Angel Investor Breakdown: Ryan Reynolds
Angel Investor Breakdown: Ryan Reynolds
Angel investing is a way for people to make money by investing in small businesses that are just starting out. Celebrities like Ryan Reynolds are doing this too! Most celebrities choose not to be a part of the business world and keep their Hollywood career as their main source of income, but some love to get their hands in the business market and experience investing themselves. Even celebrities are embracing portfolio careers and the importance of multiple streams of income. Not all find success, but some make many smart and well-thought decisions leading to their successful businesses. One of them is Canadian actor Ryan Reynolds. You may have even seen his documentary on Amazon Prime showing his takeover of Wrexham FC in the UK.
Reynolds has made a lot of money by investing in a budget telecoms firm called Mint Mobile. He owns 25% of the company, and when it was sold to T-Mobile for $1.35 billion, he made over $300 million! It is worth noting he is one of the highest-paid actors in the world so it is clear that money is not the only motivation to do this. Ryan Reynolds believes in making small investments and giving smaller companies a chance.
View this post on Instagram
The Deadpool actor has also sold a gin brand, Aviation Gin he co-owned for $610 million. He has also invested in startups such as 1 Password, WealthSimple and Maximum Effort. Even though he’s made a lot of money from these investments, he still acts in movies and makes a lot of money that way too. Other celebrities like Ashton Kutcher and Snoop Dogg also invest in businesses that are not related to their acting careers.
So, if you want to make money like Ryan Reynolds, you can invest in small businesses too!
Join our Foundation or Membership to learn how you can get started too.
Ready to level up your angel investing game? Join 1000+ angels in our newsletter.
Ready to level up your angel investing game? Join 1000+ angels in our newsletter.
Frequently Asked Questions (FAQs)
FAQs
What are some of the results that students have achieved from participating in your courses?
Check out the recommendations/testimonials at the bottom of Andy Ayim’s Linkedin profile.
We have graduates such as:
- Vera Baker got onto the Atomico Angel programme and has invested in over 7 startups since completing the course and also became a General Partner at Unconventional Ventures
- Irene Maffini has completed over 4 investments in climate change startups
- Nithin Bopana has invested in 3 deals alongside Andy Ayim, Subtly, Whering and Uome. He has also invested as a Limited Partner in a Climate Change fund
- Jia Hong Shaw has become “the pedalling investor” after cycling across Europe, launching his own syndicate and investing in over 5 startups
- After training over 100 members of Google’s Black Network, they launched the Black Angel Group and have invested over $1.5M into startups in 12 months.
Below is an illustration of our impact in our first two years, training just over 300 new angels.
What is an angel investor?
An angel investor, sometimes referred to as a business angel, is an individual that invests in privately owned small businesses (startups). The investors can choose to leverage their experience, expertise and network to add value and support the company through growth. They receive equity in exchange for this investment in the hope of sharing in the returns if the company experiences a liquidation event such as an IPO (initial public offering) on the stock exchange or acquisition from another company (trade sale).
You can read more about it on our blog.
How do you angel invest?
There are three main ways individuals can invest in startups:
- Direct investment into a startup raising, usually with a Convertible Note, SAFE Note, Advanced Subscription Agreement or Equity-priced round (all terms you can check out in our AIS Dictionary)
- Investing as part of a group of angel investors also known as an angel syndicate group. Some of these groups also utilise fund structuring platforms such as Bunch, Odin and Vauban
- Investing through an equity-crowdfunding platform such as Seedrs, Crowdcube and Republic
Who is the Angel Investing School (AIS) created for?
AIS is designed for individuals who want to take control of their financial future, make smarter decisions with their money and create wealth whilst having an impact.
During the last financial crash from 2008 to 2012, companies such as Whatsapp, Instagram, Uber, AirBnB and Slack were all created. Dozens of angel investors invested early in these companies and benefited from the vast wealth generated.
We believe that the post-covid financial downturn of 2023 presents another window of opportunity for well-equipped, educated and empowered investors.
We are here to serve individuals who want to have an impact, support entrepreneurs and take part in this incredible value-creation opportunity.
