My angel investments

I have been investing in startups for more than 20 years. The first angel investment I remember making was in “ez2Get” in 1998, which promptly went bankrupt. Ez2Get was basically a restaurant delivery service (think: GrubHub, DoorDash or UberEats) before the smartphone. In fact, most of their business wasn’t even from the Web -- it was by telephone through a call center. I learned from this failed investment that successful companies require a good idea, great execution, and good timing. See above for the photo of my stock certificate for EZ2GET.COM dated March 8, 2000. This topic of timing has been discussed on Twitter lately also.

My second angel investment was in a data center and web hosting company called First World Communications in 1999. I was working at TPG which, along with Colony Capital, invested around $200 million in First World in what we would nowadays call a “pre-IPO bridge round”. A few months later, Lehman Brothers (may it rest in peace) took First World public and the TPG stake was briefly worth many multiples of what we invested. I had somehow convinced the compliance department at TPG and at First World to let me personally buy some pre-IPO shares alongside TPG, and for a brief moment I had my first “10x” investment. A year later, First World was bankrupt. All I have to show for it is the First World / Lehman Brothers gym bag that I got as a gift on the IPO roadshow, and the First World stock certificate from the IPO. The stock certificate is framed and hangs in my home office, a stark reminder that in angel investing, fortunes come and go.

Since 1999, I’ve invested in over 100 startups and tech companies, mostly with good success. Over the last few years, I’ve been looking at about 50 companies a year and investing in around 5. I usually invest in the seed round or the Series A.

What do I look for in these investments? 

First, Founder Grit. I want the Founder to be passionate about solving the problem they are focused on, and be ready to run through walls to succeed. Ideally it’s a second-time founder, so they’ve learned from their mistakes on someone else’s investment. And ideally they have not yet struck it rich and still have something to prove.

Second, Founder + Idea Fit. I've learned that there is no such thing as a great idea or a great founder; there are only great founders for specific great ideas. The Founder has to be passionate about the specific problem that the startup is trying to solve.

Third, I’m looking for a big TAM (total addressable market). Here’s the most obvious and yet insightful statement you’ll read today: if your TAM is huge, even small market share can create a valuable company. 

Fourth, and related, I’m looking for companies that are solving actual problems, not companies in search of a problem to solve. I’ve seen so many pitches over the years for ideas that are really just features in someone else’s product, but aren’t solving a big enough problem to become a company. (Example: I invested in vhoto which was a photo app that took very short moving photos, and also created high quality still photos out of short videos. Then along came Apple with an update to its own camera app that added the “live” feature, completely copying vhoto, which eventually stumbled its way into an acquihire sale to Hulu. Turns out vhoto was a feature, not a company.) 

Fifth, I’m looking for companies with true product differentiation which are therefore not reliant on Google for traffic. More on this here.

If you’re curious, I’ve listed all of my active investments and my exits (good and bad) below, categorized by theme.

Moonshots

• Relativity Space
• Virta Health
• SpaceX
• Stealth NewCo
• uBeam (now Sonic Energy)

Health Care

-     MaxQ AI

-     Accolade

-      Chorus Fitness (wound down) 

Workplace productivity

-     AllVoices

-     SparkToro

-      Stack Overflow

-     Glassdoor (sold to Recruit)

Travel

-     Vacatia

-     Liftopia

-     Turnkey

-     Domicile

-     Playa Hotels

-     Pointshound (sold to Points.com)

-     Dwellable (sold to HomeAway)

-     Room77 (sold to Google)

-     Vamo (sold to AirBNB)

-     Switchfly (failed)

Transportation

-     Fair

-     Voi

-     SmartFoam

Social

-     Morphin

-    Stealth social media startup

-     Betmo

-     Interlace

-     Vhoto (sold to Hulu)

-     Wire (sold to Remitly)

Real Estate

-     ButterflyMX

-     VTS

-     Canopy Space

-     La Haus

-     Block

-     Pro.com

Ecommerce

-     Chairish

-     Stealth NewCo in fashion ecommerce

- Zulily (sold to QVC)

-     Beauty by Design (failed)

-     Julep (sold to Warburg Pincus)

Retail

-     MOD Pizza

-     John Elliott

And finally, my own companies: I’ve invested heavily in my own startups because if you can’t bet on yourself, then who can you bet on?

-     Hotwire

-     Zillow

-      dot.LA

-     Stealth NewCo (I'm currently co-founder, Chair, and Chief Strategy Officer at a new startup; stay tuned for more info)

Feel free to send me early stage investment opportunities that you think fit into my investing themes. Email me at srascoff at gmail dot com