Angel investors are high-net-worth individuals that invest in the early stages of a startup company in exchange for equity. They may also be referred to as seed investors, angel funders, private investors, or business angels. Angel investors invest in ideas and entrepreneurs, with profits a more secondary concern. In addition to providing vital early capital and having an appetite for risk, many also offer their industry skills, expertise, networks, and mentorship services.
Wei Guo is a Chinese angel investor who has invested in more than 400 companies through his investment firm Wei Fund. The fund, which was established in 2004, has been associated with companies such as Scout, Chariot, Worklife, and Vitroid.
Guo subsequently launched a $50 million second fund called UpHonest Capital with an investment portfolio consisting of Instacart, Dialpad, and American satellite manufacturer Astranis, to name a few.
Daniel Curran
Daniel Curran is a Silicon Valley angel investor with an enviable track record of successful exits.
Some of Curran’s notable exits include Dollar Shave Club, VetPronto, and Zirtual.
Fabrice Grinda
Fabrice Grinda is a French angel investor and entrepreneur with notable investments including Airbnb, Alibaba, Beepi, Brightroll, and Palantir.
Grinda is also the founder of the online classifieds site OLX. He prefers to invest in similar marketplaces that connect buyers and sellers but is also involved with online travel, social commerce, and location-based services.
Mark Cuban is a billionaire entrepreneur, television personality, investor, and media proprietor. With an estimated net worth of $4.4 billion, Cuban is best known for being the owner of NBA team Dallas Mavericks and one of the investors on the reality television series Shark Tank.
Mark Cuban is a billionaire entrepreneur and the owner of the Dallas Mavericks NBA team, among other pursuits. Cuban is one of the most successful angel investors on the planet and is reported to receive over 1,000 pitches per day.
According to his AngelList profile, Cuban invests in “companies that I think are compelling, differentiated and run by motivated entrepreneurs.”
Matt Mullenweg
Matt Mullenweg is a jazz saxophonist and is also the founder of WordPress.
WordPress.org became the most popular CMS and blogging platform in which the Foundation owns the trademark, and revenues come from donations. The Foundation holds a public-benefit-corporation who manages the revenues coming from WordPress events and conferences. Automaticc – the business arm – monetizes premium tools built on top of WordPress.com (a premium platform) through freemiums.
Mullenweg is an angel investor that tends to invest in startups at the seed stage with some customer traction. Owing to his WordPress roots, he favors companies that are developing open source products.
Mullenweg also provides advice and mentorship at Techstars, an American seed accelerator that has funded companies such as Bench, Digital Ocean, Plated, and Simple Energy.
Saad Alsogair
Saad Alsogair is a University of Jordan graduate who resides in Saudi Arabia.
Alsogair is a practicing dermatologist and has made more than 400 investments in startups such as Buffer, Notion, Ripple, and Unsplash. In 2021, he authored a book called Your Idea, Their Money to help entrepreneurs secure their first round of investment funding.
Reid Hoffman
Overview: Reid Hoffman is a co-founder of LinkedIn and a prominent Silicon Valley investor. He is known for his early investments in companies like Facebook, Airbnb, and Zynga.
Angel Investing Strategy: Hoffman focuses on investing in companies that have the potential to disrupt industries and create significant value. He leverages his experience as a successful entrepreneur to provide strategic guidance and mentorship to founders.
Outcome: Hoffman’s investments have yielded impressive returns, with several of his portfolio companies achieving unicorn status and successful exits through IPOs or acquisitions.
Naval Ravikant
Overview: Naval Ravikant is an entrepreneur, investor, and co-founder of AngelList, a platform that connects startups with investors. He has invested in numerous successful companies, including Twitter, Uber, and Yammer.
Angel Investing Strategy: Ravikant looks for startups with strong product-market fit, scalable business models, and talented founding teams. He emphasizes the importance of building sustainable businesses with long-term value propositions.
Outcome: Ravikant’s investments have generated substantial returns, contributing to his reputation as one of the most influential angel investors in Silicon Valley.
Peter Thiel
Overview: Peter Thiel is a co-founder of PayPal, Palantir Technologies, and Founders Fund, a venture capital firm. He is known for his contrarian investment approach and early bets on companies like Facebook and SpaceX.
Angel Investing Strategy: Thiel seeks out startups with bold visions and disruptive technologies that have the potential to transform industries. He looks for founders who are willing to challenge conventional wisdom and build companies with long-term competitive advantages.
