Artwork by Natalia Brondani
I’ve taken on the challenge of educating and inspiring rich people to angel invest in startups.
Rich people are sitting on large hoards of zombie capital, be it bonds, index funds or cash, that sit passively in the cloud, allowing the rich to stay rich, beating inflation and sometimes a bit better.
Sure, some of these bonds and index funds are backing interesting projects, but the truth is, this capital doesn’t change the world in the way startups do. I’m trying to inspire 10,000 rich people to become half- to full-time angel investors, moving a small percentage of their zombie capital, on an individual basis, into startups.
If 10,000 individuals worth $10m each put 5% of their net worth — $500,000 — into angel investing over the next five years, that’s a billion dollars into seed stage startups.
In order to do this, my friend Mike Savino and I, along with the LAUNCH team, created Angel.University, a half-to full-day course on the basics of angel investing. We’ve done them a half dozen times already, including in Sydney and Hong Kong, and now virtually over Zoom.
The likely scenario I’ve seen in angel investing is that people who do it as a career and who do it with discipline, which most do not, will likely lose half of their money, or double it, with an outside chance of doing much better.
However, most folks don’t angel invest with discipline. They meet their first startup, dump $250,000 of their $500,000 angel investing capital into it, and watch it burn.
The truth is, you want to start very slow, investing tiny amounts of capital, say $5,000, into each of your first 30 investments in year one and two, tracking which ones hit revenue, significant user growth and/or follow on investment from known investors. Then you need to double or triple — or 10x — your investment in those breakouts.
Of course, the advent of syndicates allows for the participation in angel investing without the massive, time-consuming search for deals and the extensive due diligence required to avoid costly mistakes.
That’s where the book, the course, and the podcast come in, which all urge new angel investors to take their time, study the craft and take the work seriously.
Right now our syndicate, TheSyndicate.com has ~4,000 accredited investing, making it the largest syndicate in the world (by far). We think we can get to 10,000 over the next five years by adding three or four people a day.
If we can hit 10,000 members we will be able to syndicate a qualified startup deal every week, perhaps even two deals a week eventually.
And who knows, in another year or two, we will likely see the definition of accredited investors in the United States expanded to include people taking a course or having related work experience, qualifying them to do startup investing.
Jason Calacanis is a technology entrepreneur, angel investor, and the host of the popular podcasts This Week in Startups and Angel. As a “scout” for top Silicon Valley venture capital firm Sequoia Capital and later as an angel investor, Jason has invested in 150+ early-stage startups including 7 "unicorns" (billion-dollar valuations). His book "Angel: How to Invest in Technology Startups: Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000" was published by Harper Collins in 2017. He lives in San Francisco, California.