Don’t Try This At Home! Why I Invested in Startups Instead of an MBA

Note — this is not career or investment advice. No short cuts there. Everyone has their own constraints, considerations and risk tolerance. Here’s a bit of my story.
If you appreciate personal finance like I do, you might have encountered articles about the pros and cons of taking time off from your career to go back to school for an MBA. This isn’t one of those. Instead I’m going to share the ‘real world’ education I got by investing in high growth tech enabled startups instead.
First a reality check. Startup investing is high risk. It’s not the right asset class for most people. It’s not even the right type of funding for most businesses. While I do believe that investing is a learn-able skill, access to capital is only the first challenge. Assuming its a fit, having enough time to commit to building a proper investment practice is where the magic happens. Maybe. And over a very long time period. Unless its done right, early stage investing starts to look more like super slow lotto. An alternate option is to piggy back on the entire portfolio of a skilled investor (ie invest in a good fund). Otherwise, there are no short cuts for being a good seed investor.
Respecting these considerations (yet undaunted by them), seed investing successfully is exactly what I set out to do, and have been doing for nearly four years running. When I reached the point when other business minded people might consider an MBA, I took a pass and held out for the opportunity to learn venture investing instead. Here’s why.
Prior to becoming a seed investor, I’d been a business owner since relatively early in my career. By the age range when most go back school, I had certainly reached the MBA ‘or equivalent experience’ point in my trajectory. Nothing will teach you about business better than starting one and seeing it through. Entrepreneurship was a full tackle contact sport.
There are other valuable things to learn from an MBA program (or if, like myself, you enjoy being an autodidact, to learn on your own given that even top tier schools’ syllabi are online at this point). The credential still opens (some) doors. And the network you gain from top schools is hard to beat if you don’t have another way in. But in my experience, whether its business or coding computers or investing or any other applied learning, the fastest path forward is to go and do it. And I have always been partial to fast growth.
I relate to risk as something to be managed (in exchange for an attractive opportunity), not something to be avoided. This has been my view ever since I first started making tiny investments in stocks with earnings from part time jobs back when I was in school. The risk with startup investing is mitigated by dedicating serious time to doing it properly, having a developed cross disciplinary network, good deal flow, connecting with experienced advisors plus equal parts ‘luck’ and discipline. Playing the game well is much more than a full time job.
And still, why take the chance of funding startups at the earliest stages? Answers vary among investors. Potential for higher upside is an important part of it. For me it’s also about where in the life cycle of a business I am most drawn. Witnessing organizations and industries evolve in response to the changing times is fascinating. Glimpsing the future before it plays out gets me out of the bed in the morning. Seeing potential realized is gratifying. Being rewarded for enabling and contributing to that growth feels like work worth doing.
There is no real playbook for angel or seed investing. There are some resources and best practices out there. I also had opportunities to apprentice myself to some of the best in the game, which is key. But the startup investment learning process overall is still pretty self directed. You ‘learn on the job’ and you get better at it by doing it (and by looking at A LOT of deals). Its not for everyone, but it sure turned out to be a fit for me.
