Sieva Kozinsky

Sieva Kozinsky

28-08-2022

12:26

I’ve made 80+ angel investments, including a $25k check now worth $1.5M and a $33k check now worth $3M. 10 lessons I wish I’d known before getting started:

Lesson: Don’t Angel Invest Let’s start here. If you aren’t comfortable losing the money, don’t angel invest. It’s a bad asset class! You’ll likely lose all of your money. But if you have the capital the risk and learning potential *might* be worth it.

Lesson: Create Value for Founders Support your startups by: • Introducing the founders to investors • Finding potential customers and partners • Helping the team track down high-quality talent Create value and they will refer you to other great founders.

Lesson: Don’t Invest In Your “Passion” I see a lot of investors try to do this. In theory, it’s a good idea. But it limits the pool of companies you invest in. Invest in companies with the best businesses OR the best talent.

Lesson: Take Your Time Angel investing is stressful. Startups often need cash fast so they can fuel growth. Don’t fall victim. Take your time when making investments. Never get pressured into investing before you’ve done the work and have independent conviction.

Lesson: Invest In People My best investments are ones in which I’ve prioritized talent first and market second. Don’t invest solely in an idea or vision. Invest in high-quality talent, tackling a problem in a large market.

Lesson: Prioritize Industries With Incredible Scale Economies Yes to software. No to eCommerce D2C is a minefield of dead bodies and negative cash cycles.

Lesson: Invest Alongside Tier 1s The best startups attract the best investors. Here are some examples of funds to invest alongside of: • Sequia • a16z • Founders Fund • Accel • Index Easier said than done, but their involvement is often an accelerator.

Lesson: Identify Product-Market Fit All startups are looking for product-market fit. But you need to look for it as an investor as well. Here are some signs of PMF: • Selling a few contracts • >100% net revenue retention • Customer support bottlenecks Invest behind PMF!

Lesson: Invest In Crazy Ideas Ordering a taxi from your phone sounded ridiculous before Uber. Staying at a random person’s home seemed absurd before Airbnb. But look at these companies today. The best investments often sound crazy at first.

Lesson: Make Yourself Stand Out You need a clear advantage for the best founders to pick you as an investor. A few ways to stand out: • Build domain-specific knowledge • Share ideas publicly • Build an audience online @naval has shared great wisdom here in the past.

TL;DR Lessons I wish I knew before angel investing: • Don’t Angel Invest • Create Value for Founders • Don’t Invest In Your Passion • Be Patient • Invest In People • Prioritize Scale Economies • Invest w/ Tier 1s • Find PMF • Pick Crazy Ideas • Stand Out

If you enjoyed learning about angel investing, do me a favor and: 1. Follow me @SievaKozinsky for more 2. RT the tweet below to share this thread with your friends


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