How is Angel Investing School different from others?
Angel Investing School has been described as a movement and not just a course. This is because people come for the course and stay for the community.
We take a very personable approach to angel investing to connect with founders on a values level and ensure there is chemistry when making investment decisions.
The thing that surprises people most is the diversity of our community and the open transparency from our facilitators. No one is here to sell you but rather to empower you to make the best decisions for your personal and professional circumstances.
When will I be able to start investing? Will you provide a list of startups that have the potential for great returns?
Personal Finance is personal, if you are in the UK and meet the Sophisticated Investor or High Networth Individual status you can start investing now. If you are based in the US, check out the SEC’s definition of an accredited investor.
Nobody can guarantee high returns from startups however experienced the investor is. I don’t want to mislead you. Investing in startups is very high risk because 90% of new businesses fail within three years. Safer, lower-risk investments are things like UK Government Bonds. Property and Public Stocks and Shares Index Funds are also considered lower risk. Never invest more than you can afford to lose.
On average when do you see a return (timeframes)?
Startups that succeed in providing a return usually take seven or more years before providing a return. We will cover this in more depth during the classes as there are three primary ways an investor can make a return from an exit (also known as a liquidation event).
What return on investment can I expect when it comes to angel investing with as little as £1,000?
Expect that nine out of ten investments will fail and it is best to start from the basis of “can I afford to lose this money.” This is why “making a return on investment” is not a good primary motivator for becoming an angel investor. There are safer asset classes for making regular returns such as investing in Index Funds.
Making a financial return could be one of your goals, but learning about new technologies, purpose and meeting fascinating people are worthy goals to consider also.
What type of risks are involved when getting into angel investing?
The main risk is actually the lack of education which leads to avoidable mistakes. Mistakes such as investing more than you can afford to lose. Or not conducting thorough due diligence because you underestimate the risk of failure.
Check out this article to learn more about the common mistakes to avoid.
FOUNDATIONS COURSE
Do I need to have any previous investment experience to join the course?
No prior experience is required to take the course. We have designed an experience to take you from amateur to well-equipped, empowered and educated to make your first investments.
Does the course only cover angel investing or other asset classes such as venture capital?
This course is specifically designed for teaching angel investing, so we stick to our core competence and don’t deviate from it. For breaking into venture capital, we recommend the Newton Programme, Future VC or Included VC.
There are several differences between investing in other asset classes like property investing or investing in crypto so we do not teach this in the course.
What is a cohort-based course and how does it work?
A cohort-based course (also known as a CBC) is an online curriculum of learning taken by a group of students together. Our CBC lasts eight weeks and covers the core curriculum we have assembled with world-class facilitators on angel investing. Check out the course outline here.
What times and dates does the programme run?
The course takes place every April and September with applications open all year round for students to secure their places. Applications usually close three weeks before the course start date as we usually have a welcome session ahead of the course getting started.
The course usually starts on the first Wednesday of the month (April and September) and then runs for the next seven Wednesday evenings from 18.00 to 19.30 GMT.
How much does the course cost?
The course costs £495 + VAT.
What are the benefits of taking this course?
Along with learning how to get started with angel investing we provide other benefits such as:
- Co-investment opportunities
- Ongoing access to startups who are raising
- In-person events (London only for now)
- Partner benefits such as one-year free membership with UK Business Angel Association or discounts from Stripe and others
- Opportunity to join angel syndicates within our network (some started by our alumni)
How do I apply to the course?
You can apply for the Foundations course here.
Who teaches the course?
We have a range of experienced angel investors, Venture Capitalists and Operators who teach the course.
Some of our past facilitators include:
- Deepali Nangia, Partner at Speedinvest, Cofounder of Alma Angels and UKBAA angel of the year in 2021
- Matt Pennycard, General Partner at Ada Ventures
- Marcus Exall, the experienced angel who invested in unicorns such as Improbable
- Daniel Barrett-Nembhard, a lawyer at Orrick
- Sarah Turner, cofounder of Angel Academe, an angel syndicate
Is the course only for UK residents?
We are based in the UK but our audience is global!
