GSF Angel Investing MasterClass - Mar'23

GSF Angel Investing MasterClass - Mar'23

@amitranjan
@amitranjan
37 Followers
3 months ago 396

Slides accompanying my talk at the GSF Angel Investing Masterclass (March 2023)

GSF Angel Investing MasterClass - Mar'23

@amitranjan3 months ago

GSF Angel Investing MasterClass

Mar ' 23

                        Background

                        • · Tech entrepreneur (SlideShare → IndiaStack)
                        • · SuperAngel / Expert in angel investing?? Not really!
                        • - Learning a new skill by trial/error

                                              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)

                                                                    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 -ItForward'

                                                                                          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

                                                                                                                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

                                                                                                                                      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

                                                                                                                                                            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'

                                                                                                                                                                                  Funding Criterion

                                                                                                                                                                                  Market

                                                                                                                                                                                  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 )?

                                                                                                                                                                                                        Valuation Focus?

                                                                                                                                                                                                        'You succeed in venture capital by backing the right deals, not by haggling over valuation'

                                                                                                                                                                                                                              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?

                                                                                                                                                                                                                                                    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

                                                                                                                                                                                                                                                                          Thanks

                                                                                                                                                                                                                                                                          https://twitter.com/amitranjan https://www.linkedin.com/in/amitranjanprofile/

GSF Angel Investing MasterClass
Mar’23
1/13
Background
• Tech entrepreneur (SlideShare → IndiaStack)
• SuperAngel / Expert in angel investing…
2/13
Rationale for Angel Investing?
• Startups have been life changing for me… pay it forward!
• Learn…
3/13
Why Angel Invest – three types of decisions!
• Return/IRR focused deals (80%)
• “GuruDakshina”
―…
4/13
Angel Journey
• Started 2015-16 
• Angel investing is a side hustle, doing it part time (can’t de…
5/13
Sectors in Focus
• Startup landscape is broad, you must aim for a “Circle of Competence”
• Machin…
6/13
Angel Deal sourcing
• 50% Direct deals
• 50% Syndicates (or other pooled vehicles)
Dynamics / Li…
7/13
Deal Construct
• Preferably 2-3 members founding team
• Pedigree vs Raw talent
― “Pedigree excel…
8/13
Funding Criterion
Qualifying questions 
• Is the timing right (any inflexion points)?
• Evidence…
9/13
Valuation Focus?
“You succeed in venture capital by backing the 
right deals, not by haggling ove…
10/13
Pitfalls / Mistakes
• Founders “circle of competence” is key success factor
• Struggle to give fo…
11/13
Suggestions to other angels
• Develop your area of competency – Be good at something that lies in …
12/13
Thanks
https://twitter.com/amitranjan
https://www.linkedin.com/in/amitranjanprofile/
13/13


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