How to successfully invest in Silicon Valley Startups make 7x-201x Returns
Based on private interviews of founder of ECO Global with Super Angel Investors from list "50 Angel Investors Based On Investment Volume And Successful Exits"
This article based on interviews and conversations with some of the investors on this list (you can look and see big names in this list). For reasons of confidentiality, we are not mentioning names.
You will learn from this Article:
- How to select a start-up to be the next 1bn+ or 10bn+ worth company
- Which factors show that the startup is not ready for investments
- Case studies of investments up to $14,5bn worth companies with 201x return
So, here we go.
How to select a start-up to be the next $1bn+ or $10bn+ worth company
First of all Top investors shared know how strategy which is part of proprietary Low Risk & Uncertainty, and asymmetric return investment analysis:
1) Traction / min $20k Monthly Recurring Revenue (MRR) with 100%+ YoY revenue growth or 100k DAU's (daily active users)
2) No or little competition / Venn Circle uniqueness
3) Fair valuation price
4) Markets: industries / products / sectors - Consumer internet Easiest to grow fast
5) Exited Unicorn Founder / Exited Succesfull Founder who implements advice
6) Sourced from trusted succesfull peer colleagues
7) Stanford MBA in the chain: Founder, Sourcer, vc, distribution, strategy
8) Startup has already beaten larger competitors in some markets
Investors understand by these criteria whether a startup is worthwhile or not.
Moving on.Which factors show that the startup is not ready for investments
1) Blockchain or Crypto without revenues
2) Founder that won't follow or listen investors' advice / arrogance without reason
3) Founding team that does not get along
4) CEO who isn't a founder or a persistent executioner/killer
5) No cannabis in the USA as it illegal on a federal level / binary existential risk
6) Overpriced valuation that risks future negative stigma of a down round
7) Arrogant CEO who refuses to edit deck to Silicon Valley standards or commit to at least quarterly reports
8) Has massive competition and no Venn Circle uniqueness
These factors were formulated based on negative experiences, so you can note these important criteria for yourself to minimize the chances of failure.
Now we get to the fun part!Case study / Cruise Automation USD 14,5bn worth
- Achieved 201x on return on investment to date. Involuntary exit at 11x
- $1bn Decacorn Series A 13.8x gross cash GM exit in 9 months, now 14,5 bn (data for December 2018)
- Recognized Killer Founder / CEO Kyle Vogt's previous $970m exit of Twitch to Amazon, and apparent lead over Google's Waymo and coming frenzy for GM, Ford/others desperate to acquire this Silicon Valley tech
- Rare access via a colleague friend of Kyle's
Impressive?Case study / Cabify - high end uber USD 1,4bn worth
75x return so far on paper, entered at $40MM valuation of the company
- Had 9x gross YOY year on year growth in 2014
- Already beat Uber/Lyft in 3 out 4 Spanish markets being safe - no existential threats - this told me that they could become USD 1bn worth as niche Uber/Lyft acquisition
- much lower multiple vs. Uber and Lyft
- Sourced from a colleague investor who is also a Founder and Stanford MBA
Now you know a little bit more how top angel's investors think.
In ECO Global Investors Club you have Access to rare high-quality projects and co-Investment with other investors. If you would like to know more, write to Igor directly