90% of what we teach is globally applicable but local jurisdictions have their own regulations. We cover both the US and UK angel legal processes.
Our alumni span over 30 countries from Singapore and Nigeria to the USA and France. This opens up new ways of thinking, operating and opportunities to diversify your deal flow.
What key topics does the Foundations course cover?
The course outline for the Foundation course covers
- Overview of Angel Investing
- Developing Your Investment Thesis
- Sourcing & Assessing Deals
- Legal Processes & Tax Relief
- Transaction Economics & Valuations
- Adding Value Beyond Capital
- How To Structure Your Deals
- Building A Personal Brand
You can learn more about each topic here.
What is the time commitment necessary to complete the course?
Attendees are expected to attend all eight weeks of the course 18.00-19.30 GMT. Please note that places are limited and highly sought after so we try to ensure everyone who gets on the course maximises the value.
Outside of class, each week we share pre-read, watch and listen to content and some weeks also have worksheets that we will use during class but can be completed after the class ends.
What are the main takeaways from the course?
- Understanding your primary motivation is linked to your investment thesis
- Evaluating why investing is a team sport (value of the community)
- Learning from the most common mistakes such as investing more than you can afford to lose
What support can I expect post-course?
Post-course, you will receive regular market insights, news and dealflow through both our Slack community platform and monthly newsletter. We regularly share co-investment opportunities for several members of the community to invest together. In addition to this, you will gain early access to our monthly in-person events.
What happens if I miss a session of the course?
If students miss one or two sessions, we share a recording available for 48 hours for them to recap the class. Absence from class should be communicated ahead of class at least 48 hours in advance.
The biggest loss is the opportunity to ask facilitators your most pressing questions which is why attendance is so important.
MEMBERSHIP
The membership requires an ongoing subscription payment similar to a gym membership. You receive ongoing new pre-recorded masterclasses to learn at your convenience along with regular community Q&A sessions.
The Foundation course differs from the Membership as it requires a one-time payment for a cohort-based course delivered live across Zoom each week.
Do I need to have any previous investment experience to join the AIS membership?
No prior experience is required to join the AIS membership. We have designed an experience where you can access a library of content, attend our community Q&A calls and get support via Slack from the AIS team.
Does the membership only cover angel investing or other asset classes such as venture capital?
AIS Membership goes beyond angel investing to share more context on subjects such as Venture Capital, journaling and understanding startups. In the future we will likely expand to cover buying small businesses, investing in other asset classes and building a diversified portfolio.
What is included in the AIS membership?
- Fortnightly live community Q&A calls with Andy Ayim MBE on Zoom
- Insights on market updates and regular startup pitch decks
- Access to ALL pre-recorded courses (present and future) and templates on-demand covering subjects such as finding great entrepreneurs, understanding Venture Capital, Fundraising and much more
- Early access to register for our limited availability monthly events days before the general public
- Co-investment opportunities alongside Andy Ayim MBE and other angels in the community
- Networking benefits through personal interactions online and offline with other community members. Build real relationships with others who will help you grow.
- Ongoing practical accountability in relation to your angel investing goals
- Ongoing motivation and inspiration from a truly unique and talented community of people
How much does the course cost?
There are two payment plans:
- £40 per month*
- £33.33 per month* (£400 charged annually – equivalent to just under £33 per month over 12 months. With annual pricing, you get 2 months free and only pay for the equivalent of 10 months. This saves you £80 annually.)
You pay a monthly or annual fee until you choose to cancel your membership. No Direct Debits are necessary to be set up too! Cancel anytime.
*Note that prices above exclude VAT (Value Added Tax) paid to the UK government. This will be added for UK citizens only.
What benefits can I expect from the course?
You will gain access to:
- The private Slack community
- An AIS Monthly newsletter
- Regular dealflow from startups
- Old and newly recorded content exclusive to the membership
- Direct answers from Andy Ayim MBE
Will I get access to all courses if I become a member?
Yes. You will get immediate access to all existing courses (more than 20 at present) and can go through the courses at your own pace. Courses and masterclasses are video-based. Sometimes you will have access to templates and platforms that you can utilise from the course.
