Update August 2017
Here’s a 90% complete list of angel investments, good and bad, organized below in 3 sections: funds, direct investments, and investments from AngelList syndicates. Not all show–have had some issues with my WordPress webpage, but you get the idea. At this point, on my alternative/venture investments, I’m roughly 30% direct investments, 35% managed funds, 30% cryptocurrencies and 5% AngelList syndicates.
Current status: have dramatically slowed down my direct angel investing, in my quest to simplify my management/accounting hassles. I currently am looking at investments in funds where I believe there is a built-in “unfair advantage”. Like the Bio-Innovation Fund, which backs select companies they work besides daily in the wet lab co-working space they rent out to basic science startups, and The Engine, which builds on their insider role backing promising technology out of MIT. I hope to add value via my network and experience, but frankly don’t have a lot of time to dig in deeply after my initial help making intros and connections to customers, advisors and other investors. Right now, I prefer to invest in Ethereum and Bitcoin, betting on the overall success of their protocols rather than on any one specific team. Even better, unlike private investments, it’s liquid. I’ve got a program on Coinbase to buy some ETH and BTC every 2 weeks. ETH is my biggest single investment other than the public Vanguard funds which are the foundation of my investmest strategy. I think at this point my “alternative” investments are about 1/3rd of my portfolio. The intention was smaller, but I just rolled old ones into new ones. I’ve always intended it to be <20%, but then crypto assets exploded and I’ve just been holding.
Some stats since 2009: 13 commingled funds; ~90 direct deals; and 65 syndicated deals via AngelList. Plus a weird SPV or secured asset or two. I broke down the stats earlier this year for an AMA on Growthhacker.com. Hard to say which are doing best. The AL syndicated deals seem least profitable at this point, and might not even make a profit. There are a few good companies, but no breakouts. The direct deals have an edge over managed funds, but the Techstars Boston 2011-14 fund (managed by Katie Rae and Reed Sturtevant, who also did the Project 11 funds I hold and who now manage The Engine Fund) is already marked at >10x, with 4x capital already returned and with room still to considerably improve on several big remaining winners, so who knows?
Just over ½ of the companies I’ve invested in directly (that is, not including the managed funds, limited partnerships, or AngelList syndicates) are in Massachusetts, which isn’t surprising since that is where my network is deepest. 15% are from CA, 13% from NY, 8% international, and the rest spread randomly across the United States.
Only 8% have female CEOs, and only 17% even have a female co-founder on the team. (Fortunately, the quantity and quality of female-led teams is improving, as 6 of the 13 teams in the Techstars Boston 2017 class have female CEOs.)
14% of the founders I never met in person before making the investments—half of those I talked to via videoconference beforehand, and the other half was me simply going along blind with trusted friends who were investing and had done the diligence.
About 2/3rds of the teams were led by first time CEOs, but almost every team had either deep domain expertise or significant relevant prior business experience. I’m guessing—no stats here—about 10% of the CEOs were 25 or under, and 80% between 25 and 40 years old. This in spite of me not starting my first company until I was 45. About 1/3rd of my direct investments come out of places where I mentor (Techstars, Harvard, MIT, MassChallenge), and the majority come to me recommended from either trusted co-investors or previous portfolio companies. As a rule, if a CEO exits and makes me money, I will always back them on their next venture.
Mirroring the basic American story, A LOT of investments (including my top 3) came with a founder or CEO with a compelling immigrant story and incredible work ethic. It’s certainly higher than the population at large. If you have any further questions about the breakdown, drop a note and I’ll dig up the data.
Final thoughts–1) even with the high number of investments made with my “spray and pray” philosophy, there’s not enough data to draw conclusions. A few things are for certain–luck is the primary factor. I’ve had a fair amount of holdings with modestly successful exits to places like LinkedIn, Amazon, and Google. But two of the top three results to date came from acquisitions for company stock…which just happened to be at AirBnB and Twitter, which turned 2-5x exits into 20x+ exits, and those are the exits that change everything.
2) I don’t seem to be getting better at picking them, as my returns seem to have been best when I was still relatively new to angel investing (although I’ve been managing investments for 35 years.) My hope is that that period of time was when I had no other job and could throw myself into it with full focus and energy. In 2011 I also had a thesis about mobile software that panned out. But Occam’s Razor may suggest that I’m just losing brain cells and the intuition of what is the next big thing. We’ll find out if my spider sense still tingles or not–I’m all in on blockchain, especially for fintech applications., and I’m only focused on that. Fingers crossed.