Intro To Angel Investing | Lecture #10 | Track Your Performance & Get Others To Join You - Taught by Garry Johnson III
Dear Students,
To be a successful investor, you need to know how to measure your success, which comes with tracking your performance over time.
Typically, a venture capitalist will have a team of individuals, including analysts who review the financial performance of their investments and follow up with founders. However, as a "Ghetto VC," you might not have access to such resources. Instead, you will need to track your own performance. Fortunately, there are tools and resources available to help you do this. One such platform is KingsCrowd, and you can check out my interview with the CEO below at the end of this lecture!
Watch Me Teach Lecture #10:
Often referred to as the "Bloomberg of the private markets," KingsCrowd allows you to conduct due diligence and analyze various deals. Furthermore, you can upload your portfolio and add your investment companies to track your progress. The platform keeps track of how much founders are raising, your return on investment, and how the value of your investment is changing over time.
Building a routine to review your portfolio is essential. Whether you check in monthly or quarterly, consistently evaluating your investments will help you understand how they're performing. Monitoring this data allows you to make more informed decisions and stay updated on your portfolio companies' progress.
By using a platform like KingsCrowd, you can keep all your investment information in one place, making it easier to review and update as needed. Regularly checking in on your investments also allows you to ask questions and seek updates from the companies you've invested in. While you shouldn't expect monthly updates, staying informed on an annual basis is reasonable.
As you monitor your investments, you may decide that it's time to exit some positions. Platforms like StartEngine offer secondary markets where you can potentially sell your shares. However, to make these decisions, you must first evaluate how each business is performing alongside others in your portfolio.
In conclusion, tracking your performance is vital to your success as an investor. Using a platform like KingsCrowd can help you stay organized and informed, allowing you to make better decisions and maximize your investments.
In this example, let's consider Lisa, an individual investor who has built a $1,200 portfolio of 12 startups over the course of three years. Lisa invested $100 in each startup, covering various industries and stages of development. She used KingsCrowd to manage her portfolio and track her performance.
In her first year, Lisa noticed that two of her portfolio companies, a fintech startup and a healthtech firm, experienced rapid growth. They successfully raised additional funding rounds at significantly higher valuations, which increased the value of her investments in these companies by 60% and 45%, respectively.
On the other hand, two other companies in her portfolio, a retail tech startup and a travel-focused business, faced challenges due to market shifts and increased competition. As a result, these companies failed to raise new funds and eventually ceased operations. Lisa's investments in these companies were lost.
During the second year, Lisa's portfolio experienced mixed results. Four of her startups raised new funding rounds at modest valuations, resulting in a 15-25% increase in the value of her investments. Meanwhile, two other startups in her portfolio struggled with product development and market traction, leading to stagnant valuations.
By the end of the third year, Lisa's remaining four investments showed varying outcomes. One of her companies, an AI-driven marketing startup, had a successful exit via acquisition, netting her a 100% return on her initial investment. Another startup in the clean energy sector raised a substantial funding round, doubling her investment value. However, the final two startups saw modest growth, with one raising a small bridge round and the other remaining at the same valuation.
After three years, Lisa had a deeper understanding of her portfolio's performance. She had experienced both successes and failures, and her initial $1,200 investment had grown to $1,780. While some of her startups had failed, others had achieved significant growth, ultimately leading to a positive return on her overall portfolio.
Throughout this journey, Lisa regularly reviewed her portfolio performance using KingsCrowd, ensuring she remained informed about the progress of her investments. This allowed her to make better decisions, learn from her experiences, and continue refining her investment strategy.
Get Others To Join You!
This is where you can multiply your potential and practice cooperative economics. When a community of individuals comes together to build wealth collectively, true impact occurs. Focusing on personal wealth by building an individual portfolio is essential, but a community that takes pride and ownership in building wealth as a collective becomes an unstoppable force.
