When JOBS was passed, there were specific ways non-billionaires could play in the pre-IPO space of crowdfunding startups as accredited investors.
1. Earn more than $200,000 individually, or $300,000 household, or
2. Net worth over $1,000,000 excluding the investor’s primary residence.
But there have always been creative ways to invest in a startup. For example, when you have specific skills needed by a startup that they normally would have to lay out capital to cover.
Papa Bear (my business mentor) used to trade his skills in navigating the financial compliance waters for startups to go public for a share of the company. One deal netted him 9 figures, but that was the only home run out of 62 companies he’d taken through that process.
The takeaway lesson here?
Expect startups to either fail or be mediocre compared to the rare home run investments that motivate us to keep going. But money alone doesn’t give you the influence over the success that skills and other intangibles do.
What can angels bring to the table besides money? What intangibles can YOU bring to the table for your local startup opportunity?
Papa Bear was able to participate in the success of the startups in which he invested his talents far more effectively to influence success, than if he had thrown the equivalent value of his time and intellectual offerings into the stock market.
I’ve been talking with founders at RevRoad, based out of Provo, Utah, near the Silicon Slopes (Utah’s tech boom corridor between Provo and Salt Lake City). As an organization, they mentor and educate entrepreneurs through free monthly webinars and seminars, but they get a bit more hands-on by holding entrepreneur competitions, where they can select a handful of portfolio startups to exchange equity for an investment of time and skills from their team of experts in legal, I/T, social media, marketing, and other serves that would normally be expenses an entrepreneur would normally bootstrap out of savings or lines of credit to hire out.
Listen as A. J. Rounds tells me more about the RevRoad “Nail It and Scale It” phase of venture services.
There is more to the RevRoad business model than what he’s describing in this Phase One – and the main takeaway I got from A. J. is advice that all angels should take to heart; “We don’t win until our portfolio companies win.”