What types of courses are offered in the Membership?
Here is a screenshot of some of the courses which each have a number of classes within them.
Are the courses self-paced?
Yes. Whether you are a busy professional or a working parent, you can take the course at your convenience. To get results, we encourage you to time-block time in your diary at least twice a month to protect yourself from distractions. This discipline produces results.
So you have made it this far
You are clearly interested in what we offer so why don’t you join us and take either the Foundations course or join our Membership. 🙂
Ready to level up your angel investing game? Join 1000+ angels in our newsletter.
Ready to level up your angel investing game? Join 1000+ angels in our newsletter.
Press Release: Angel Investing School’s Andy Ayim MBE, named on Real Deals Future 40 Diversity and Inclusion Leaders list
Press Release: Angel Investing School creator Andy Ayim, has won a spot on Real Deals’ Future 40 Diversity and Inclusion Leaders list.
“We are delighted to announce that Ayim made this year’s list for being wholly dedicated to improving diversity and inclusion in the investment industry. Unsettled by the inequalities that exist around funding that is given to black, female entrepreneurs, Ayim made it his mission to “democratise access to knowledge, networks and capital for diverse founders and investors”. Today, he runs The Angel Investing School that trains professionals from all backgrounds on investing in the next generation of diverse founders. Prior to this, Ayim was managing director of Backstage Capital, where the firm invested in 25 underrepresented founders. In 2017, Ayim published an open letter to leaders trying to improve diversity, with actionable steps for the industry. He started to consider privilege and oppression in 2015 when he was working in Silicon Valley and blogging about relatable role models he identified with such as entrepreneur Tristan Walker of Walker & Co and Nas from Queensbridge Venture Partners. Today, his writing activity has grown exponentially with his weekly newsletter covering minorities in tech (now at issue 222!) he’s become a fulcrum for this cause. It is this continued dedication that won him an MBE for his contribution to D&I in tech this year.”
The Real Deals Future 40 Diversity and Inclusion Leaders list, in association with Private Equity Recruitment (PER), showcases key individuals in the asset class who have made or are making a notable impact on improving diversity and inclusion practices across their firm and the wider industry.
In light of recent events across the globe and continued efforts to make the industry a more diverse and socially conscious industry, it’s certainly a very apt time to shine a light on this extremely important topic. This years’ list not only highlights key dealmakers, but also those working behind the scenes at private equity and venture capital firms to make a true difference to how we engage with gender, race, ethnicity, sexuality and disabilities and wider D&I policies.
Real Deals editor Talya Misiri said: “Private equity invests in all types of businesses across many different countries and societies, and yet, the people who invest, mainly share a similar race, sex or socio-economic background. Luckily, there is an increasing minority that are actively trying to change this.
“In this years’ list, we celebrate those who are breaking down these pre-existing barriers. Those who are opening the doors of the asset class to all, to make it an industry where people from all walks of life are accepted, welcomed and have the opportunity to succeed.”
For more information visit: https://realdeals.eu.com/article/future-40-diversity-and-inclusion-leaders
OneTech Scholarships for The Angel Investing School
OneTech Partners With The Angel Investing School To Provide Scholarships To Underrepresented Professionals
The Angel Investing School (AIS) is a nationwide community focused on widening participation for professionals from all backgrounds to learn how to get started with investing in startups. Through their 6 week courses, they teach 30 emerging investors every April and September on a guided tour of angel investing. Their most recent cohort had 45% women and 65% people of colour with a wide range of professions represented by digital marketers to developers and management consultants.
OneTech is proud to work with a value-aligned partner dedicated to creating a more diverse and inclusive tech ecosystem in the UK. We are proud to have worked with the founder, Andy Ayim who was an Entrepreneur-in-Residence with us last year where he had his Ah-ha moment and went from idea to launching this mission-led business.
After piloting a program in April, the two organisations joined together to launch a new AIS scholarship program that sets out to help level the playing field for underrepresented professionals keen to get started with investing in startups but lack the access to the knowledge and network.
