I'd also add something to the general topic. I never expected to sell my company and I think that actually helped. I drew a salary and kept my finances distinct from the legal entity that was the company. As it was I was the only owner, there were no investors to please, so profits went into growing and securing the business. Note: I consider sharing the profits with employees to be part of business growth and security.
That meant I had complete ownership and a healthy business, without much real debt. This was attractive and it was quite surprising, sort of, when the offer came in. It was only sort of surprising because there had been a few rumors about it.
So, I'm of the mind that the mentality drove the process and the process influenced the results. Of course, there is survivorship bias and I'm just a single data point.
Have you seen any correlation to the "no pressure"/generous aspect of your investments to the success or failure of said investment? My feeling is that the lack of stress attached to the investment may make it easier for the founder to achieve their goals. No anxiety about failure to pay you back = no self fulfilling prophecy. Probably depends on the founder.
That sounds noble. But, concretely, you want to help people make SaaS products like Storemapper (mentioned in the article)? I don't want to sound demeaning, but is that really such a noble goal?
When I started there were zero angel investors and next to zero VCs. Things have got a lot better, but we still have a long way to go.
Sure he's not curing cancer but there is a tremendous amount of nobility in his future actions.
Look beneath the surface my friend :)
That comes across as a pretty negative thing to say, the implication you're hinting at and not saying in a forthright manner.
Noble goal is an inherently subjective concept. Your definition of that, will vary from everyone else. It makes very little sense to challenge someone's actions on that basis.
This is the reason I would do it if I ever make FU money.
Any startups that come to mind that have helped this generation?
If you want a series of potentially-fun lottery tickets in industries and teams you choose, you have an advantage.
If you want any return (and I mean any, as in, recovering any capital), you have 3 huge disadvantages: insufficient diversification[1], a lack of dealflow, particularly great deals, and inexperience evaluating and participating in other people’s startups. These are all surmountable, but doing so is an occupation.
If you don’t already read Matt Levine, the “Retail Traders” section of https://www.bloomberg.com/view/articles/2017-10-09/retail-vo... applies to picking a small quantity of individual startups too. The reason to do it is because it’s fun (and you’re comfortable losing all of the principal), not to earn average risk-adjusted returns.
[1]: Check out 500 Startups’ presentations and posts on how much diversification is required to expect average returns for the asset class. Here’s one: https://500.co/not-so-simple-math-on-venture-portfolio-size/
> I don't understand it.
I do. Angel investing is a status symbol in tech circles.
It is not just a financial decision.
I think a lot of us non-rich guys know this, too. When I was young and had no money, it was harder to give someone a significant amount of money than to spend my time helping them. So I would give my time. Today when someone asks me to help them with something I'm thinking "can I just give you money, hire someone to do it" unless it's something I actually enjoy doing. And I'm FAR from rich.
One of my least favorite things is when a family member asks me for help but they refuse to take money / let me pay for something. They think they're being fair by refusing money but they're actually being unfair because they're asking me for help but not letting me help them in the way that is easier for me, purely because they don't want to feel bad for having taken the money.
If you've got the spare time, cool, if you've got the spare money, cool. What's the issue here?
However, giving back to a professional community seems like it would run on a different set of fundamentals to giving back to a social community.
Could one not equally apply the argument to non-monetary activities -- giving talks, running events, writing OSS software, etc? That's all stuff that normally falls under the mantle of giving back to the community, yet it often confers resume benefits.
What is it that makes it different?
With banks out of the business of loaning people money there are genuine opportunities out there where people can put money to work. I imagine he is not going to be gambling on ICOs but investing in profitable companies.
Most tech companies looking for angel investment or VC money are just other versions of information selling (that is, information about people) or social interaction or both. They aren't worth "giving back" to, from either a tech perspective (from the perspective that they'll possibly advance technology) or from an investment perspective (they'll almost certainly perform worse than even conservative investment).
Hell, with current interest rates, you might as well use some portfolio margin and borrow an extra million.
Longer term 6 to 8% feels about right though.
Vanguard 500 Index Fund, 130.56% since 2010.
And neither look like hockey sticks.
If you made a million today, you probably want to just keep it in an account and wait until a 20%+ correction happens before buying in, though -- it's been quite while since the last significant drop.
Uh, it's 6-8% compounded over what ever time frame. Which is actually still quite good and probably handily beats most angel investment returns.
Perhaps I’d take my money and go build schools in the Himalayas or something.
But to each his or her own!
without it, this is one of many aspects that will make it impossible for some hamlet in Bumbaf* Cheapsville to be "the next silicon valley"
Interestingly though, a read of "paying it forward" in wikipedia - https://en.wikipedia.org/wiki/Pay_it_forward - teaches me that the phrase can also be implemented in the contract law of loans. I never knew!
I just knew that would be in there. Why do so many tech people seem to think that VC investment is what they want to be doing once they have spare cash? This isn't a personal critique of the OP, but it just seems so very common in general. I don't understand it.