private email to my angel list syndicates

[ inside the ‘trench run’ of angel investing ] 


Dear Syndicates,

Wanted to give you a quick update on our syndicate, what we’ve learned and where we are headed.

1. Our syndicate is now $1.18m with 318 approved backers (you are one!).

2. Each syndicate can have 99 investors + me.

3. On average you will each get to invest in 1 of 3 of the deals I syndicate.

4. As such, you should look at each opportunity and NOT FEEL BAD if you pass. It’s fine to pass on a deal. Some syndicates want you to do every deal — I don’t care. If you don’t do 9 deals and then do 1 I’m fine with it. I’m not insulted in any way if you pass on 99 deals and then do 1.

5. Angel investing is about getting into at least 30 quality deals over three years in most people’s estimation. I’ve done 60+ and hit a couple of winners, had many 10-30x returns and of course the super unicorn of Uber—which the press is saying is a 2,000x return ( I can’t comment on that).

5a. Hitting a unicorn is a 10-20 year process as an angel (and most angels never hit one), but hitting a 10-50x investments should be something that happens every couple of years for an active angel with quality deal flow (which I consider myself). All of this is to say that if you have $100k you want to invest the best advice you would get from career angels is to put $2k in 50 deals, or $3k in 33 deals. some folks would debate this, but I think you get the idea: most startups fail ( 7 of 10 maybe), some return a multiple ( 2-50x ). You can’t invest in < 20 and expect a good return in most people’s estimation.

6. I believe Angel investing should be low-single digit % of your net worth. If you’re worth $3m I think risking 3% / $90k is reasonable. Some might say 1% other’s might say 5%. I do not think anyone would say you want to risk 20% / $600k of your networth. You are all adults who are qualified investors—I think you don’t need me to tell you how to manage your net worth. just putting this out there in case someone in the syndicate is a dentist doing this for the first time! :-)

7. Founders are embracing the Syndicate. This was a big question for me. I invest in 3 startups a month for about $250k. I thought 1 of 5 would do the syndicate. It now seems that 4 of 5 will do the syndicate. This means I am going to do 12-18 syndicates a year.

8. Next week I will launch two syndicates at the same time. So, expect to see the pace increase, but again you can invest however much you want and you can pass on the deals I’m investing in.

9. My angel investing is going so well that I’m moving to San Francisco this summer. That should give you an indication of where I’m at with the Syndicate. I currently live in Los Angeles and commute to SF every other week.

10. Deal flow: we are getting amazing deal flow. We are getting including in a lot of high quality deals, so I’m very, very excited about the next 30 months, as I will be investing $5m of my fund during that time (provided the deal flow is high quality).

11. Speed: Since we have 3x the number of members than spots in each deal the best way to get into a deal is to quickly reserve and fund. I realize this is not ideal, but there is no other system right now we can think of.

if you need to contact me, my personal email is TKTKTKTKTKT (please don’t share).

best jason

twitter.com/jason

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