What I Learned About Entrepreneurship Through 15 Angel Investments


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

by Neil Patel, quicksprout.com


Over the last 2.5 years I made 15 angel investments with my own cash. Although I have made a decent amount of investments, I don’t consider myself an “angel investor” because I don’t search for companies to invest in, I don’t lead financing rounds, and I don’t know how to read term sheets.

When I first started investing I did it because I wanted to make more money, but I started enjoying investing in startups because it was teaching me a lot about entrepreneurship.

For the last 9 years I have been an entrepreneur and over the years I heard both good and bad stories about investors. But I never really understood what investors went through until I started investing my own cash into companies that weren’t mine.

Here’s what I learned about entrepreneurship through angel investing:

Entrepreneurs have a tendency to embellish

I can’t even count the times I have ran into entrepreneurs who embellish. And it isn’t just bad entrepreneurs who embellish; good ones have a tendency to do the same thing as well.

The worst is when they tell you everything is great and how the company is doing really well, but a week later they mention how they’ll be out of cash within the next 30 days.

If you are going to be an entrepreneur, be a straight shooter. People respect that and in the long run you’ll gain the trust of your team members, customers, and even investors.

Don’t account for revenue until it hits your bank account

The biggest mistake that I see entrepreneurs making is that they account for revenue before it hits their bank account. Why would you tell your investors that you are going to make $60,000 this month when the month just started? Wait till the end of the month to count your money.

Plus if you start accounting for revenue that hasn’t come in yet, you can get yourself into a really messy situation… especially if you start spending that money before it comes in. If you want to tell people estimations that’s fine, but tell them how it can vary drastically.

The best way to keep your investors happy is to be transparent

Most of the companies I have invested in, never give me status updates. It’s nice to hear how your investments are doing every once in a while. It doesn’t matter if it is bad news or good news, I just want to know what’s happening.

When my business partner and I raised money for KISSmetrics we decided to be transparent with our investors. Every week we send them a weekly update of our progress and what’s going on with the business.

Sometimes our updates are positive and sometimes they aren’t. When we have bad news, we make sure to talk about what we have learned and how we will avoid those mistakes in the future.

If you ever raise money, your investors know that you are going to make mistakes. They aren’t dumb… so be transparent with them.

Plus, it never hurts showing that you are progressing as an entrepreneur because if you need more money you ideally want to be able to go back to those same investors.

What’s best for your investors is typically what’s best for you

When someone gives you advise, they aren’t giving it to you because they want to see you fail. Believe it or not, but the advise they are giving is supposed to help you succeed.

Now granted, some times their advice is wrong, but at least they are trying to help you. And who says that you have to follow through on their advice? They are just making suggestions.

So stop thinking that investors are in it for themselves. Because if your company does well, not only are they going to make money, but the chances are you will to.

And yes, sometimes what is best for your investors isn’t what’s best for you, but those cases are very rare. You’re always going to hear horror stories, but you have keep in mind that there are two sides to a story.

Companies can turn around… you just have to have faith

Funny enough, the companies that I invested in that I thought would be home runs are starting to look like they might not be home runs. And the ones that I wasn’t too sure about, are starting to do really well.

This doesn’t mean that the good companies are going to go bankrupt and that the bad companies are going to be the next Google; it just means that you have to be patient.

It can take 5 if not 10 years before a business becomes big, so don’t start counting your chickens before they hatch. And if things aren’t working out the way you expected, just give it some time because time really does solve a lot of problems.

Entrepreneurship is a numbers game

Out of the 15 companies, 1 has already failed and the rest are still up and running. In the next year or two I expect a couple more to fail, a few to at least return the money I invested, and hopefully one or two will be home runs which will make up for all of my loses and still leave me with a surplus.

If you are going to be an entrepreneur don’t expect all of your businesses to do well. What’s probably going to happen is that your first few businesses are going to fail because you’ll make a lot of mistakes, and your next few will do well.

The longer you stick with being an entrepreneur, the more likely you are to succeed. Just stick with it and keep on learning from your mistakes.

Ugly businesses are sexy

I haven’t invested in something as big as a Twitter, Foursquare, or Facebook, but I have invested in a few companies that are really well known. But for me, I don’t consider those businesses sexy.

Why? Well it’s because they usually have a ton of competition and they don’t always have a clear path to monetization from the start.

I personally consider sexy businesses the ones that no one cares for. Quinstreet, Omniture, Hubspot, and Salesforce are examples of businesses that very few people talk about, but they are printing money.

You’re in business to make money, right? So if you want to make money, you’ll have better odds of doing so by starting a business that you can monetize from day 1. And yes that won’t give you the glory and fame that you would achieve if you created Facebook, but your odds of creating one is slim to none.

Business ideas are a dime a dozen, great entrepreneurs aren’t

I’ve learned the hard way that business ideas are a dime a dozen. Every time I invested in a cool idea and not the entrepreneur, it ended up losing me money.

I don’t think that investing in great entrepreneur guarantees that you’ll make money, but it will at least give you a better shot.

Great entrepreneurs have a tendency of treating their investors’ money better than they treat their own money. They try not to waste it and if they lose it some even try to pay it back.

And when things go south, they don’t jump ship and leave the investors hanging. They stick it out until they can either turn the business around or until they drown with the sinking ship.

As an entrepreneur you need to understand when to spend money and when not to. You also need to understand that you have to execute fast and when things aren’t working out you need to pivot. And most importantly you have to be loyal to your business because even if you don’t have investors, you’re team members are still counting on you.

Closing thoughts

As an entrepreneur you shouldn’t be close-minded. Stop looking at things from just your perspective and start looking at things from your investors’ or even your team members’ perspective.

You’ll be surprised on what you’ll learn.

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