GSF Angel Investing MasterClass - Mar'23

    GSF Angel Investing MasterClass - Mar'23

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    @amitranjan
    40 Followers
    8 months ago 607

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    Key Insights

    GSF Angel Investing MasterClass
Mar’23
    1/13
    Background
• Tech entrepreneur (SlideShare → IndiaStack)
• SuperAngel / Expert in angel investing?? Not really!
- Learning a new skill by trial/error
    2/13
    Rationale for Angel Investing?
• Startups have been life changing for me… pay it forward!
• Learn vicariously from other smart, ambitious people
• Money needs a more productive use than banks, MFs
✓Generate alpha over public markets (ROI expectancy)
    3/13
    Why Angel Invest – three types of decisions!
• Return/IRR focused deals (80%)
• “GuruDakshina”
― learn about new, upcoming sector
― think paying tuition fees for learning 
• “Be a Good Samaritan” or “Pay-It-Forward”
    4/13
    Angel Journey
• Started 2015-16 
• Angel investing is a side hustle, doing it part time (can’t devote a lot of time/attention) 
• Over 40 startups – 80% seed/angel, 20% Series A
• Don’t lead (or take board seats), but available to founders as they want
• 30% mortality, 20% at par returns, rest 50% in the game
• Don’t actively track IRR based on MOIC (paper money!), but likely to beat public mkt returns
    5/13
    Sectors in Focus
• Startup landscape is broad, you must aim for a “Circle of Competence”
• Machines give mechanical advantage, Software gives leverage 
• Thumb Rule for software business
✓Marginal cost of production tends to zero (diminishing marginal cost) 
• SAAS, Consumer, Fintech, HealthTech, Edtech – where software plays 
pivotal role
• Accept what you don’t know – e.g. lending startups
    6/13
    Angel Deal sourcing
• 50% Direct deals
• 50% Syndicates (or other pooled vehicles)
Dynamics / Life Cycles of above two are very diff
• Syndicates - remote, no touch, passive, non-engaging (almost like mutual funds 
investing, or index investing)
• Direct deals - High touch, “get into the trenches” with founders, high emotional 
involvement
    7/13
    Deal Construct
• Preferably 2-3 members founding team
• Pedigree vs Raw talent
― “Pedigree excels at what they’re told to do, raw talent excels at what they were not told to do”
• Approach - “Bottoms Up” v/s “Top Down”
• Opportunity - “Blue Ocean” v/s “Red Ocean”
    8/13
    Funding Criterion
Qualifying questions 
• Is the timing right (any inflexion points)?
• Evidence of traction or momentum (Startups live/die by the shape of their growth curve!)?
�• Does team “get” distribution (their secret sauce)?
• Is team stingy & capital efficient?
• Are they hustlers & relentlessly resourceful?
• Did the demo impress (can they actually build)?
Team
Market Product
    9/13
    Valuation Focus?
“You succeed in venture capital by backing the 
right deals, not by haggling over valuation”
    10/13
    Pitfalls / Mistakes
• Founders “circle of competence” is key success factor
• Struggle to give founders behavioural / attitudinal feedback
• Not leading deals sometimes is a disadvantage
• Timing the exit?
    11/13
    Suggestions to other angels
• Develop your area of competency – Be good at something that lies in 
critical path of startup success
• Develop ability to independently evaluate people, business or 
technologies. Depending on network, social proof/signal isn’t always 
a good idea
    12/13
    Thanks
https://twitter.com/amitranjan
https://www.linkedin.com/in/amitranjanprofile/
    13/13

    GSF Angel Investing MasterClass - Mar'23

    • 1. GSF Angel Investing MasterClass Mar’23
    • 2. Background • Tech entrepreneur (SlideShare → IndiaStack) • SuperAngel / Expert in angel investing?? Not really! - Learning a new skill by trial/error
    • 3. Rationale for Angel Investing? • Startups have been life changing for me… pay it forward! • Learn vicariously from other smart, ambitious people • Money needs a more productive use than banks, MFs ✓Generate alpha over public markets (ROI expectancy)
    • 4. Why Angel Invest – three types of decisions! • Return/IRR focused deals (80%) • “GuruDakshina” ― learn about new, upcoming sector ― think paying tuition fees for learning • “Be a Good Samaritan” or “Pay-It-Forward”
    • 5. Angel Journey • Started 2015-16 • Angel investing is a side hustle, doing it part time (can’t devote a lot of time/attention) • Over 40 startups – 80% seed/angel, 20% Series A • Don’t lead (or take board seats), but available to founders as they want • 30% mortality, 20% at par returns, rest 50% in the game • Don’t actively track IRR based on MOIC (paper money!), but likely to beat public mkt returns
    • 6. Sectors in Focus • Startup landscape is broad, you must aim for a “Circle of Competence” • Machines give mechanical advantage, Software gives leverage • Thumb Rule for software business ✓Marginal cost of production tends to zero (diminishing marginal cost) • SAAS, Consumer, Fintech, HealthTech, Edtech – where software plays pivotal role • Accept what you don’t know – e.g. lending startups
    • 7. Angel Deal sourcing • 50% Direct deals • 50% Syndicates (or other pooled vehicles) Dynamics / Life Cycles of above two are very diff • Syndicates - remote, no touch, passive, non-engaging (almost like mutual funds investing, or index investing) • Direct deals - High touch, “get into the trenches” with founders, high emotional involvement
    • 8. Deal Construct • Preferably 2-3 members founding team • Pedigree vs Raw talent ― “Pedigree excels at what they’re told to do, raw talent excels at what they were not told to do” • Approach - “Bottoms Up” v/s “Top Down” • Opportunity - “Blue Ocean” v/s “Red Ocean”
    • 9. Funding Criterion Qualifying questions • Is the timing right (any inflexion points)? • Evidence of traction or momentum (Startups live/die by the shape of their growth curve!)? • Does team “get” distribution (their secret sauce)? • Is team stingy & capital efficient? • Are they hustlers & relentlessly resourceful? • Did the demo impress (can they actually build)? Team Market Product
    • 10. Valuation Focus? “You succeed in venture capital by backing the right deals, not by haggling over valuation”
    • 11. Pitfalls / Mistakes • Founders “circle of competence” is key success factor • Struggle to give founders behavioural / attitudinal feedback • Not leading deals sometimes is a disadvantage • Timing the exit?
    • 12. Suggestions to other angels • Develop your area of competency – Be good at something that lies in critical path of startup success • Develop ability to independently evaluate people, business or technologies. Depending on network, social proof/signal isn’t always a good idea
    • 13. Thanks https://twitter.com/amitranjan https://www.linkedin.com/in/amitranjanprofile/


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