Recommended for Startup Investors?
The book that started it all for me—it was the first time I ever conceived that people invested in startups for a living. Great book with a lot of actionables (such as the Calacanis Characteristics I use to evaluate startups.) My only frustration with the book is that Calacanis buries the lede until some chapter in the teens to unveil that this book was written for those with $2.5m in net worth. Equity crowdfunding and constraints caused me to publicly embark on my quest to invest in 50 startups on a string of a budget, relatively speaking.
- If you invest 10% of your net worth, you're likelihood are between losing 1-3% of your net worth to increasing it by 20%. So, assuming $100k net worth and you invest $10k, your expected returns are range from returning $7k-$9k to returning $30k. This means for what you invest, losing 10%-30% is possible, or tripling your money.
- Calacanis believes the only way to get a unicorn is to invest in 50 startups in Silicon Valley within 3-5 years as a full-time investor.
- Unicorn = a company that is worth $1 billion. If you invest in a company that is worth $10 million, and it grows to $1 billion, you get 100x your return. (One billion is one thousand million, so take one zero away.)
- Generally angels cut $25,000 checks per deal.
- Good angels combine some combo of: money, time, network, and expertise
- Get pro rata rights so when your winners raise future rounds, you can pump more money at the new price to keep your % stake.
- Calacanis's three most famous investments are Uber, Thumbtack, and Dyn. Though he's also an investor in Calm.com and many other fanciful startups. Most notably, he was a scout for Sequoia (yet another gold standard firm in VC, will do an explainer on them at some point,) and scouted Uber for them.
- Calacanis is from Brooklyn, his father was a bartender and his mother was a nurse.
- Calacanis sold Weblogs to AOL for a sum of money.
- Calacanis' biggest miss was Twitter, because he had a philosophical beef against Ev's hypothesis on cutting out the meat of a blog post. He still gets along with Ev.
- YouTube's Deal Memo.
- There are 12-24 unicorns created every year, about 1 decacorn a year, and 1 centicorn a decade.
- Write deal memos!
- Use equity crowdfunding platforms and syndicates to practice in angel "dagobah"
- Expect investor updates from your founders
The Four Founder Questions
- Why has this founder chosen this business?
- How committed is this founder?
- What are this founder’s chances of succeeding in this business — and in life?
- What does winning look like in terms of revenue and return?
I have a game where I try to say things with as few words as possible because it reminds me that this meeting is not about me, it’s about them.
How do you know the person who referred you? — warm up question
What are you working on? — because it’s about the founder
Why are you doing this? — it’s all about the founder
Why now? — timing is everything
What’s your unfair advantage?