- How I became an angel investor and why it is not as good as it might appear
Just now·6 min read
I’ve started investing in other peoples’ projects circa 2005. Invested in both offline and online projects. Online, of course, was more productive. I’ve invested in betting websites and online casinos, and luckily was able to sell my shares right before the gambling industry began to have problems both in Russia and America. There also was a CMS for the social network and blog, which was an improved version of LiveJournal. It was a finished product, written from scratch, we’ve made local sites of interest such as cat lovers and fishing with it, but lacked the marketing skills and generally the vision of how to make something big out of it. The market was not really exploited then, in fact there were only Classmates (Russian version), Vkontakte was little-known and nobody have been using Facebook yet. Everybody I knew back then, was still on MySpace. Marketing the software was the real challenge and we weren’t good at marketing.
I would also note that due to my retrograde, conservatism, and unwillingness to follow trends, I overlooked the rapid growth of smartphones among the population, and apps. I only got into apps in 2015. Before that, the focus was mainly on websites. However, I was lucky to get there in the right moment. I’ve bought a clone of a popular American app with the same name for pennies (the app itself was recently shut down), polished it up, added options, gathered most of the original audience back (without doing anything at all, they came back there by search), and as the number of users grew into a decent figure, I sold it for a profit. Not for millions, of course, but I did make some money out of it.
Around 2010 I came to my first startup gathering, my friend from Moscow Hillel was setting up a meeting with one Russian investor, who likes colorful shirts (I omit his name). Listened to and saw what other guys were presenting and what the investor had to say about it (he is a very smart and experienced guy, I still read him on Facebook, he often gives me food for thought). The next day went to a big gathering with the same investor on Digital October (Moscow). There people presented their projects, and the jury chose. But to be honest, I did not see anything particularly interesting, some aggregators of hairdressing salons, tagging brands on photos, etc. Nothing of those projects ever became big, as far as I know.
I set up my own investment firm and started receiving pitches. What I’ve encountered when I was looking for mentees online, it’s the same 90% bullshit as everywhere else. For example, a guy writes me an email and starts off by saying that he needs 3 million rubles (the dollar at the exchange rate was around 30 rubles at the time) for a rap portal somewhere in Siberia.
I still remember how he “pitched”: “imagine, you go to the main page, there are beautiful videos with dancing girls, the music is pumping, everything is cool, we need 3 million rubles to start”. I asked him why he decided to immediately make a website and where the number of $ 100,000 came from, why he did not create at least a group on some forum or in the social network first to see and to probe the interest in the subject. After that, of course, he disappeared. And there are plenty of others like this. Stupid ideas in urgent search for hundreds of thousand of dollars.
Relatively recent pitch. A couple of years ago I was in Moscow, asked my friend from the tech crowd, if she knew any people with projects looking for investments. She immediately connected me with a person who happened to be my old acquaintance. I contacted him, and asked what he has. From his words it was a certain AI, which is supposedly able to draw up legal documents, properly respond to voice inquiries, give advice and generally interact with people. All it takes is some measly $20,000 of bridge money, for which the creators are willing to give 2% in the project. The pitch was even more interesting than the Siberian rapper: “I do not understand exactly how it works, but somehow it works and it is very cool” (I almost literally quote the correspondence). Already invested a million dollars, soon will invest another five! But we need 20,000 dollars right now.
And all this is so ridiculously presented in a manner “the window will be open only for a week, and then that’s it!”, “a representative of the company is difficult to contact, he is constantly busy as he answers questions from the endless investors willing to give money”, “only 20 thousand dollars, where the potential is millions, no, billions!” etc.
That kind of scam mixed with naivete, served up with a “we’re not really interested in your money” sauce. But if you do, we’ll take it, yes. Needless to say, I have not heard about this project since then, and an online search has nothing on them. And the dude who presented me with this project is still in the tech/investors crowd, telling stories how he lives in San Francisco and giving pompous interviews about nothing in particular to the startup press.
What’s the moral of this whole narrative? There are a lot of projects being made, even too many, everyone wants to be in a startup now, and everyone sees in his dreams how he goes to the Valley and his product is personally bought by Zuckerberg, and Musk is tweeting about it.
In fact, more than 90% of the projects are empty, useless crap and garbage. Finding something worthwhile takes time, persistence and effort. Most people are inadequate in assessing their products, everybody is so sure that he invented something brilliant. Not too many scammers though, as in was in the ICO times, mostly dreamers. There are also those who just want to live off the investor’s money, they do make some projects, get investments, and sort of are in the business. Just make enough cash for themselves but that’s it. This is how they understand success. There is no passion in them and no vision.
I have a friend of mine in the US. In 2014 they made a “revolutionary” project in the field of medical marijuana delivery, raising more than 50 million dollars from investors. They closed that project after three or four years and started a second one two years ago, also related to the cannabis industry. At the moment, according to Crunchbase, they are in the seed stage and have raised $5 million.
The point is, in general, to make a supposedly potential product, find a sucker with money and then just live off of it. Get a salary, pay for expenses, hang out. Have a share of the turnover and so on for a few years. Then you do it all over again. Most of the startups that get funding do just that. People don’t aspire to do something big that will be worth hundreds of millions or even billions, they just want to make enough money to get by.
I’m still looking for interesting projects. But to find an idea that really builds into something worthwhile is not easy, that’s a fact. It’s almost like winning a lottery. But if you do have something interesting, I am always ready to listen to your proposition. Just find me online and shoot me an email.
I run https://sapiox.com
- Date of publication:
- Thu, 04/22/2021 - 14:07
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