Angel & syndicate leader Ed Roman on optimizing for outsized outcomes, leaning on gut & market analysis, not learning the wrong lessons, avoiding fraudulent customers, & swinging for fences (only) in SV.
0:01 Angel is brought to you by Audible. Go to http://audible.com/angelbook to receive a free audiobook & 30-day trial.
0:30 Today on the show: Ed Roman (Hack VC). Topics of discussion: market philosophy, teams, missed investments, biases.
1:24 Jason talks about why he wrote his book: Angel. “One of the few ways in our society to create a large amount of wealth.”
3:21 How did you become an Angel Investor? Ed talks about his journey: starting three companies, mentoring entrepreneurs, and eventually investing into startups.
4:09 Ed explains the reason he moved from Austin, Texas to Silicon Valley. Jason explains why Silicon Valley is the primary place to be, as an Angel Investor.
6:02 What’s the deal-flow difference of Silicon Valley compared to Austin? Ed explains why entrepreneurs are moving to the Valley from other ecosystems.
7:19 What do you consider a good return on investment? Ed explains why you shouldn’t be chasing companies that are returning 3X if you’re a professional investor, and how investors get washed out of acquisition-deals (Jason explains a real life scenario).
12:43 Ed explains his early stage investment philosophy. “I’m looking for the swing for the fences - large potential outcomes.”
13:50 Ed explains how he determines if a startup will receive venture funding in the future. And how he stays two-steps ahead using a combination of his gut & being collaborative with other investors.
16:43 Ed shares his first mistake as an Angel Investor. Which led to other Angel Investors asking for his help, to avoid mistakes. Ultimately leading to the creation of his syndicate: Hack VC.
19:52 Jason and Ed talk about the responsibilities attached to being a syndicate lead, and managing other people's money. Ed: “As an investor, you have to be a risk loving person.”
21:44 Jason shares his specific terms for syndicating a deal. And the importance of simplifying metrics early on.
23:18 Ed and Jason share their experience with fraudulent startups. And why due diligence plays a key role.
26:54 What are your thoughts on uncapped notes, or no information rights? Ed explains why he optimizes for the best deal, rather than being price sensitive.
28:41 “I’m a market-driven investor.” Ed shares what he looks for in a startup, prior to funding them.
30:41 Thank you Audible for supporting this podcast. Go to http://audible.com/angelbook for a free audiobook & 30-day trial.
34:55 Portfolio Review segment: Ed shares his most painful investment miss. And why it happened. Jason shares his story of passing on Twitter.
39:31 Ed shares the story of another startup he passed on. But might be able to redeem himself.
42:45 Ed explains his biggest failed investment due to the founder being hard to work with.
46:12 Ed explains how novice Angel Investors should approach/react to their loses.
48:23 Ed shares some of his best investments to date. AngelList, Alto, NodeSource.
50:24 Jason and Ed conclude the episode discussing the benefits of being collaborative in Angel Investing.
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