Who doesn’t fantasize? “If I were young again…”
Me, for one; the thought has seldom, if ever, come to mind.
But it’s on my mind lately.
What’s got into me, some midlife crisis? No, I’m too old for that.
I’ve just come home from 2 days in Seattle at the NW Regional Angel Conference. I was stimulated to my limits, as is often the case. But I was surprised at a few of the topics presented, like Mike Crill’s, “The Decade for Angel Investing,” where he posits on this being the best time to be committing your personal assets to the sector known as angel investing.
He made a lot of good points.
Then I returned and spent an hour with Tech Coast Angels’s Dave Berkus and Common Angels’ Maia Heymann. They’re both working on funds; Maia’s making an even bigger commitment to future funds while Dave has just announced the ACE II Fund. Between the two of them it’s beginning to dawn on me: I should’ve been in funds all along. It’s the only way to go I’m thinking tonight. And this is where the little sting of regret, the ‘If I were to do it all over again,’ is coming from.
For lots of reasons, but especially for diversification. It’s hard to build a diverse early-stage portfolio, especially by trying to cherry-pick deals as they work their way through the process. Maybe I’ll catch their initial presentation, but then be in San Francisco, or Vienna at an angel conference and miss some critical follow-up discussion. With the fund approach, if the deal passes muster with those closest to it, I’m in it, too. Yes, my position is small, but it’s getting too expensive to be placing much larger bets on the few deals I do pay attention to; the fund keeps me engaged.
Plus the funds are good for the angel groups. Dave and Maia didn’t tip-toe around it, angel groups are not known for being quick to write checks. And the best deals with the brightest entrepreneurs know this and today there are too many alternatives to the classic approach angel groups have delivered for so long. Accelerators and incubators are prepping these startups and as cream rises to the top, the better deals get seeded, quickly. These entrepreneurs aren’t knocking on our door, and we potentially miss out.
So these funds are good for the entrepreneurs and good for the angel groups, but are they good for the individual angels? Only time will tell, but I’m already getting an inkling; my portfolio has had very few positive exits, but I’m encouraged to see quick exits already from one fund. It’s renewing my interest and at the same time, it’s making me wish, if I were a new angel investor I’d be placing my bets in these angel group funds.