So much of the focus in the work we do at One Tech is about nurturing diverse founders in the London ecosystem but we recognise that in the absence of friends and family round, many of our founders benefit from raising angel investment. Therefore, we believe that as AIS trains more diverse investors, the flywheel will lead to more diverse startups being invested in. This is all part of our long term goal of changing the face of startups.
Julie Fedele graduated from AIS earlier this year and went on to invest in Ohne, the UK based direct-to-consumer subscription service providing bespoke deliveries of organic period products to customers, on a cycle to match theirs. In her own words, Julie mentions that,
“For a long time, I have wanted to start angel investing but didn’t have the confidence. Through AIS, I now have a sound understanding of the process, ‘investing’ language demystified and a laser focussed investment thesis.”
One Tech is excited to provide 5 scholarship places for the September cohort of The Angel Investing School. Our goal is to provide an opportunity to overlooked professionals who wouldn’t traditionally have access to the startup and investing ecosystem. Andy, the creator of AIS shared, “I am excited about this opportunity to create pathways for anyone from teachers to nurses to have the opportunity to gain access to this education and network.”
Alison, the Managing Director of One Tech shared that, “One Tech will cover the costs for 5 people to gain access to this opportunity who need it most, we have no doubt it will be a great learning experience and we are proud to partner with Andy on this journey.”
If you would like to qualify for a One Tech scholarship for AIS: APPLY HERE.
Applications will be reviewed at the deadline date of 14th July 2020, and recipients will be announced on Monday 20th July 2020.
To learn more about The Angel Investing School, visit angelinvestingschool.com, and to explore the offerings of One Tech, visit weareonetech.com.
FAQ
Angel Investing School FAQs
What is Angel Investing?
An angel investor is an individual that finances (invests) in privately owned small businesses. They leverage their experience, expertise and network to add value and support the company through growth. They receive equity in exchange for this with the hope to share in the returns if the company experiences a liquidation event such as an IPO or acquisition.
Who is this course designed for?
The curriculum is designed for individuals who have not invested in private companies (startups) or have invested in just a handful (incl. equity crowdfunding) and want to learn how to become a more effective angel investor through learning from other more experienced angel investors.
It is ok for you to have no prior knowledge of finance and investing as we cover the basics, share content in advance of the course and hold your hand through the experience answering your questions along the way.
Whilst many founders could be interested to gain insight and empathy into angel investing, it is only suitable for founders interested in getting started with angel investing. We will not be eroding the quality of the learning experience with cross-selling e.g. from accountants and lawyers attending the class with the goal of selling services to participants.
Professionals from all backgrounds are welcome, from teachers and nurses to plumbers and creatives. We want to widen participation in this opaque asset class to professionals from all backgrounds.
What topics will the course cover?
The course will cover 8 key topics:
- Overview of angel investing
- Developing a thesis
- Sourcing & assessing deals
- Transaction economics
- Legal process (incl. term sheets and understanding tax relief)
- Adding value beyond capital (post-deal support)
- Structuring a deal
- Building a brand
What happens after the course?
You will have lifetime access to the resources and links shared along with the relationships you build. There will be a private community (AIS Alumni) that shares useful information such as demo days, deals within the network, relevant events and more.
How much does the course cost?
One-time fee of £495 (incl. VAT)
How long will this course take to complete?
The course duration is 8 weeks long, every Wednesday from 6.30pm – 8.00pm, ran virtually, so you can join from the comfort of your home.
Do I need to be in London to take this course?
No, we run courses every April and September remotely. So you can join us from the comfort of your home or office.
For those who can’t commit to attending each and every Wednesday, we have created an On-Demand course that you can take at your own pace.
Can my company get in-house training?
We offer a 4 week of tailored corporate training experience. Please email team@angelinvestingschool.com to learn more.
We also offer for corporates to sponsor the April and September cohorts to widen accessibility for diverse professionals.
How do I get a return on my investment?
It is important to understand that investing in privately held companies is an extremely risky asset class. Riskier than investing in buy-to-let properties, mutual funds, index funds and other asset classes. The truth is, most new businesses fail and therefore there is a high probability you may not make a return on your investment.
