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  • Leon Apel 12:44 am on November 1, 2018 Permalink | Reply  

    Suggested Investment Criteria 

    Suggested Investment Criteria:

    1. Excellent product market fit (the product needs to be highly appealing to its intended audience)
    2. Excellent ability to acquire clients, partners, and team members to grow
    3. Excellent management team and reasonable equity structure to align incentives
    4. Reasonable valuation/terms
    5. Reasonable upside: 100x+ potential for very early stage companies and 10-50x for later stages
    6. Excellent probability of traction and capturing significant market share
    7. Strong business references
    8. Desire/passion to focus on the business rather than on other interests
    9. Reasonable skin in the game
    10. The company must have reasonable odds of generating a competitive advantage over time (eg. knowledge advantage, IP, network effects)
    11. Aligned incentives with the investor
    12. Historical track record of success with other companies/projects/employers
    13. The founder must consider feedback and be open to suggestions; however, the founder must have great judgement and ultimately decide what is in the company’s best interest.

     

     

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  • Leon Apel 12:40 am on September 4, 2018 Permalink | Reply  

    Chance of Crowd Funded Venture Getting Liquidity? 

    I wonder if crowdfunding sites were forced to disclose the probability of an investment’s liquidity what would happen? For example, if only a single digit% of ventures after 5 years achieve a liquidity event would it change market behavior significantly?
    It’s incredible that the big question isn’t answered clearly enough: Why do you think you have a good probability of getting a liquidity event?
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  • Leon Apel 4:37 pm on August 15, 2018 Permalink | Reply  

    Testing Prospective Founders 

    The following are same ways you can test for the credibility of potential founders:

    1. Real Positions: If a founder puts positions on their deck like COO, CEO, CTO make sure that the founder explains exactly what each person will be directly responsible for. I’ve seen multiple situations where a founder lists people on their deck who do virtually nothing. It comes off as dishonest, especially when you cross-reference their position with their LinkedIn position.
    2. Skin in the Game: What is the exact dollar amount the founders invested? If they have liquid assets why aren’t they putting a significant percentage of their funds in a company?
    3. Personal Guarantee: While this might be a controversial ask, it helps to understand their level of confidence. In some cases, such as for hard money loans, this should be a requirement.
    4. Jurisdiction: It adds significant credibility to be based in the US and have significant US assets.
    5. Ability to Explain a Strategy Specifically and Clearly: If the founder can’t explain their strategy in detail, they may not understand the problem or have the skillset to solve it.  In eCommerce there are a few buzzwords that people consistently use that tip me off that they don’t understand how to grow their company.
    6. Peer-Review from Several Sources/Experts: Get help compiling questions/due diligence from others/experts to get a better understanding of the risk/reward of the company.
    7. Addictions: Does the founder have any alcoholic, gambling, or drug-abuse issues?
    8. Realism: If a time frame for milestones or the amount of funds asked for are unrealistic, it shows potential issues with the founder’s judgement.
    9. Funding Vehicle: For example, an ICO from a BVI company may have a worse reputation than a SAFE agreement or a public company, which does quarterly disclosures.
    10. Professional Communication: If the founder can write professional updates, it helps add credibility.
    11. Social Media Presence: You may question the founder’s judgement if they post inappropriate content on social media.
    12. Ability to Cope with Stress: Ask the founder about the most difficult business challenges they encountered and how they solved them.
    13. Excuses: I’d rather hear about how someone plans to grow and solve an issue than someone who spends too much time explaining their setbacks (this is just a personal preference). “Dont criticize, condemn or complain” – Dale Carnegie.
    14. Focus on pro-forma vs actual performance numbers: I want to see both. However, if pro-forma is listed I want the strategy to be explained clearly so that the pro-forma is not complete nonsense.
    15. Time Management: The “I’m too busy” excuse isn’t impressive or make you seem to be in demand. If you’re good at managing time, you can focus on the important things.
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  • Leon Apel 4:20 pm on July 31, 2018 Permalink | Reply  

    Why I Don’t Sign NDAs an Investor: 

    Why I Don’t Sign NDAs an Investor:
    You can read someone else’s reasons here, which are more eloquently explained than mine: https://medium.com/@suranga/why-you-shouldn-t-care-about-ndas-and-why-we-don-t-sign-them-2ba3edcaa86e
    The following are my reasons:
    a) We look at many deals and don’t want to invest in conflict of interest checks or be limited
    b) I think I’m a good guy. Look up the type of companies I’ve funded (mostly mission oriented)
    c) They’re not super enforceable
    Since I’ve been asked a few times now, I thought I’d post this here.
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  • Leon Apel 8:54 am on June 22, 2018 Permalink | Reply  

    How to Get a Successful Mentor 

    To get a successful mentor, there are two important components:

    1. Sources
    2. Persuading mentors to mentor you (finding a mutually beneficial proposition)

    Mentor Sources:

    1. Directly contacting the person you want to mentor you (LinkedIn, Email Introductions twitter etc). I’ve caught the attention some of the world’s most successful entrepreneurs on Twitter (Donald Trump), LinkedIn, forums (Some business partners), Facebook, and even through a proprietary messaging app (Mark Cuban) they invested in.
    2. Getting a referral from a mutual acquaintance
    3. Alumni networks (I found this surprisingly useful because you can send a direct email to person)
    4. Emailing team members at their company and asking for a direct introduction

    Persuading Someone to Become Your Mentor:

    1. Ask their criteria (sometimes you can pay them, but, in the case of billionaires, their time is so valuable that you can’t afford to pay them)
    2. Offer them equity in a potentially high growth company
    3. Have strong references (Personally, I require the mentee to create a list of successful, credible references)
    4. Offer to assist them in other ways (eg. Help them find connections or service providers)

    Further, it may make sense to read books written by your favorite mentor rather learn directly from them.

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