Unpopular VC

Peter Livingston , founder of Unpopular VC , shared his insights on angel investing and working with startups globally in my recent podcast interview.

My next podcast guest will be Guy Kawasaki on March 7th. I had the opportunity to speak with him about his new book Think Remarkable and am excited to share this episode.

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With over a decade of experience and 400+ investments under his belt, Peter emphasized the importance of diversification and long time horizons for new angel investors. He recommends starting small with check sizes around $1-5k to build a portfolio of at least 50-100 companies. Peter cautions that liquidity often takes 8-15 years, so angels shouldn't concentrate too heavily in just 1-2 startups.

Through Unpopular VC's unique model, Peter and his partner Thibault Reichelt have deployed $68 million into 400+ companies so far. They take a bottoms-up approach to find talented founders worldwide building compelling businesses, regardless of trends or location.

Speed and conviction are critical to get into the best deals before the herd. Peter explains how their lean, autonomous team empowers them to move fast and make contrarian bets. As a result, they've gotten into several succesfull startups early like Zepto and Yassir .

Overall, our discussion covered Peter's journey from startups to angel investing, sourcing great founders globally, portfolio management for 4000+ LPs, and key lessons learned. Read on for a summary of the key questions and responses from our conversation.

Investment Commitees

Peter believes that investment committees are "really dumb" and much less effective than individual partners making decisions.

• Investment committees are slow and miss out on the best deals
• Good investments often seem bad initially and need contrarian thinking
• Requiring committee approval biases away from non-consensus bets
• Peter and his partner have full autonomy to invest independently
• This empowers them to move fast and make unpopular bets
• Enables getting into extremely successful investments early
• Big wins offset mistakes over time

Angel Investing Rules

The key is diversifying widely, starting small, investing consistently over decades, and taking a very long-term view. Patience, persistence, and the right expectations set you up for success.

• Diversify widely - don't concentrate too heavily in 1-2 startups early on.
• Start with very small check sizes - $1-5k to build experience over time.
• Build a portfolio of at least 50-100 companies as you gain experience.
• Understand the long time horizon - liquidity takes 8-10+ years.
• Go slow and be patient - invest small amounts consistently over many years.
• Expect that most startups will fail - prepare mentally and manage risk.
• Get deal flow by establishing yourself as an active angel early on.
• Look for founders with strong credentials and some concrete traction.
• Accept and embrace mistakes as part of the messy world of investing.
• Preserve capital to maintain flexibility in follow-on rounds.
• Let great founders do their thing - avoid over-involvement.

Red Flags in Investor Meetings

The main red flag is when Peter doesn't believe a founder will be able to recruit the talent, capital, and customers needed to be successful over the long run. Track record, credibility, and compelling storytelling are key.

• Lack of commitment/dedication from the founders
• Founders who seem unlikely to recruit strong teams
• Unrealistic projections or expectations on timing
• No clear plan for raising future capital
• Founders who can't articulate the risks/challenges
• Bad signs around team dynamics or culture
• Lack of passion/conviction around the problem/solution
• Founders without relevant experience or credentials
• No evidence of exceptional ability based on past achievements
• No demo or concrete traction to give credibility
• Unwillingness to acknowledge potential downsides
• Overly complex business models or go-to-market
• Markets that seem too small or hard to penetrate