Two New Investments, Now It’s Time to Start the Diet

I’m delighted to let people know that I’m investing in Ordr.In and  Ordr.In produces a suite of APIs looking to unify the food delivery business (and a TechStars NY Summer 2011 company), while helps physicians make sense of all of the electronic health record choices they need to making. And both are firmly in my 65% jockey, 35% horse way of evaluating companies.

As I said in my post “The Next Eight Months“, for the last two years I’ve been sticking to a top-down, hopefully disciplined, strategy having made around 30 angel investments. Now I only expect to do maybe 1-2 more investments this fall other than the existing commitments made which haven’t yet funded. While many expected a run-up in valuations this summer, I’m baffled that valuations have soared so much in the 4 months since I wrote that post in spite of lower public stock markets, and I found that I’ve recently broken my resolution not to go above $4mm market valuation for seed rounds. So make that one more reason for me to be edging towards the sidelines.

I’m also reluctantly minimizing my involvement with new companies and introductions for a bit. Why? Dharmesh Shah wrote about it better than I could in his article “Dear Friend: Sorry. My  Heart Says Yes, but my Schedule Says No“. Just have to get through the backlog…yes, I still haven’t finished income taxes for 2010, as an example, I’m moving houses, and I’ve got to start getting things back under control.

But back to market conditions.My favorite move by a startup: raising lots of cash while the going was good. A prime example are the guys at Kinvey. While they had raised $1mm from Atlas Investors already, they took advantage of that momentum at TechStars Boston DemoDay to haul in another $1mm for future rainy days. As Mark Suster says, “When they pass around the hors d’oeuvres tray, take 2 and put a 3rd in your pocket.”

If things are too rich to be buying, that means it is a good time to be selling. I have one big idea related to that, but it will take some time to see what can be pulled off. Watch this space.

In the meantime, I’m considering the advice of Joe Caruso of Bantam Group, an experienced, wise and successful angel, who I spoke to earlier this week. He had two pieces of advice, both of which any angel would be wise to heed. First, never totally sit out a dance. If you stop being active and only say no, your deal flow dries up, and it’s hard to re-start it.  Second, while you don’t stop investing, you can cut down on the amount you invest. As he put it, “25k is the new 50”.

Stay active, but stay cautious. Let’s hope for a soft landing, and a return to valuations reasonable to both entrepreneurs and investors.

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