Are startups a smart investment option?
Fundraising Oct 14, 2018
If you ask most angel investors, they’ll say that startups are probably one of the riskiest things you can put your money into, but when they go big they can go really big. There’s a a really great book by one of my mentors Jason Calacanis called Angel. It’s all about angel investing. And he really walks you through how to do it from both a strategic and tactical level. Jason was very early in the Uber round and invested in other companies such as Robinhood, Thumbtack & Cafe X as well as my last company, Votion.
Jason runs the LAUNCH Incubator that I’ve been lucky enough to bring two companies through, and he’s a fantastic adviser & investor. His whole premise is that you want to distribute your capital among a bunch of small investments, with the mindset that most are going to fail and you’re going to lose your money, and maybe 1 out of 10 will give you some sort of return on your capital and maybe 1 in 100 or 200 you will do amazingly well with. And so if you’re a very wealthy individual, and you’ve got a lot of capital to play with, you can take a percentage of that capital and apply it into startup investing. Just go in with the mindset that you very well may lose it all.
Investing isn’t the only way to build equity. You could work for a startup. Or you could advise startups (like I do). If you are a founder or somebody that can provide value to startups, you could be an adviser, and you can get little chunks of equity in a whole bunch of companies. You make money if the company raises a round or gets acquired or goes public.