Angel Investing – 2020 Update

It’s been a little more than 5 years since we started our Angel Investing Fund. The goal was to use the money that I made in the last year of my work career and do some good in the world.

We called it our “One More Year Fund”.

I made 6 Angel investments for our OMY Fund over the first 3.5 years. All of the investments had a connection with improving the world by linking with the UN’s 17 Sustainable Development Goals. The goal is for just one of the portfolio companies to be successful – making a positive mark on the world and paying for losses on the others.

I didn’t provide an update last year as 2020 kind of killed my interest in more investing for the time being. First, I started the year recovering from my heart attack and missed a bunch of the pitch meetings. Second, the pandemic meant all of the group’s meetings became Zoom calls – making it hard to do deals. I like sitting down with prospective entrepreneurs in person – and networking/teaming up with other investors.

As a result, in 2020, I doubled down on one investment, but stopped looking at new deals entirely. I even dropped my annual club membership, which pays for deal legal support.

Since the goal of the portfolio is to do good in the world, instead of investing $$$ we made an incremental, multiyear pledge to a non-profit foundation I have been involved in for a long time.

Doing more Angel deals right now is also difficult because of all the Angel deals that we have done, none have paid off yet. That’s not a huge surprise in 2020, as the pandemic was quite hard on all of them. We get monthly or quarterly updates from management of each of the companies and I am impressed with how they have learned to reinvent the way they test, sell, and manufacture.

How are the six companies doing? I would say that 3 seem to be making good progress – they’ve successfully commercialized, completed clinical, and had successful new capital raises at equal/higher valuations than I bought in at. It’s great to see how much progress they have made.

Two others have been hit hard by COVID (one company completely losing their contract manufacturing partner, leaving them without product), but managed to survive a challenging year. I’m hoping they can build on their 2020 pivots. The last investment we made is now lost as the company dissolved last summer as a result of issues separate from the pandemic.

If people asked if I would recommend getting involved in Angel investing, my answer would be “it depends”. Research says it can be a successful investment strategy if you make enough bets, but the investment windows are very long (3-5-7 years), it is difficult to pick winners, and for every start-up, there are 100 things that can go wrong. Like a pandemic.

At the same time, these MicroCorps are really impressive in tackling innovation and they each have an opportunity to change the world in a positive way. I continue to think of them as a sort of charitable giving: a bit more work, a bit more risk, but hopefully ideas that pay off for the future.

Image Credit: Josh Howard; Unsplash.com

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