[joosters]

...the cash, from selling the business has built momentum for other projects like [...] angel investing,

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.

[danieltillett]

I "invest" in new startups because I want to help the next generation. I put invest in quotation marks because I don't expect to make any money (I will be happy if I break even), but I do want to give back and create the environment that I never had access to. I know others feel the same.

[KGIII]

Some of my investment is to empower people that I like. Some is just to help them over a temporary financial hurdle. Some is more like a gift than an expectation of a financial reward and, honestly, a loss is the expected outcome.

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.

[kdscruggs]

Congrats on the sale! Very noble of you, big fan of your approach. Ultimately, my goal is to eventually do the very same (give good people their chance to flourish and create good business).

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.

[KGIII]

No, but I don't have any frame of reference other than this. I treat every investment as a potential total loss, at least in this area. So, I don't really pressure or tell people what to do. So far, it's barely profitable.

[amelius]

> I "invest" in new startups because I want to help the next generation

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?

[danieltillett]

I am not trying to be noble, just trying to change things where I live for the better (I am not in SV, I am in Australia).

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.

[bacheson1293]

Helping others realize the wonders of financial independence so that they can experience more happiness by spending time with friends, helping others etc.

Sure he's not curing cancer but there is a tremendous amount of nobility in his future actions.

Look beneath the surface my friend :)

[adventured]

> Is that really such a noble goal?

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.

[imron]

> I know others feel the same.

This is the reason I would do it if I ever make FU money.

[moretai]

What are some startups you invested that you think will help the future generation?

Any startups that come to mind that have helped this generation?

[tylertringas]

I use the term "angel investing" pretty loosely here. Not implying picking startups on angelist, but more like small investments in other Micro-SaaS businesses. Still formulating a strategy for investing tbh as it's the first time in my life I've have real captial to deploy, but I feel like I have a better competitive advantage investing in what I know rather than securities

[troydavis]

Whether you have an advantage or disadvantage depends on your goal.

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/

[joosters]

Hey, good luck to you. Again, it's nothing personal, and I don't mean to be insulting your choices, I just find it interesting that VC investment is so popular a choice for moneyed tech workers.

[mbesto]

I am not a financial advisor, but generally speaking you should only be putting 5% of your net worth into high risk investments (i.e. angel investing). Some people have done the opposite (95% of net worth) and gotten extremely lucky on going all in (see Jason Calacanis's book Angel for example).

> I don't understand it.

I do. Angel investing is a status symbol in tech circles.

https://twitter.com/sama/status/623685126849822720

[soneca]

I believe this a great feature that create "tech hubs". It is the "give back to the community" of tech entrepreneurs.

It is not just a financial decision.

[joosters]

But there's plenty of ways to 'give back to the community' without being the one waving the chequebook. In particular, if you've got the spare time to work on other projects, you can do plenty to help out.

[fpig]

You always have the same amount of time, regardless of your net-worth, so the richer you are, the more valuable time becomes relative to a dollar.

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.

[soneca]

I believe a "proper" angel investing implies that the investor do not only write checks. There is time commitment helping other founded. Successful entrepreneurs turned angel investors is the pinnacle of "smart money" I think

[duggan]

Some folks have more spare money than spare time.

If you've got the spare time, cool, if you've got the spare money, cool. What's the issue here?

[joosters]

I've no issue with angel investing. It does start to irk me when people talk about it as 'giving back to the community' though. That used to be called charity, not investment.

[duggan]

Ok I think that's a reasonable position to have.

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?

[erikbye]

When you're busy with your new, own projects, time is in short supply. Are you seriously going to complain that people angel invest? It's of great benefit to founders.

[cat199]

"This isn't a personal critique of the OP, but it just seems so very common in general. I don't understand it."

[erikbye]

You conveniently elided the preceding part and where he suggested devoting time instead of money. No matter your selective citation his tone was still that of a critique or complaint.

[growt]

I think it's because before the sale you were on the other side of the table dreaming about how easy the VC life is (just spending some cash and letting you do the actual work).

