Q: Tell us a bit about your angel/investing history
My first investment was a partnership investment with my Dad as lead. I was 11 years old, and a guy from Vancouver named Murray Pezim (“The Pez”) called my Dad and told him he found a great oil/mineral stock in Alberta called Jupiter Resources. They just had a really good assay of their property and were expected to start drilling for oil in the summer. I bought 100 shares for $1 each with my Toronto Star paper route money (my Dad bought considerably more). It took three years but Jupiter grew to be $9. I was a king! I bought the expensive Popeye cigarettes and stopped buying fake Cola from the Pop Shoppe but bought real Coke right from the stores – the expensive stuff! I was a 14-year-old Dan Bilzerian. That success definitely piqued my interest in giving other people my money, but later successes were very hard to come by. Most recently I have placed both cash and some cash/sweat in the last 16 years. In the past 40 years, I’ve come out ahead considerably. I have mostly done consumer/prosumer-focused tech and two B2B tech companies. I am exploring one cleantech/green idea to seed and sweat with, and one pharma-tech company for taking a well-known batch process and turning it into a continuous process. I have a few of my own startups going as well, but I don’t invest boldly in stuff I do until we can qualify the market.
Q: Do you have an investment philosophy?
I definitely see life in the Catholic definition of the word “humility” or knowing one’s place. But humility doesn’t always mean being meek and humble. It means if you have the skills to be a great doctor, then that is your place. It means if you are meant to be a great mid-level manager, then that is your place. It means that if you are to be a starving artist, then that is your place. This philosophy touches my examination of a startup in three ways.
- When I look at teams I often assess whether these guys and girls want to be founders and entrepreneurs because it’s the popular thing to do or because they are actually called to do it. You will be surprised how many people want to be like someone from a sitcom in the valley more than they want to relieve a consumer’s pain with their product or service.
- Timing the market or knowing one’s place in the market. This I do by looking at trends and seeing who is being funded, who is getting a series A, who is being acquired, who is IPOing (I also review failures – but there are just so many – easily 20 to each success story). Then I look at user growth or consumer education on the product or service and try to guess if the market is mature or if it is at the early adopter stage. I like the early adopter stage when I can convince myself of the market growth. If I can’t do that I look for a follower or a second-to-market company if they exist. They usually get a big benefit from learning from the successes and failures of the leader in the market, so they are more efficient.
- Knowing my place. I have my own personal moral compass and try to limit investment of time and money in things that I can go back to my wife and be proud of. I would dread answering my wife with what I did today by saying, “I just invested in a great slavery app – buy and sell humans for 20% less than the competitors!” In general, I look for products or services, that are more efficient in time, less expensive, or of better quality than what exists. I’d like to see 10x better, but sometimes I will settle for incrementally better.
Q: What’s your cheque size?
This is definitely growing, but $50K-$100K for the right company is good. To limit my exposure, however, I try to get some of my friends involved so we can then find 3 other companies to invest in as well and have more chances of success. I do a lot of free consulting and dropping $5K for a marketing campaign or to build a well-researched plan or to show a real need. But there are strings attached with my money – you can see my philosophy answers.
Q: Why do you invest?
First, if you’ve never dealt with an Angel you will not understand this fully.
But imagine you have a vision of the future, and most everyone in your life supports it to your face but has doubts when they talk to others. You have been struggling with everything to make your vision a reality. No one is helping except a few people you found along the way. You have done everything you can and now you have to go ask someone with a lot more experience for the money. You’ve heard stories about founders being robbed at some places, but mostly being rejected. You show up and start talking, and the Angel listens, asks you how you handled this or that, talks about where they made mistakes in the same situation, gives you some pointers, then cuts you a cheque and says, “I believe in you!”
Going back to my philosophy, I believe it is my place to help and believe others (with some filtering of course).
Q: What motto or paradigm would you like to share as a piece of “elevator advice” for founders?
“Sell before you build” – if the market is there, you will have both yourself and market demand keep you on schedule. “Build it and they will come” is for very fast teams that can fail quickly. I have seen and worked with these teams, you are not one of those teams. Trust me on this one. “Sell before you build.”
Andrew Opala is a regular contributor to the Newsletter and is the Editor since November of 2017. Andrew co-founded Voxavox, Swipesearch, TenFour Labs, Instaradio, Redpimento, and theMin. He can be reached through LinkedIn. (Andrew adds that since you are seeing his profile some Angel missed their deadline for getting into the newsletter.)