FiBAN - Art of angel investing by Bill Reichert

Bill Reichert Managing Director

Garage Technology Ventures

The Art of Angel Investing

FiBAN

September 20,2012

Top Ten Myths of Angel Investing

Myths of Angel Investing

“Invest in what you know.” 1 Reality: Most winners are black swans

Myths of Angel Investing

“Focus on making money.” 2 Reality: Need to focus on creating value.

Myths of Angel Investing

“The key is good due diligence.” 3 Reality: The key is good intuition

Myths of Angel Investing

“Don’t let emotions cloud your decision.” 4 Reality: Recognize your emotions; don’t deny them.

Myths of Angel Investing

“Build consensus among a syndicate of investors.”

5 Reality: Controversial investments do better

Myths of Angel Investing

“Success comes from adding value.” 6 Reality: The harder you work, the less successful the startup

Myths of Angel Investing

“Make sure you protect yourself.” 7 Reality: Keep it simple; don’t invest if you are worried about control.

Myths of Angel Investing

“Valuation is important.” 8 Reality: Shared expectations are more important.

Myths of Angel Investing

“It’s cheap to start a company now.” 9 Reality: It’s really expensive to build a successful company.

Myths of Angel Investing

“Diversify your portfolio.” 10 Reality: Make few big bets, and buy options in several others.

Other Tips . . .

•  Your influence is not based on the size of your check

•  Buy high, sell higher; there’s no such thing as a bargain in venture capital

•  Don’t chase fads; once a sector is hot, you are probably too late

Other Tips . . .

•  Monitor the “Surprise Ratio”: Positive surprises to negative surprises

•  Lower expectations do not result in higher returns

•  Learn from your mistakes; better yet, learn from the mistakes of others

Bill Reichert reichert@garage.com

The Art of Angel Investing