As we are starting the preparation for Startup Iceland 2013 (have you signed up and marked your calendar yet?), one of the elements of building startup ecosystem is to bring more investors into venture investing group. I think there are many avenues for Entrepreneurs to get started like Startup Weekend, Startup Reykjavik, Innovit Incubator and the University Startup Weekend class etc in Iceland, however, there is not a lot of activities that are centered around investors. I have been searching for  model that we could adopt here in Iceland and I finally found someone who is doing this in Seattle – John Sechrest. You can read about John here.

The biggest challenge in Angel and Venture Investing is not RISK, there I have said it it is not about Risk it is about not being able to devote enough time for the amount of capital that one invests. Just to give you an example, a typical angel investor may invest from $10000 to $100000 per company and in order to really spread the investments one needs to take 3 to 5 companies. Given with Angel investing one needs to spend 6+ hours a week for every company, investors need to spend considerable amount of time for a small size of the investment. In addition, one cannot make a living doing this, again there I have said it. If you think you are going to make a living doing Angel Investing or Venture Investing, the truth hits you quite harshly across the face when you are starting out. The pay window if you are successful in Angel Investing or Venture Investing is nothing less than 5 years, you could get lucky but that is kind of the average and the returns are lumpy ie you don’t get a steady stream of returns but one or two lumpy payments if the companies you invest in gets an exit. So, why would someone go through all this pain to make a living… well, the same reason why an Entrepreneur goes through all the pain to start a company and build things of value. There is a reason it is called Angel Capital 🙂

Back to practical matters, John shared with me a template for a conference that he has organized in Seattle, called the Seattle Angel Conference. I think it is a sensible model that could work to bring new investor groups into the world of Angel investing and Venture investing. For everything we need a few good women and men, and John has assembled that group in Seattle. I have invited him to come and share his experience in Startup Iceland. The gist of Angel Conference is pretty simple:

  1. A group of Angel’s come together form a Limited Liability Company (LLC or ehf in Iceland)
  2. Each of the members commit capital ie $5000 each
  3. LLC Manager is elected
  4. 6 to 10 weeks of due diligence is conducted by the group that came together
  5. 5 to 10 companies are picked to pitch during the conference
  6. A subset of the companies are funded by the LLC and all members can participate as mentors or advisors to the companies that were picked

This is an incredible value for Angel investors, a seasoned group can guide new Angel investors into the world of venture investing. This model is very similar to the Mentorship driven accelerators that have become so successful. Of all the things that have been said and done, everyone can learn when we collaborate and work together. I am big believe that bringing diverse group of people together and throwing a challenge to them and providing the right incentive can facilitate solution to any problem. I think Iceland needs a better class of Investors, other than the posers! we need someone really committed to building the startup ecosystem. koma svo!

Related articles