[asmithmd1]

How else would you invest your money? Index funds in a stock market whose price is going hockey stick?

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.

[sidlls]

I'd invest in equities, commercial real estate, and residential real estate development.

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).

[charlesdm]

10% a year on a million is still (way) better than throwing 4x $25k at a random startup through angel investing.

Hell, with current interest rates, you might as well use some portfolio margin and borrow an extra million.

[asmithmd1]

Are you saying you can expect 10%/year with your money in the stock market? No stockbroker will tell you that, it is more like 6%-8% over a 10 year time frame. And you have to have the courage to watch your balance drop 50% over a 1-2 year time span and still stay in.

[icedchai]

My own accounts have earned over 11.5%/year, for the past 10 years. This was through the financial crisis, where I did see huge drops like you describe, held, and continued to invest.

Longer term 6 to 8% feels about right though.

[erikbye]

S&P 500 ETF Trust gained 63.42%, last 10 years.

Vanguard 500 Index Fund, 130.56% since 2010.

And neither look like hockey sticks.

[charlesdm]

If you put some time into it and learn how to properly invest, yes.

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.

[joosters]

Trying to time the market? Good luck with that.

[vinceguidry]

All active investment, unless you're a market maker, is market timing.

[alien_at_work]

> it is more like 6%-8% over a 10 year time frame

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.

[joosters]

Yeah, exactly. Profitable VC investment is often described as a numbers game, where you need to make maybe hundreds of investments to smooth out the inevitable numerous failures. 4x $250k angel investments is basically a long shot gamble. On the flip side, if you do spread your investments and invest in lots of companies, you as an individual aren't going to be able to have enough time to help or advise any one startup in a meaningful way.

[alien_at_work]

How often do angels get screwed when VC's come in? Genuinly asking, not trying to make some point.

[joosters]

Sorry, I'm talking about VCs/angels as the same thing, and not trying to say anything about the investment time/stage/size/whatever.

[briandear]

I want to “invest” in the opportunity to sit back, write books and fly airplanes. Angel investing seems like its fraut with constant bombardment from bullshitters. Spending my days looking at decks and listening to the noise of how great someone’s revolutionary idea for delivering fresh made salads to Brooklyn hipsters is would drive me nuts.

Perhaps I’d take my money and go build schools in the Himalayas or something.

But to each his or her own!

[ringaroundthetx]

"paying it forward" is part of the silicon valley culture, and as other markets mature they try to adopt that mentality as well.

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"

[joosters]

I always thought "paying it forward" spoke of acts of charity, not investment (and to those who say that VCs don't expect any reward and invest solely through good spirit, perhaps they should then be making investments that don't give them the potential of huge paydays?)

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!

[nathan_f77]

I think it's just a lot of fun to meet other entrepreneurs, and be involved in what they're building. Definitely more fun than putting your money into some index funds.

[sparrish]

Seems a bit ironic that a successful bootstrapped business owner would want to do angel investing.

[tylertringas]

Appreciating the good discussion here around "angel investing" which I broadly agree with depending on how you define it. Just want to clarify that for me personally, I meant just investing in early-stage businesses in creative ways; not VC, moonshot, whatevers. In the run up to launching many failed businesses prior to Storemapper I accumulated nearly $60k in credit card debt, which functioned more or less like an angel investment from Chase et al. I think there are lots folks who could build a good business but don't have access to even that level of "capital" or don't want to take that kind of risk and might instead look for an "angel" investment. Maybe. Still early in formulating a strategy to be honest. (further reading if you're curious: https://tylertringas.com/debt-free/)

[moeamaya]

Both ourselves and our fellow bootstrap friends have eerily similar tales of CC debt as our first investors. $30k for a nearly profitable bootstrap founder is rocket fuel.

[DeBraid]

People go with what they know.

Makes sense to skew towards industry where one has acquired lots of information.

[Kiro]

Because it's fun. You wouldn't want to do it if you had the money?