Outcome: Thiel’s investments have delivered exceptional returns, with several of his portfolio companies achieving billion-dollar valuations and successful exits.
Esther Dyson
Overview: Esther Dyson is an entrepreneur, investor, and philanthropist known for her early investments in technology startups. She was an early investor in companies like Flickr, Square, and Evernote.
Angel Investing Strategy: Dyson focuses on investing in startups that leverage technology to solve complex problems and improve people’s lives. She looks for founders with innovative ideas and a clear vision for scaling their businesses.
Outcome: Dyson’s investments have resulted in significant returns, with many of her portfolio companies achieving success in their respective markets.
Chris Sacca
Overview: Chris Sacca is a former Google executive turned venture capitalist and angel investor. He is known for his investments in companies like Twitter, Uber, and Instagram.
Angel Investing Strategy: Sacca looks for startups with disruptive business models, strong growth potential, and visionary founders. He emphasizes the importance of building relationships with entrepreneurs and providing hands-on support to help them succeed.
Outcome: Sacca’s investments have produced impressive returns, with many of his portfolio companies achieving unicorn status and successful exits through acquisitions or IPOs.
Key takeaways:
Angel investors are high net-worth individuals that invest in the early stages of a startup company in exchange for equity.
Angel investors include Chinese businessman Wei Guo, who manages two investment funds, and Daniel Curran, who has a proven track record of exits.
WordPress founder Matt Mullenweg is also an angel investor, preferring to invest in open source companies. French entrepreneur and OLX founder Fabrice Grinda, on the other hand, tends to invest in marketplaces that connect buyers and sellers.
Key Highlights:
Angel Investors: Angel investors are high-net-worth individuals who invest in the early stages of startups in exchange for equity.
Wei Guo: Wei Guo is a Chinese angel investor known for his investments in over 400 companies through his firm Wei Fund. He also launched a $50 million second fund called UpHonest Capital, with investments in companies like Instacart and Dialpad.
Daniel Curran: Daniel Curran, a Silicon Valley angel investor, has an enviable track record of successful exits. He invested in 23 companies, generating an estimated 600% return over four years, with notable exits including Dollar Shave Club and VetPronto.
Fabrice Grinda: Fabrice Grinda, a French angel investor, has notable investments in companies like Airbnb, Alibaba, and OLX. He prefers investing in marketplaces that connect buyers and sellers, as well as ventures in online travel, social commerce, and location-based services.
Mark Cuban: Mark Cuban, a billionaire entrepreneur, owner of the Dallas Mavericks, and Shark Tank investor, is one of the most successful angel investors. He receives over 1,000 pitches per day and invests in companies that are compelling, differentiated, and run by motivated entrepreneurs.
Matt Mullenweg: Matt Mullenweg, founder of WordPress, is an angel investor who prefers seed-stage startups with customer traction. Due to his WordPress roots, he favors companies developing open source products. Mullenweg also provides advice and mentorship at Techstars.
Saad Alsogair: Saad Alsogair, a dermatologist from Saudi Arabia, has made over 400 investments in startups like Buffer, Notion, and Ripple. He authored a book called “Your Idea, Their Money,” which offers insights to entrepreneurs on securing their first round of investment funding.
The circle of competence describes a person’s natural competence in an area that matches their skills and abilities. Beyond this imaginary circle are skills and abilities that a person is naturally less competent at. The concept was popularised by Warren Buffett, who argued that investors should only invest in companies they know and understand. However, the circle of competence applies to any topic and indeed any individual.
Economic or market moats represent the long-term business defensibility. Or how long a business can retain its competitive advantage in the marketplace over the years. Warren Buffet who popularized the term “moat” referred to it as a share of mind, opposite to market share, as such it is the characteristic that all valuable brands have.
The Buffet Indicator is a measure of the total value of all publicly-traded stocks in a country divided by that country’s GDP. It’s a measure and ratio to evaluate whether a market is undervalued or overvalued. It’s one of Warren Buffet’s favorite measures as a warning that financial markets might be overvalued and riskier.
Venture capital is a form of investing skewed toward high-risk bets, that are likely to fail. Therefore venture capitalists look for higher returns. Indeed, venture capital is based on the power law, or the law for which a small number of bets will pay off big time for the larger numbers of low-return or investments that will go to zero. That is the whole premise of venture capital.
