ā j4ck š„¶ icebreaker.xyz ā
@j4ck.eth
Angels, what questions do you ask a founder when you're considering investing?
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Benjamin
@benjamin
I almost exclusively am the one to reach out re. investment ā so I already have a thesis in why I find the company interesting and often Iām pitching them and not the other way around. Just looking for a spark and an articulate explanation of what the company is doing.
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Benjamin
@benjamin
Don't know if you're legit asking, or just posing a good question -- but, #1 challenge w/ early stage investing is reliably getting high quality deal flow. #1 error is missing out on the next [insert big company here].
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Benjamin
@benjamin
Early stage returns have a Pareto distribution. Meaning the more companies you invest in the higher your expected return is and the lower you risk is. -- the conclusion being, your best strategy is to invest in every reasonable company that will take your money.
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ā j4ck š„¶ icebreaker.xyz ā
@j4ck.eth
i was genuinely asking! great call on the Pareto distribution and ty for the explainer so i didn't have to look up :) i am also 6'6" my tall friend š¤
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Benjamin
@benjamin
Practically speaking: a good target is around 20 companies. You can expect 2 to 3 stand out companies, and enough diversity to back a few pie-in-the-sky ideas and/or not feel to bad when a company goes bust (and in retrospect, you realize it was kind of the obvious outcome.)
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Benjamin
@benjamin
Other learnings: 1. Companies tend to start failing around year 3 (eg. two funding cycles). 2. As the early money, expect to get pushed around by later investors 3. Founders that tend to win are just tenacious (and I don't really know how you judge that at the start)
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ā j4ck š„¶ icebreaker.xyz ā
@j4ck.eth
totally. how do you address the deal flow challenge?
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