Author: Leon Apel

Please connect with me if:

1. You’d like to manage a high growth/disruptive company funded by my investor group
2. You’re highly motivated and want to manage a high growth company
3. You’re working on a disruptive company and need funding
4. You’d like to invest/co-invest in companies we’re working on
5. You’re in the longevity biotech space and you’re working on a breakthrough

• The US, CA, and & SG have major advantages because they have solid, reliable banking and laws. However, that could change in the future if laws aren’t honored or people are targeted for political reasons.
• I am not comfortable and/or unfamiliar with other jurisdictions. I will not disparage countries I am uncomfortable with in case I want to work with them in the future or their situations change.
• I think it’s a terrible idea to consider setting up a business outside of your comfort zone unless you have political connections that you can rely on
• If you can’t trust something as simple as the banking system or the legal system in a country, why would you build a substantial company in that country?

1. IP (Intellectual, Human/Experiential, and Financial

a) Intellectual Property (IP): If a company can solve a problem that involves superior intellectual abilities (eg. AlphaZero can win a chess match), then it has significant potential value. IP also refers to legal protection. By holding patents, you have the option to protect a potential intellectual advantage in a market.

b) Human/Experiential Capital: If there’s a winning team capable of solving significant challenges, that increases the potential value of the company.

c) Financial Capital: If a company has significant resources, it can afford to build a significant presence or network capable of generating a significant advantage.

2. Product-Market Fit

My definition of product/market fit is the degree to which you can design a product/service that solves a problem so well that you have the ability to attract the following:

• Significant revenue
• Ability to increase pricing

3. Investing in Vertical Integration to Capture Significant Revenue in a Large Market

By investing in vertical integration and widespread cover, multiple products/services have become almost essential oligopolies to users including the following:

• mobile carriers (eg. TMobile, AT&T, Verizon)
• credit card issuers (eg. Visa, Mastercard, and AMEX)
• Amazon (enabling one hour delivery by having significant vertical integration in some markets)
• Overnight delivery service providers (eg. DHL, Fedex and UPS)

4. Network Effects/Widespread Adoption/Exclusive Content

• Search (eg. Google)
• Connections/Relationships (eg. Facebook and LinkedIn)-
• Unique content (eg. Facebook/Instagram, Netflix, YouTube, and Twitch)

5. Good Strategy/Management/Governance 

Structuring with some of the following characteristics may increase the odds of success:

• Creating a board of directors
• Aligning incentives
• Having a defined a process for decision-making and dispute resolution
• Applying a meritocratic system of sharing ideas where the best ideas win
• Reporting data systematically/regularly to key stakeholders to make decisions

I’m impressed with how fast conclusions spread–both good and bad. In fact, it’s a bit concerning that ideas can spread so quickly, often without much due diligence.  It’s also a potential problem because people are trained to trust authority or certain sources and they are overconfident about half-baked conclusions.

I think the root issue is that people aren’t motivated enough to determine the truth because it involves reviewing source/raw data. Instead, the majority of people believe a headline or some clickbait without doing sufficient due diligence.  Sometimes issues are rather complex and involve hours of study to determine fact from fiction (eg. nutritional recommendations, global warming, vaccine safety, etc). Sometimes, ideas that are stated as “absolute truths” are not that.

It’s quite refreshing to hear new ideas because many social interactions involve someone repeating, almost verbatim, a common news headline.  In fact, it’s gotten to a stage where Gmail and Skype have begun predicting your response to someone’s email/messages.

This may seem off-topic but one clear symptom of this is that people tend to repeat the hottest buzz words of the week, or month. For example, as of December 2018, I’ve heard the word “Millenial” so many times it’s quite ridiculous.  A millenial is a wide age range so people casting a large group as acting in a similar fashion is quite ridiculous and almost meaningless.

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.