“Q: Whats a sure thing in investment? all ventures are speculative to a certain

–“Q: Whats a sure thing in investment? all ventures are speculative to a certain degree.”–

All costs are opportunity costs. The very high chance you can get a 14-16%, or even 18% return, unless something catastrophic happens, because you’re buying into a quality biz at a good price, vs. losing 3-6% in inflation and fees? It’s an easy choice.

Now a sure thing is a biz you fully understand and understand the risks and recognize the only problem is capital availability because the banks (smaller) and investors (larger) only want bigger deals with bigger returns. And they save these ‘sure’ deals for working with companies already in their network. Now, then you get the warren buffet strategy of sure things at a good price, and you accumulate enough investment over time to buy really, really, good assets at good prices.

There is a wonderful investment space between the traditional banking biz and the lower-end venture capitalists, for angels to make money all day long in perpetuity. The problem is that every deal costs the same time and effort to vet. So your returns are limited to the number of deals you can vet and invest in without entering the VC market profile of risk. Every fish eats one smaller than he, up the hierarchy of fish. 😉

As an angel, you only need to convince yourself or maybe a friend and partner. As a member of an angel network you can work to get a piece of nearly every deal in the network – because it’s best to invest in what you understand, and everyone understands something a bit different from everyone else.

As a low-end VC you’ve taken other people’s money with the promise of some rate of return. So you have to convince your partners to invest that money, and sometimes the people you’ve taken the money from. And because of multiple fingers in the pie you have to seek higher returns.

Some of us just like learning about and investing businesses. And some angels basically enjoy helping young companies make money. And some others are trying to get multiples on their or other’s cash. And some of those people have a mission good or bad as well.

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