In a previous chapter, we discussed adding value to startups and helping them find other investors. You have the power to advocate for a company within your network if you believe in it after conducting due diligence. While you can't make investment decisions for others or provide investment advice, you can recommend that they check out a company you've reviewed and believe in.
There's power in community, especially when supporting a local company that you want to help scale. Word of mouth and advocacy can make a significant difference in getting a business off the ground. In the traditional VC world, signaling is crucial – who your lead investor is, and which VCs have backed you in the past or current round. If people in your community trust you, your investment in a company might prompt them to look into it themselves.
As a "Ghetto VC," it's essential to share investment opportunities with others while also ensuring they have access to resources to make informed decisions. Encourage others to be informed investors, just as you would for yourself.
The "Ghetto VC" approach is about building a community that values ownership and supports small, high-growth potential businesses. Whether you provide a small business loan or invest in a high-growth financial technology company, you're taking control over where money flows, who gets access to capital, and which businesses can create thriving communities.
Remember, if you're not pulling up a seat at the table, you might end up on the menu. As everyone else reaps the benefits of investing, consider what's at stake for you and your community. Embrace the opportunity to make a difference and create a powerful, united community focused on collective wealth-building.
Here’s an example to see these lessons in practice:
Maria had always been passionate about her community and creating a better future for its residents. When she learned about the concept of cooperative economics and the power of investing in local businesses, she was eager to apply the lessons of Chapter 12 to make a real difference.
She started by educating herself on the investment landscape and the various opportunities available. After conducting thorough due diligence and developing her investment thesis, she began investing in a few promising local startups. Maria was excited about the potential of these businesses, not just for her own financial gain but for the positive impact they could have on her community.
As Maria continued to invest, she realized that she could multiply her impact by getting others to join her. She organized a monthly meetup group to discuss investment opportunities, share knowledge, and support one another in their investment journey. The group quickly gained momentum, and more people joined as they saw the potential of investing in their community.
Maria also made it her mission to spread the word about local businesses seeking investment. She actively promoted these companies on her social media channels, wrote blog posts about their missions and goals, and even reached out to local news outlets to share their stories. Her efforts started to bear fruit as more people in her community became aware of these investment opportunities.
One day, Maria came across a local company called GreenGrow, which aimed to create sustainable urban agriculture solutions for her community. Maria believed in the company's potential to address food insecurity, create jobs, and promote sustainable practices. She decided to invest in GreenGrow and encouraged her meetup group to review the opportunity as well.
Maria's advocacy for GreenGrow caught the attention of local investors, and soon the company had raised enough funds to build a new urban farm in the heart of the community. The farm not only provided fresh, locally grown produce but also created job opportunities and educational programs for residents.
As GreenGrow thrived, Maria continued to apply the lessons of Chapter 12 by supporting other local businesses. She invested in a tech startup that developed an app to connect local businesses with consumers, a social enterprise that provided job training for at-risk youth, and an eco-friendly manufacturing company. Each investment had the potential to create value for the community and its residents.
Maria's dedication to her community and the power of cooperative economics inspired others in her network. Many members of her investment meetup group started to invest in local businesses as well, creating a ripple effect of positive change. Together, they were making a tangible difference in their community by supporting job creation, economic growth, and sustainable practices.
Over time, the community witnessed a transformation. New businesses blossomed, existing ones thrived, and the local economy grew stronger. The residents felt a sense of pride and ownership in their community, knowing that they had played a role in its success.
Maria's journey had begun as a personal quest for financial growth, but it had evolved into something much more significant. By applying the lessons of Chapter 12, she had managed to unite her community in a collective effort to build wealth and create a better future for all. Her actions had not only transformed her own life but had also inspired others to take control of their financial destiny and, in turn, the destiny of their community.
Maria's story demonstrates the power of cooperative economics and community-focused investing. By working together and sharing knowledge, individuals can make a real difference in their communities, fostering growth, sustainability, and prosperity for all.