The Three Principles: Know Who - Know How - Know Capital
Know Who: Members attend monthly meetings and other events focused on great contacts who have invested and played key roles in companies in almost every sector, including: life sciences, advanced technology, IT, manufacturing, and consumer products. They are highly-networked with investors, serial entrepreneurs, and representatives of a wide range of financial resources in the DC Metro area (e.g., Maryland, District of Columbia, and Virginia), and across the U.S.
Know How: Every successful investor admits to having lost lots of money after investing in a company that looked like a big winner. However, failure makes it easier to learn the fundamental rule of investing: "Bet on the jockey, not the horse" - the entrepreneur makes the company a winner. That is why top angel investors look very carefully at the person at the helm of the company and then, based on hard learned experience, make exceptionally quick decisions. Tech-based companies make this rule especially important. Advanced degrees in research do little to prepare the founder to succeed in business.
Know Capital: Unlike the venture investment environment during 1990-2000 that grew and flourished, success in today's investment environment demands new and recently tested investor skill sets.. Until around 2000, top experienced venture investors raised funds from wealthy individuals who wanted to add a "high-risk/high-return" component to their portfolio. Since then, for fundamental reasons closely related to the nature of the investors and their investments, the market has dramatically changed. According to numerous sources, by 2008 the U.S.venture capital and angel investment activity declined more than 85% in both value and size.
In the place of large funds run by experts ("legacy model"), new investors with deep domain knowledge and investment experience gradually began to replace them. Instead of a 10-year investment horizon, newer investors started to identify and work with startup and emerging companies. They did not assume that using “underutilized capital” was the starting point for successful investing. They moved from first seeking other people's money (OPM) to work with to a practice of “company building.” They used smaller amounts of capital invested for shorter terms with sharper investment targets centered on growth sectors in emerging markets. Some call this the "Moneyball" investing method.
Outcomes from using this approach have proved to be excellent: solid returns on investment and dramatically reduced failure rates.
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