I’ve just passed my 8 year anniversary as an angel investor earlier this spring, and I thought it might be worthwhile to note some of my thoughts.
I started out doing this because I wanted to re-engage with the entrepreneurial community after a living couple of years in upstate NY. Someone suggested angel investing as a great way to meet new companies, so I investigated several groups in town. I wound up joining Boston Harbor Angels, where I found a diverse group, interested in any domain and any geography. In addition, the group had (and has) a very liberal guest policy, which leads to better networking and wider diversity of opinions in the room. Finally, being hosted by Candy Brush at Babson led to having a number of students in the room at most meetings, again improving the atmosphere.
Like most angels, I started off listening, then took off, making the classic errors of spending too much on a few early deals. I soon figured out that I would quickly run out of my “fund” at the rate I was spending, and I wanted to have a large portfolio to mitigate the risks. So I backed off somewhat and put less in each deal as well as becoming a “once and done” investor, which freed me from having to save for follow-on investment.
Since then I’ve made nearly 40 investments (including a few violations of the follow-on rule). I’ve had 8 companies die with zero return, and another 7 get sold with returns ranging from 1.5x to 4x. A couple of the exits are royalty-based, so I’m not yet certain what the returns will be.
That leaves just over 20 companies in the portfolio. Some of these I’m carrying as likely zero returns – they’re just not going anywhere and I have little hope that they will turn around – but there are still many that I have high hopes for. I’ll highlight a few of these, disclosing only public information.
I’m an early investor in Pixability, my first “ad-tech” play. The CEO there, Bettina Hein, is smart and tenacious. They’ve raised multiple rounds since my investment, and while they have not taken off to the moon yet, they seem on a good trajectory.
Shortly after Pixability, I went into Localytics, which provides an analytics platform for mobile apps. While the angels thought Localytics would be a quick flip, they’ve instead taken multiple VC rounds and look to be very successful.
Another high flier is CoachUp, which is a marketplace where athletes can find personal coaches to help them improve their skills.
In the ad-tech arena, besides Pixability, I’ve got investments in GaggleAMP, Viral Gains, and Mavrck. Each has their niche, and all are doing quite well. The ad-tech sphere is extremely crowded, and I expect that within a few years we will see massive consolidation in the area as some of the larger players begin to buy out the smaller ones. It’s unclear to me which of my companies will be buyers, and which bought, but I’m happy with them all. The shift from print and broadcast advertising to digital is still nascent, and there’s plenty of room for innovation. Lots of money to be made, too, I hope!
Leaving the software arena, I’ve got a few interesting life sciences plays, ranging from eSight, which I call “Geordi La Forge” glasses that allow the mostly blind to see again, to Siamab, which is a cancer therapeutic. The nice thing about these investments is that the upside is so large: if these folks succeed, the outcomes are wonderful regardless of the financial reward (which could also be wonderful, but who’s counting?).
I’ve also got an investment in KnipBio, the pink bacterial fish food. This is a bacterium that turns methanol into protein plus pigment. Turns out that this is just the ticket to feed farmed salmon, trout, and shrimp. They all want to be pink, for marketability, of course, but more so because the pigments are natural antioxidants that improve the beasties’ health. With farmed fish exceeding farmed cattle (by weight) a couple of years ago, and with a global shortage of fish feed caused by climate change, KnipBio is poised to be a huge win for the planet and for Knip’s investors.
This year I’ve made three investments. It’s too early to tell whether they will take off as I hope, but all signs are positive so far. UltraCell has a new, patented process for producing cellulose insulation from recycled cardboard (instead of paper) that could revolutionize that industry. Nix86, a restaurant and supplier automation system that can bring that industry into the 21st century (previous attempts in that area have failed as adoption has been slow because the new products have been too disruptive). The Nix86 team has a ton of industry experience that promises to guide them along the path to success. Finally, I’ve invested in Troupe Jewelry. Led by an old friend and successful serial entrepreneur, Troupe has an elegant CAD system that lets ordinary users design custom jewelry. From that design, using 3-D printing as a part of the process, the jewelry is manufactured and finished using traditional methods, so the final result is of high quality.
So that’s a brief portfolio review. There are quite a few others that shall remain nameless until they begin to take off.