Andy Ayim MBE treated his initial investments as skin in the game to gain practical learning experience rather than risk money he couldn’t afford to lose (which is not advisable). He is comfortable at a minimum learning about new technology, business building and new markets through his investments. Focusing on nurturing long term relationships regardless of the outcome.
What are the course founders & facilitator investment backgrounds?
The course was curated by Andy Ayim, MBE who has invested in over a dozen startups and has worked for over a decade in the London startup ecosystem, firstly as a founder, before developing his craft as a product manager and more recently as an investor.
The facilitators are a diverse range of angel investors who each have experience investing in privately held companies. Most of what they will teach will be through personal stories and lessons learned with tools and templates shared throughout the experience.
Why did you create the course?
I personally wanted to learn how to get started with angel investing and learn from the experience and lessons learned by others. I want to democratise access to knowledge so that people from all backgrounds can learn whether or not angel investing is right for them.
Are there any regulatory requirements for being an angel investor?
The guidance from a regulatory perspective, under the FCA rules Financial Promotion Order and Markets Act states that you can be an angel investor and make investments in a small business through your own decision if you can self-certify as either High Net Worth or Sophisticated investor.
Simply put, you need to understand the high risk associated with investing in small businesses and therefore be able to invest an affordable sum of money. Don’t invest what you can’t afford to lose. Once you invest your money could be tied up for a number of years and still result in a loss. Ensure that this money is not part of your lifestyle costs or money tied up with your monthly costs, it should be a sum of money you can afford to invest.
I know it sounds pessimistic, but it is important to level set before even taking the course. This isn’t a get rich quick scheme or promise of any riches. There is a possibility that you could make a return on your money and potentially access some tax reliefs, which will be covered in the course.
Is there a minimum amount of money one should have when starting out in angel investing?
Personal finance is what it says, ‘personal.’ So given how risky this asset class is, you don’t want to expose more than 5% of your annual income to angel investing. For an illustrative example, If I earn £100,000 per year. I wouldn’t risk more than £5,000 on angel investing per year. On the course, we teach how you can invest as little as £1,000 alongside other angel investors.
Disclaimer: this is not to be deemed as financial advice, please seek advice independently from a registered financial advisor.
Why do you aim for 50% of the course to be women, men of colour, LGBT and/or non-binary?
We believe the ‘opportunity cheque’ or the first money invested into a small business can be pivotal to the outcome of whether that business can grow to succeed or fail. Therefore with less than 1p in every pound going to all-female teams and the lack of funding going to diverse-led startups we believe if we can train up more diverse angel investors, more diverse startups will gain investment as a result.
What can you do to help businesses stay resilient throughout Coronavirus?
What can you do to help businesses stay resilient throughout Coronavirus?
Last month, I visited my hairdresser in Peckham Rye, where I spend over an hour getting my hair twisted into locks. With the current advice to minimise contact in public spaces, it is unlikely I can get my hair done for at least the next 4-6 weeks.
The strain on me personally is minor, but for my hairdresser, this impacts her livelihood, her children and her income. I have shared ideas for additional revenue streams such as paid video check-ins to advise customers like me on how to care for their hair at home for £10 a session. I also shared advice on managing debt and government support available.
What are the other pain points that new businesses are facing? What could private markets, big tech, VC and angel investors do to help weather the storm during these unprecedented times for startups?
How have startups been affected?
- Sales forecasts have been revised due to the travel restrictions and cancellation of events, which were previously factored into the business development pipelines.
- Supply chains have been impacted globally along with fulfilment, as people are being encouraged to work from home, reducing productivity and increasingly leaving demand outstripping an ability to supply.
- Hiring has been put on freeze as budgets are revised.
- Only a few months into the year and margins are already being squeezed, causing an increased focus on cash flow and lowering burn rate.
- It is a challenging time to raise funding given investors are rethinking their strategy and how things are impacting them as shown below.
- For some services such as massage therapists where it is almost impossible to continue, they are seeking support from HMRC, accountants, negotiating holiday periods with their banks and looking out for government subsidies.
What can professionals (consultants, lawyers, PR etc) do to help them?
