Around six months ago I joined one of the leading associations for angel investors in Brazil, called Anjos do Brasil. Once a month there is a meeting with a keynote and four startups pitching to raise money.
It has been a very interesting experience, because I am discovering the other side of the coin. Over the past 10 years or so I have been involved with entrepreneurial projects where, in some cases, I was looking to raise money from investors. Now I am evaluating startups and projects who are looking to get my money.
After evaluating around 50 startups, a couple of weeks ago I made my first investment. It was in the mid 5 figures range, but it still gave me a weird feeling when I wired the money. I know that angel investing carries a lot of risk, and that I should be prepared to completely lose that money. Still, kissing goodbye to a big pile of cash is not easy!
On the bright side, I believe the startup I invested in has a lot of potential, and I am discussing with them the possibility of becoming an advisor, given the company operates in a segment I have a lot of experience with (distance learning and online courses).
The plan is to grow my portfolio to around 10 startups over the next two or three years, and then wait for a return on my investment over 10 years or so. Again, the statistics say that I will lose my investment on 9 of those startups, but if I nail one, the return should be higher than the overall amount invested.
I am still not sure if I will keep investing on Brazilian startups or if I will try to invest in US-based ones. The advantage of investing in Brazil is that the tech segment is years behind the US one, so most startups that are raising money are trying to solve big problems and tackling big markets, meaning the growth potential is high. The downside is that reaching an exit is much more difficult here. Only recently we are seeing companies going through structured investment rounds (seed, round A, round B, etc.). Acquisitions and IPOs are even rarer.
Even if I just breakeven, however, I am sure the experience will be worth my while. I am learning a lot, networking with a lot of interesting people, and having a lot of fun along the way!