Find Your Investor Character

We all invest time and effort in what we believe, in what aligns with our identity, in something we feel comfortable with or excited about. Being an investor is similar. Not only institutional investors have investment thesis, but individual investors should also have their own investment thesis, starting from knowing their own investor character.

Do you like to participate in the decision-making process and selection or just select managers to do that for you? Do you enjoy helping startups you invest in or just learn along the way? Are you excited about the realization of frontier technologies or drawn to novel innovations? Are you only interested in something you can understand? Are you an impact investor that takes impact into consideration? Do you like long games with 10-100x upside potential or safer shorter bets closer to IPO/exits with smaller upside potential? Do you prefer to follow famous VCs when possible (usually more expensive valuation) or do you love researching and strive to be a smart investor?

Take a look at these examples, and think about which cases you’re more interested in learning more about. This isn’t solicitation, the purpose is to find what aligns with you better.

Pre-IPO Secondaries

The top blue-chip startups like Stripe, SpaceX, OpenAI, Instacart, Flexport, Notion, Epic Games, Discord, Airtable, and Databricks have created hundreds of billions in value in the private markets that are nearly impossible to access for non-institutional investors. Now that’s changed. Furthermore, the public market downturn brings many pre-IPO secondaries discounted 30-60% from their peaked valuation, but not for all though. If OpenAI is too expensive for you, Anthropic is a strong contender started by former OpenAI employees, just raised $100m from SK Telecom, and $450m 3 months ago from Google and more. Secondaries exchanges give private investments and pre-IPO startup employees liquidity as well as participation opportunities for more investors.

Follow Y Combinator (YC)

YC is the hardest accelerator to get into in the world, it’s said that the acceptance is lower than Harvard.?Pitchbook gave a report?on achievement comparison of renowned accelerators like YC, Techstars, 500 Global, MassChallenge, and SOSV in 2023 June. The report concluded that in terms of successful exits, capital raised within three years of completing an accelerator program, and cumulative capital raised, unicorn creation rates, YC led the pack in all. Selecting from YC-backed startups is one of our strategies, but not the only one.

Follow Top Angel Networks

Angel investors have become a special category of investors, not by check size and stage in the traditional sense, but by a more collaborative process for investment decision-making and venture building. There is more collective intelligence built up in the processes of top angel networks (hundreds of members) than in most VC firms with very lean teams. Some angel networks have built processes that have created “higher-than-average” IRR over long years of operation. And, in the U.S., angel networks share deals with each other, which means more data is collected. Angels are high-net-worth professionals and executives. Their insights and networks can be helpful in reviewing deals and helping with critical decisions in a startup journey but don’t handhold. They also have participated beyond angel rounds now. (more insights from our previous panel) Connecting top angel networks is one of our strategies.

Follow Industry-Leading Corporate VCs or Specialized VCs/Accelerators

Evaluating each deep tech startup is a deep case study, we need to understand the industry context, technical knowledge, business logic, and competition landscape. Fortunately, we might have the opportunity to leverage the brain power of corporate VCs or startup programs. Many industry-leading enterprises engage with early-stage startups possibly from TRL (Technology Readiness Level) 4 and up, they have the industry expertise to select startups and innovations with potential. For example, Shell and Halliburton run startup programs for many years. Similarly, specialized VCs and accelerators are sources to find gems in their focused domains. For example, SOSV specializes in bio/health tech and climate tech, and CIA-backed In-Q-Tel specializes in defense tech.

Follow Top VC Fund Managers with Top Track Records

Only top decile VCs create cash-on-cash returns to their LPs(limited partners, investors invest in VC funds) that beat other assets such as real estate or public market stocks. Real performances of VCs are very hard to find and verify, even if you do get their reports, often they use TVPI (ratio of the total value to paid-in capital) which considers both the realized and unrealized value of the investment, the latter is just value “on paper”. For example, if companies raised rounds during 2021, values were largely inflated and recorded “on paper” unless they raise a down run after that so the value is updated. Many fund managers touted their performances by TVPI, instead DPI (ratio of distributed value to paid-in capital) is the real return for LPs. On the other hand,?VCs make a lot of big mistakes and herd behaviors, look at WeWork and Theranos, so don’t just follow big-name VCs because they are famous, research what they have done! (Go Google who invested in WeWork and Theranos)

Follow Major Forces and Tailwinds from Policies

Against the backdrop of macroeconomics, global trends such as the climate crisis leading to governments’ actions, geopolitics tensions leading to the localization of critical manufacturing capabilities and supply chains, defense tech, and semiconductor sovereignty, could create and shift investment opportunities accordingly. Examples of climate tech include?green hydrogen,?decarbonization and carbon-to-value tech, carbon market infrastructure, and carbon software. However many factors are at play and uncertain because of still-evolving developments and different timelines/policies in different countries. Using a top-down approach, for an emerging trend we often connect with industry experts in the trench to understand related variables, collect landscape data and market reports, and host advisory panels for deeper discussions around a topic. We might reach out to potentially promising startups identified through the research process. If interested, you can join our discussions.

Follow Your Calls

Everyone cares about some causes, be it saving the next generation from the climate crisis, improving equality and inclusivity in our societies, finding cures for diseases humans are suffering, or better healthcare models. Other areas of SDGs (Sustainable Development Goals) could be your calls, investments are crucial impact drivers, and you can put your money to work on that. Impact investing isn’t equal to inferior financial returns, on the contrary, impact-driven decisions are often requested by investors or stockholders.

Be a Smart Investor

Although angel investments have been democratized, angel investors need better intelligence to make better decisions. We see angels have absolute disadvantages in information and knowledge when looking at deals coming from current sources. Usually so-called “deal memos” are sales promotions filled with one side perspective – the selling side. We want to be smart investors being able to know as many variables as possible and ask questions. When making decisions we know what risks we are taking.

Be a Value-Add Investor

Being an active investor might help startups grow in many ways depending on your experience and connections. Many startups prefer to take capital from value-add investors. The help could include making introductions, advising on business strategies, company governance, capitalization, and exit journey. Bigger investors might become board members, while syndication of smaller investors can support startups by making introductions if needed. Investors are one kind of synergetic partner with a high conviction for startups. Besides financial returns, this can add learning opportunities about new innovations with first-hand updates to active investors.

Ideally, all kinds of investors need to build a diversified portfolio across industries, stages, and execution teams. The good news is that syndication enables investing smaller checks possible, any accredited investors can invest in private companies, even later rounds before they go public. We collaborate to share the cognitive loading and more data.

To join us –?Global League?– no need to commit any capital or fee, you get to know deals vetted by us with the above methods. You can also actively recommend startups from identified quality sources, participate in the evaluation process (panels), collaborate on due diligence, co-invest, advise startups before or after we co-invest, and shape the venture building and exit strategy. If you can’t commit much, just review the data collected by our group and think about your own investor character and hence portfolio construction. Participants and co-investors in each investment will share learning.

We are looking for Venture Investors, apply here.