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Angel No More: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

Kevin Hartz is sitting this one out.

Sure, Hartz is busy with his day-job as CEO of online ticketing startup Eventbrite, but it’s not a time management thing that keeps him from his usual angel-investing habit. It’s more a money management thing. Hartz doesn’t like to invest his when there is so much sloshing around Silicon Valley.

The last new investment Hartz made was more than a year ago. At the time it was a little company no one had heard of called Pinterest. You’ve probably heard of it now. Hartz also made early bets on Airbnb, Flixster, Palantir, Trulia
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Study Indicates Follow-on Funding Gives Lower Returns for Angel Investors

In 2007, Professor Rob Wiltbank reported in Returns to Angel Investors in Groups that angel investors made follow-on investment in about 30% of their invested companies. It was surprising for me to learn that follow-on investments correlated with lower returns, that is, angels that made follow-on angel investments saw returns of 1.4X their investment, while those that did not make follow-on investments enjoyed 3.6X returns.  The time to exit for both groups was similar.
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How To Be an Angel Investor — Harvard Business School Working Knowledge

If you want to become good at early-stage investing, you need to learn how to size up the fundamental elements of an opportunity. Many investors use
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Marketing is not the dark side

The premise of this story is that Angels should always look for a marketing to engineer/scientist ratio of 1:1 or more for increasing the success rat
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M/E Ratio – Evidence for upstream Marketing investment

The ratio is a great guide for Angels. Statistics show that fewer marketing people than engineers/scientists substantially increases investment risk.
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