The origins of angel investing is broadly believed to have been an investment by Arthur Rock in 1957 into the Fairchild Semiconductor in Silicon Valley, California . At the time, Arthur was based in New York before moving out to Silicon Valley and eventually went on to form the venture capital firm Davis & Rock. He invested in a range of tech companies we regard as household names such as Intel and Apple. You can learn more about this history and the early days of venture capital from documentaries such as Something Ventured.
Personally, I grew up fascinated by technology, business and investing. Across my interests, passions and career, I have had the opportunity to explore each of them. In 2019, I wanted to learn more about how to become an effective angel investor and learn from the lessons of more experienced angels. I soon realised that a number of people in my network were keen to learn this too. The challenge was that venture capital is an opaque industry and there was no clear on-ramp into angel investing.
The Angel Investing School was born out of this frustration. The purpose is to enable curious investors from anywhere to learn how to get started with investing in startups. I believe entrepreneurs can come from anywhere, so why can’t the capital too!
Common misconceptions people had included:
- I need at least £20K saved before I can invest
- I need accreditation before I can invest
- I will make great returns in a year or two of investing my money
- I’ve invested £50 in Monzo through crowdfunding, I am an angel investor and can put on Linkedin that I am an investor in Monzo now
Ok, so that last one was cheeky, but a lot of people invest through crowdfunding unaware of what happens to their money and don’t gain skin in the game to learn what it is like investing as an individual. The FCA states that anyone can start investing as long as you can self-certify as either High Net Worth or Sophisticated investors. This basically means you need to understand the risks associated with investing your money and in the event that a company fails you receive no return. There is no limit on how much or how little you invest.
So can you invest with as little as £5K into a new business venture? Absolutely, but the decisive factor that enables you to do so is whether you can access to quality deal flow early and whether you can invest in a sustainable way rather than a ‘one-off.’
Truth is, most new businesses fail and therefore, there is a high probability that you may lose your money as a result. However, the only thing guaranteed is a fast learning experience from having skin in the game. Treat your first investments as the cost associated with learning how to become effective angel investors. Similar to investments we make into our education from an MBA to an online course, angel investing is an investment into your personal development. Your initial investments represent an opportunity to learn more about developing your investment thesis, learning about how you can add value beyond the capital and what you will and won’t invest in going forward.
As illustrated above, both Mike Walsh and Owen Michels both invested $5K into Uber in the early years as angel investors. I can hear the naysayers say, “but that is the United States, you can’t do that in the UK.” Wrong again my friend, you sure can. In an interview with Sifted, Check Warner, Partner at Ada Ventures explains how Ada Ventures scout network can either get paid in cash or choose to reinvest their finders fee into startups they introduce to the VC.
The Angel Investing School exists to make investing into startups more accessible to all. We will be running an inaugural in-person school for 6 weeks in London, taking place across 6 evenings from 1st April to the 6th of May. The topics we will cover include:
- The history of angel investing and the London ecosystem
- Sourcing & assessing deals
- Transaction economics
- Deal Structuring (incl. term sheets and valuations)
- Adding value beyond capital
- Developing a thesis
Once the course ends, all graduates will gain access to ongoing deal flow, events and support in building a track record in the startup ecosystem. Interested? To find out more and sign up, click here.