It’s been an interesting couple of months on the angel front. Having invested in many companies over the past nine years, some of them have aged to the point that things are happening. Some of them have rotted on the vine, others are ripe enough that they’re getting picked.
So here’s what’s happened in my portfolio.
One company closed its doors. Frankly, I was surprised it took so long. I had made an investment on a convertible note a few years ago and they’d proceeded to raise a priced round, converting my debt to equity at a small write-up. Just a month or two after this funding event the company discovered that their sales just were not taking off – the product just wasn’t complete enough to satisfy a large percentage of their customers. Developing a complete product to displace incumbents was far to costly and unlikely to succeed. So they did a bit more than pivot – I consider that they jumped tracks completely. Some of their technology was reusable in the new model, but it was really a completely different business. One of the co-founders found the new business less interesting, and so left the company. Roll forward a year and we find the new product not taking off as quickly as it should, combined with setbacks of one sort and another, and the money runs out without showing enough promise to raise additional funding. Hence a write-off for me. As I said, this was not a surprise.
The next company also hadn’t shown enough progress in taking their technology to commercial viability. A VC who had provided a later round of funding helped arrange an acquisition by another portfolio company. My investment is still in play in this new company, so a positive outcome is still in the realm of possibility, just not very soon, I expect.
A third company in which I held a long-in-the-tooth convertible note has been successful, in fact profitable, but was not growing at the rate that might lead to an acquisition. So the CEO offered to pay off the debt and interest and that’s what we did. I made a little money and we parted still good friends. This, by the way, is a much better outcome than if I’d held a SAFE, which carries no interest.
The fourth company is the successor to StarStreet, a company that I’d invested in largely on the basis of its CEO, a brash young fellow named Jeremy Levine. I’d agreed to meet him for lunch and after looking over his materials was planning to “talk him off the ledge.” I felt that this was a terrible idea, fraught with all sorts of perils. Well, by the end of the lunch I was ready to write a check – Jeremy was so smart, had strong answers to all my objections, and was clearly a pit bull. The product, however, failed. Not because of any of my objections, but because the dynamics of the “game” it represented were not exciting enough for players. So Jeremy and his team pivoted to another, related, application. This one worked much better, but Jeremy had thought of an ever better one, so he sold this one off to a major competitor to focus on the new one, DRAFT. He was then joined by his grade school buddy, Jordan Fliegel (founder and former CEO of portfolio company CoachUp). Together they started building the DRAFT business. Soon, though, they were approached by another company which made them a very generous offer. And I have my largest exit to date.
All this activity has me wondering what other pleasant surprises I might have waiting in my portfolio!
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