My Angel Investor Checklist
Editor’s note: James Altucher is an investor, programmer, author, and entrepreneur. He is Managing Director of Formula Capital and has written 6 books on investing. His latest book he’s giving away free. He built and sold Reset, Inc in 1998 and Stockpickr.com in 2007, among others. You can follow him @jaltucher.
I know through hard experience that I’m one of the dumbest investors I know. Here are two examples: the time I cost Yasser Arafat $2 million (and lost investors another $100 million in the process) and the worst VC decision ever made (of course, it was made by me).
編集者注記：James Altucherは投資家であり、プログラマーであり、筆者であり、起業家である。フォーミュラキャピタルの担当責任者であり、投資について６冊の本を書いている。彼の最新の本は無料で配られた。他の会社とともに設立したReset, Incを1998年に、Stockpickr.comを2007年に売却した。彼のツイッターアカウントは@jaltucherである。
数々の試練を通して気付いたが、私は知る限りで自分が一番酷い投資家である。ここに二つの例がある：ヤセル・アラファトに200万ドルの損失を与えた（さらに投資プロセスの中で投資家の方々に1億ドルの損失を与えた。）のと、VCとして過去最悪の決断をしたことだ。（もちろん私の決断であるが）
編集者注： James Altucher 氏は、投資家、プログラマー、執筆家、起業家です。彼は、Formula Capitalのマネージングディレクターであり、これまでに投資についての本を6冊書きました。彼の最近の著作は、無料で読むことができます。彼は Reset, Inc. を1998年に、Stockpickr.comを2007年に、そしてその他の企業を自分で設立した後に売却しています。彼のtwitterアカウントは、@jaltucher です。
私はこれまでの辛い経験を経た上で、私は自分自身がこれまで会った投資家の中で一番まぬけな投資家であることを知っています。2つの例があります。アラファト議長に2百万ドルの損失をもたらした例(そしてその過程で投資家に1億ドルの損失をもたらしました。)、そしてこれまで最悪のベンチャーキャピタルとしての間違いを起こした例です(これはもちろん、私が犯した間違いです)。
Both happened around the same time period (2000-2001) and solidified my reputation in history as possibly the worst investor ever.
However, I learn from my experiences. After a few successful startups following that period (Stockpickr.com notably, which sold to thestreet.com in 2007) I’ve started to do more angel investing and, in doing so, have figured out a check list to help me avoid my prior mistakes. If you follow this checklist I think you can do well as an angel investor.
しかし、私は経験から学んでいます。その後にいくつかのスタートアップ企業を成功に導いた後に(特に、Stockpickr.comについては、thestreet.comに2007年に売却しました)、もっとエンジェル投資を行うようになり、そうする上で、過去にした間違いを避けるために、チェックリストを使うようにしました。もしあなたがこのチェックリストをちゃんと守ると、エンジェル投資家と同じくらいよい結果が出ると思います。
Everyone trashes angel investors but angels have one critical edge over VC investors: we don’t have to do anything. I don’t have to put any money to work ever if I don’t want to. I can pass on deals all day long. VCs, because its their job, often have a strong financial incentive to eventually (say, over a 5-year period) put money to work since they take fees on the money that’s out there. VCs also have a psychological reason to put money to work. It’s their job. So if they are doing a good job they often feel the need (for better or worse) to put money to work.
the Angel Checklist
Invest with co-investors smarter than you. I don’t invest now unless there is a co-investor going in at the same terms as me who has significantly more experience in the field as well as experience with the entrepreneurs we are investing in. I can’t give examples in each case here but with Buddy Media, for example, I went in with many successful co-investors.
Invest in CEOs who have done it before. Buddy Media is another great example. I knew Michael Lazerow because after I started Stockpickr he met with me with the possible idea to become CEO. His lock-up after selling Golf.com to Time Warner was coming to an end and he wanted something new to do.
自分より賢い共同出資者と共に投資する。自分より遥かに経験があり、投資先の起業家と同じくらいその分野で経験がある共同出資者がいなければ今は出資しない。どちらの場合においても良い例がないのだが、例えばBuddy Mediaの場合はたくさんの成功している共同出資者と投資した。
一度成功したCEOに投資する。Buddy Mediaはまたもや素晴らしい例だ。私はStockpickrを始めた後にCEOになるのに十分なアイディアを持ったMichael Lazerowに会っていたので、彼は以前から知っていた。Golf.comをタイムワーナーに売却した後の休眠期間は新しい事を始めたいという彼の思いと共に終了した。
Rather than let him be CEO, I blatantly stole all his ideas and then was lucky enough to back him in the venture he shortly thereafter started, Buddy Media. He had already done at least two successful startups so I was confident he knew what he was doing. Another example is Ticketfly where Andrew Dreskin had basically built and sold the same idea before, improved on it, and started again, and had great co-investors. BAM! I couldn’t ask for anything better.
nvest in strong demographic trends. 76 million baby boomers are retiring in the next few years. Other than the Internet (and subsidiary to that, Facebook alone) there’s no bigger demographic tidal wave happening in the United States.
Personalized medicine is quickly becoming a standard technique for diagnosing and treating the elderly on illnesses ranging from cancer to depression. I look for companies tapping into this demographic trend and co-invest with several biotech investors who have done it successfully dozens of times over. The only thing I make sure is that I get in at their terms. Else, I get back to my mantra: “I’m too stupid to determine if this is a good value for me to get into.”
Get in at a low valuation. 1-3 are often good enough. But I like the added flourish of getting a good deal. I pass on about 19 out of every 20 deals I see. Maybe I pass on more. I should keep track of the statistics, but I don’t. There’s no one way to determine if a valuation was low. Clearly Twitter was low at its first round valuation of $20 million. That didn’t seem low to me and would probably have passed if I had the opportunity. Everything depends on the size of the market, what revenues one gets, etc. Again, though, this is related to (1) above.
If I can get in where the best investors are getting in, along with other favorable terms (warrant coverage, full ratchet, favorable comps compared with other valuations in the space) then I feel like I have an edge. These deals are out there. The critical thing is sitting on your hands. Again, being an angel, I don’t have to do anything.
If you have 1-4 you almost don’t have to do anything else. If I’m co-investing with Kleiner Perkins I can usually assume their team of MBAs is hard at work doing all the due diligence for me. But often, to provide an extra layer of safety, I do my own work. And here’s the due-diligence checklist.
To be honest, this checklist is often more about giving me comfort that I did something intelligent since I don’t really expect to uncover anything new, but every now and then something pops up.
Due diligence checklist
Talk to CEO
Talk to heads of sales in each region
Talk to customers
Talk to end users (since sometimes the customers are resellers)
Do background checks on CEO, CFO, heads of sales
Talk to all of the other investors
Although my general rule of thumb is, I don’t want to have any meetings. You know the secret to a quick meeting? No chairs and no donuts. Even quicker? Just use the phone and stay at home. That’s my meeting of preference.
With the above checklist I actually think angel investors have a strong edge over “professional” venture capital investors. They have a strong network but good angels have a strong network too (particularly with the rise of companies like AngelList). And if you follow rule No. 1 and piggyback with the best venture capitalists, then it’s the best of every world.
And look, the more VCs who make money, the more I will. On top of that, I hope to God we have a pretty strong bubble. Go Groupon!
Photo credit: Alan Cleaver.
