As I have been researching what it truly takes to be a great angel investor I was referred to a few video interviews with Bill Gurley about his experiences on being a VC. I found it interesting as most of the things that Bill recommends as important to be a VC are not related to what is important to be an angel. For example he kicks things off early and talks about how success as a VC comes from starting early, being enthusiastic, and being good at sales. That makes sense for being a VC… but I don’t think it has anything to do with being a good angel.
What it takes to be a VC
One great point that Bill makes about the difference between VCs and angels or bootstrappers is that VCs at the series A round are looking for revenue potentials of 20-70m so that they can be in a good position when the series B is looking for 100m in revenues. That said, angels and bootstrappers don’t have this high of a bar so there are different economics for angels than there are for VCs.
There are five great lessons
The main thing is that only the best opportunities can be taken regardless of whether you are a VC or an Angel.
- There are a limited number of board seats one person can hold
- Optionality needs to be there for each investment
- These are long term relationships so pick people you can get along with
- Returns are related the failures more than the successes – protect the downside
- You only make money with a good decision that is not in the consensus (look at Groupon, etc.)