- Support startups in crafting and sending proactive comms to reassure partners, customers, investors and key stakeholders. Make them aware that business is still running but here are the changes. Bigger corporates have started doing this already in the last 7 days.
- Support startups in operational excellence and performance improvement. Assess where costs can be cut whilst retaining existing customers. If possible, explore new delivery channels and revenue streams.
- Support startups in crafting updated polivies for employees i.e. Remote working policy as well as negotiate terms on supplier contracts.
How have the Private Markets been affected?
- Lenders are worried that many companies will struggle to make their debt obligations and therefore lead to bad debt.
- Most lenders are restricting loans to new customers as they asses their current book of loans.
What government support is there for startups?
- The British Business Bank has a Coronavirus Business Interruption Loan Scheme that startups may be eligible for.
- The Government announced a £500m hardship fund but has not provided details on how this will work yet.
- Awaiting more details from the budget on the £3,000 cash grant will be available to 700,000 of our smallest businesses.
How have big companies been affected?
- Enterprise companies are reviewing procurement pipelines and focusing on their biggest suppliers first, so sadly any new startups contracts may be delayed, reduced or cancelled.
What could big companies do to help startups?
- It would be great if Big Tech companies (Facebook, Amazon, Microsoft, Apple and Google) could come together during this time and provide a network of support given their reach, brand trust and domain expertise. It would be great if they provided one to many support as a “Helpline” to provide tactical advice, discounts, small business bursaries and introductions where possible.
How have VC Investors been affected?
- Some limited partners (investors who invest in VC funds) with portfolios exposed to the stock market have decided to raise capital calls to withdrawal their funds from VC funds.
- Therefore, some VCs have pulled their term sheets from startups as a result.
- Others are rethinking their investment strategy and adapting due diligence to consider how their portfolio will weather the storm.
How can Angel Investors help startups?
- They can reach out to their portfolio and see where they can add value based on the above. Startups are their customers, so delivering value to them creates value for the investor.
- Angel investors may have to be flexible and consider providing working capital loans, convertible notes and other flexible forms of finance to startups to plug the widening funding gap.
- Finally, investors should update their investment strategy and think about what due diligence should look like given the above i.e. greater focus on the startup’s ability to remain resilient during these uncertain times.
How are you adjusting your strategy currently? What small things have you found helpful for startups you support? Let me know in the comments below.
The Angel Investing School Manifesto
The Angel Investing School Manifesto
Yesterday, a friend of mine shared with me the great news that he was planning on starting a family and asked: “what is the one skill that you would love to teach your daughter as she grows up?” Almost immediately I answered, “the ability to make smart decisions on a consistent basis when I am not in the room.”
One trait that I believe has shaped me profoundly in the decisions I make in my career, with my family and in life, is the ability to make decisions guided by a set of principles. I call these my guiding principles; essentially they are a shortlist of mental models that tie into my beliefs. You could say that they are helpful one-liners that help me make better decisions.
In starting The Angel Investing School, I had the opportunity to catch up with a range of people who I knew were successful angel investors (people who invest into new businesses) and it was apparent that there were common themes, within the lessons learned from each of their experiences; that became the guiding principles that helped them avoid making mistakes.
I recognise that investing in new businesses (startups) has become democratised, with platforms such as Crowdcube and Seedrs that allow individuals to invest as little as £20 into startups. However, the problem exists when the access to invest is so easy that many who take the leap have not had the education to understand what they are investing in. People are taking a gamble as they don’t understand the risk associated with their investment and what returns could look like in the eventuality that the company is acquired (bought by a bigger company) or has an IPO (Initial public offering is when a company gets listed on a stock exchange like FTSE 350 in the UK).
I also recognise that there is a new breed of potential investors, who are digitally savvy, some are young and rich such as content creators (think vloggers and musicians). Others include professionals who have worked several years in their career, building domain expertise and a broad network but have no clue where to get started with investing in startups. Whilst the remainder are entrepreneurs who have successfully grown their companies and are at a stage where they want to invest back into new emerging startups, leveraging their experience and expertise to support others like they were supported too.
