Outside the Bay network it's going to be impossible to flip a photo site for 9 or 10 figures, but there are always buyers for profitable & growing tech businesses.
It's likely that investing outside the Bay Area is a competitive advantage for investors of all sizes.
2x liquidation preference and a board seat for someone only putting in $25k? Seems a bit heavy handed (though he says he is moving away from those terms now).
Sorry, you misunderstood. Not for me by myself but for the whole Series Seed syndicate. I only put in $25K but I generally helped put together ~300K for the company.
I'd like some advice if you have any. I am a 23 year old living in Austin, Tx. I am writing a business plan in hopes of getting backing but im not really sure how to find interested parties. How did you go about deciding on your ventures?
Does anyone have links to good ones? Will any additional angels write up their own?
Thanks for this, Gabriel. Very interesting/helpful.