Foreign direct investment occurs when an individual or business purchases an interest of 10% or more in a company that operates in a different country. According to the International Monetary Fund (IMF), this percentage implies that the investor can influence or participate in the management of an enterprise. When the interest is less than 10%, on the other hand, the IMF simply defines it as a security that is part of a stock portfolio. Foreign direct investment (FDI), therefore, involves the purchase of an interest in a company by an entity that is located in another country.
Micro-investing is the process of investing small amounts of money regularly. The process of micro-investing involves small and sometimes irregular investments where the individual can set up recurring payments or invest a lump sum as cash becomes available.
Meme stocks are securities that go viral online and attract the attention of the younger generation of retail investors. Meme investing, therefore, is a bottom-up, community-driven approach to investing that positions itself as the antonym to Wall Street investing. Also, meme investing often looks at attractive opportunities with lower liquidity that might be easier to overtake, thus enabling wide speculation, as “meme investors” often look for disproportionate short-term returns.
Retail investing is the act of non-professional investors buying and selling securities for their own purposes. Retail investing has become popular with the rise of zero commissions digital platforms enabling anyone with small portfolio to trade.
Accredited investors are individuals or entities deemed sophisticated enough to purchase securities that are not bound by the laws that protect normal investors. These may encompass venture capital, angel investments, private equity funds, hedge funds, real estate investment funds, and specialty investment funds such as those related to cryptocurrency. Accredited investors, therefore, are individuals or entities permitted to invest in securities that are complex, opaque, loosely regulated, or otherwise unregistered with a financial authority.
Startup valuation describes a suite of methods used to value companies with little or no revenue. Therefore, startup valuation is the process of determining what a startup is worth. This value clarifies the company’s capacity to meet customer and investor expectations, achieve stated milestones, and use the new capital to grow.
Profit is the total income that a company generates from its operations. This includes money from sales, investments, and other income sources. In contrast, cash flow is the money that flows in and out of a company. This distinction is critical to understand as a profitable company might be short of cash and have liquidity crises.
Double-entry accounting is the foundation of modern financial accounting. It’s based on the accounting equation, where assets equal liabilities plus equity. That is the fundamental unit to build financial statements (balance sheet, income statement, and cash flow statement). The basic concept of double-entry is that a single transaction, to be recorded, will hit two accounts.
The purpose of the balance sheet is to report how the resources to run the operations of the business were acquired. The Balance Sheet helps to assess the financial risk of a business and the simplest way to describe it is given by the accounting equation (assets = liability + equity).
The income statement, together with the balance sheet and the cash flow statement is among the key financial statements to understand how companies perform at fundamental level. The income statement shows the revenues and costs for a period and whether the company runs at profit or loss (also called P&L statement).
The cash flow statement is the third main financial statement, together with income statement and the balance sheet. It helps to assess the liquidity of an organization by showing the cash balances coming from operations, investing and financing. The cash flow statement can be prepared with two separate methods: direct or indirect.
The capital structure shows how an organization financed its operations. Following the balance sheet structure, usually, assets of an organization can be built either by using equity or liability. Equity usually comprises endowment from shareholders and profit reserves. Where instead, liabilities can comprise either current (short-term debt) or non-current (long-term obligations).
Capital expenditure or capital expense represents the money spent toward things that can be classified as fixed asset, with a longer term value. As such they will be recorded under non-current assets, on the balance sheet, and they will be amortized over the years. The reduced value on the balance sheet is expensed through the profit and loss.
Financial statements help companies assess several aspects of the business, from profitability (income statement) to how assets are sourced (balance sheet), and cash inflows and outflows (cash flow statement). Financial statements are also mandatory to companies for tax purposes. They are also used by managers to assess the performance of the business.
Financial modeling involves the analysis of accounting, finance, and business data to predict future financial performance. Financial modeling is often used in valuation, which consists of estimating the value in dollar terms of a company based on several parameters. Some of the most common financial models comprise discounted cash flows, the M&A model, and the CCA model.
Business valuations involve a formal analysis of the key operational aspects of a business. A business valuation is an analysis used to determine the economic value of a business or company unit. It’s important to note that valuations are one part science and one part art. Analysts use professional judgment to consider the financial performance of a business with respect to local, national, or global economic conditions. They will also consider the total value of assets and liabilities, in addition to patented or proprietary technology.
A financial option is a contract, defined as a derivative drawing its value on a set of underlying variables (perhaps the volatility of the stock underlying the option). It comprises two parties (option writer and option buyer). This contract offers the right of the option holder to purchase the underlying asset at an agreed price.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