The guiding principles below are my own personal principles and I don’t share them as an oath or a contract but as insight into what helps me make better decisions when investing in startups.
- Angel investing shouldn’t be the first investment you make
- Play the long game and embrace the downside
- Take your time, and do your due diligence
- Get to grips with tax reliefs
- This is a team sport
- Don’t transact, nurture winning relationships
- Invest in what you understand
- Add value beyond the capital
1. Angel investing shouldn’t be the first investment you make
Most high net worth individuals and sophisticated investors allocate less than 5% of their wealth to angel investing as it is such a risky asset class. Typically, wealth has been built up from a range of other asset classes from investing in land & property to public stocks & shares. They are investing what they can afford to lose with angel investing similar to the money they could afford to lose at the casino. As tempting as it may be, learn the rules of engagement, play the long game and be disciplined and patient. Avoid making a bad investment you cannot afford, which puts you off investing ever again.
2. Play the long game and embrace the downside
Don’t invest too much too soon given that over 90% of your investments will probably fail. A common situation is where you have saved up £50K (which is a significant amount of money) and you blow it all within two months out of excitement and the thrill of investing. You soon realised you placed a lot of bad bets, and you have no money to double down and follow on with into the good performers. The wise investor sets boundaries such as investing up to 1/3 and saving 2/3rds for follow on investments into companies that go on to perform well. Go in with your heart AND your head and invest in a few companies a year for a long duration of time like you would if you were a value investor in Index Funds. Embrace the downside and remember it is a continuous learning journey.
3. Take your time, and do your due diligence
Some new angels feel uneasy and guilty taking founders time and rush to make hasty decisions to invest. Remember, it is a significant amount of money, spend time getting to know the founding team, the product, the customers and the market. Bounce the opportunity off a trusted set of advisors to make an informed decision. They might raise the red flags you failed to see.
4. Get to grips with tax reliefs
This is UK specific, but SEIS/ EIS (Seed Enterprise Investment Scheme/ Enterprise Investment Scheme) enables investors to reduce risk and do more with the money you have. Both schemes are designed to encourage investment into early-stage growth-focused companies, providing tax relief (some money back!).
5. This is a team sport
Startups often raise anything from £50K to £300K in their first funding round. Therefore angel investors often invest alongside other angels to close the round. Joining networks and spending time with founders to foster relationships gives you access to deal flow and enables you to share deals with others and get advice from them too. It can be a lonely journey so value the communities you could join. Get help from others who have already been on the path you are about to go on. All of these lessons are from angel investors I have learned from.
6. Don’t transact, nurture winning relationships
Don’t be blinded by a big market or exciting idea, the highest risk is the founding team’s ability to execute on their idea. Remember, you are in it for the long haul and the only thing that is guaranteed when you invest in that you buy the right to participate in an exponential learning journey. There will be some highs but probably a lot more lows, and those are the times you need to support the founders most. Create memos or keep a journal so that you can track why you invested, how you were feeling and lessons learned along the journey.
7. Invest in what you understand
Stick to your core competence and invest only in what you understand. For this reason, I don’t invest in crypto and certain aspects of deep tech. A lesson learned from value investors Charlie Munger and Warren Buffet who were comfortable in missing out of big tech companies like Google and Facebook as they focused on what they knew well and ignored opportunities outside of that. If you worked in marketing for 20 years in an FMCG company then a good place to start could be by focusing on marketing tech and/or FMCG startups.
8. Add value beyond the capital
A brand is built through founders sharing with others how helpful you have been, especially during the difficult times. Four things really stand out to me here:
- Empathy to understand what the founding team feels and listen sometimes without a solution, just listen and be present.
- An ability to fill knowledge gaps.
- Introductions to customers, partners and fellow investors (if needed).
- Deliver quality contributions consistently.
The Angel Investing School is about what you could do with the money you can afford to lose. Adhering to the principles above should help teach you how not to lose it. My hope is that once participants complete the course, they leave equipped to make smarter investment decisions on a consistent basis.
Are there any principles I missed out on that you have? If so, please share below. If you are interested in The Angel Investing School, follow us on Instagram, Twitter and check us out here.