> if a VC investor is doing their job well, they will make sure to keep investing in your company until they have a good amount of ownership. This means it is against their incentives to introduce you to other investors or do anything else that interferes with their ability to buy more shares in your company for a good price.
this is only true for larger multi-stage funds who compete with each other, not for Seed or Series A-only funds
Yes, it's completely backwards really. In most successful companies, a VC's holdings are likely to decrease over time, not increase, as the company raises more money and existing investors are diluted. And investors are (in general) motivated to introduce you to new later stage investors because it increases the value of their holdings, even when diluted.
That's because most of us can't actively remember back to the dot com bust and have only been around for the boom times since. Success is great! Say you're an early investor, with 2 million shares out of 10 million issued, or 20% of the company at a $10 million valuation, or $2 million dollars. Pretty good! $2 million is $2 million.
The AI boom is in full swing. You've got product market fit, lots of paying users, everything is gucci. So when they issue 40 million more shares to new investors, there's 50 million shares out there, you have 2/50 million, but, hey, lookit! The new valuation is $100 million. You now have $4 million of a $100 million company. Not bad! It turns out that when things are good, things are quite good!
Unfortunate, it's discovered that your product is actually the torment nexus. Users flee, the bubble pops, the entire sector goes bust, your remaining users sue you, you run out of money. Your board fires you and the new CEO takes on a new round of investors. They issue 950 million shares, at a $one million valuation.
Fuck.
For all your hard work, your blood sweat and tears. Failed personal relationships. Your 2 million shares are now 2/1000 of $1 million, or $2,000. That's right, two thousand dollars only. Do not past go, Do not collect money to FIRE, hope you can get a job running Door Dash, except that got automated away so you can't do that.
Edit: Before commenters reply, That's not possible! I have preferential rights written into my contract. They won't and can't do that! And maybe you're right. Maybe you've got a totally iron clad contract written up by a lawyer who experienced the com bust and there are provisions against the exact scenario written above isn't possible. Except you were collecting a founder's salary of $50,000 /year and don't have $200k in savings to afford a high-powered corporate lawyer to sue and get back what's left of your company. Say you do regain control, it's got a $1 million valuation for a reason. Maybe it'll be like Pebble and you win, and you can run it as a life-style business because there are enough loyal customers who like your brand of torment nexus, and you eke out $10,000 of revenue (gross, not net) per month. Not bad per se, but still not the NYSE bell ringing IPO you were hoping for. Plus you're in debt to your lawyers and it's going to take forever to pay them off.
Yeah. In my experience investors in the early rounds are eager to do introductions because they’re still seeking to validate the investment internally.
If they led a pre-seed, they’d be happy to see someone else lead the seed round because then it’s easier to make the case within the fund that they should maintain or increase their stake.
External validation means a lot when the company is young.
I like this in general but I think it’s sad the friends and family who helped you don’t get any financial upside.
I also take issue with calling this angel investing:
> I angel invest primarily through my scouting relationship with the VC firm Andreesson Horowitz. They give me a budget for investing in each fund and I get a fraction of the carry.
Full agree. This is... just being a VC. If it's not your own money and you're aligning with someone else's thesis, you're just a vc with crappier terms
Its the same as "bird dogging" or wholesaling in real estate or really any series of other middlemen or wholesale business who do the hard work of finding the deal but don't necessarily have the cash or want to run the business end to end.
1. You're extremely rich.
2. You see it as a learning opportunity or you enjoy helping, without thought of financial reward.
What will happen, at the slightest whiff of success, is that professional investors and VC will swoop in at a moments notice, and dilute you to pieces.
In the end, you will have paid for the company while it was small, to get it started, and then the VC:s will snatch it away by diluting you. Hence nr 1 above, but be prepared to spend!
Future investors can negotiate liquidation preference and participation terms that will give them a bigger part of the pot than their % ownership during a “liquidation event” I.e. basically any outcome other than an IPO will trigger those rights
He's a retired pro basketball player. He's since made early investments in companies like Hugging Face[1], Coinbase, and Robinhood.[2] If you earn millions in your 20s, didn't spend it, and have a killer work ethic, you can flip careers to professional investor.
Later on it looks like he classifies him as a "vanity angel" rather than a "strategic angel." It sounds like it can be useful to have someone with name recognition as an investor when you're talking to people who aren't very familiar with the space.
if you are trying to convince people to invest on name recognition vs. knowledge of your space, or ability to move the company forward it doesn't seem like a great guide for getting angels: "be lucky and get someone famous with lots of money".
> Elad was elusive but the angel who was most consistently influential and supportive during my entire five-year run at Akita. We had a fifteen-minute call almost every quarter, sometimes at an unpredictable time, but always full of great guidance.
How helpful can a person who spends less than 5 hours over 5 YEARS be? How much time are they even spending learning / thinking about the company?
Unrelated to article, but I had a call with Jean when she was running Akita pre-acquisition, and she was so thorough and thoughtful. We didn't end up buying Akita for various reasons, but I remember walking away thinking, this person can not fail.
Readit News
this is only true for larger multi-stage funds who compete with each other, not for Seed or Series A-only funds
The AI boom is in full swing. You've got product market fit, lots of paying users, everything is gucci. So when they issue 40 million more shares to new investors, there's 50 million shares out there, you have 2/50 million, but, hey, lookit! The new valuation is $100 million. You now have $4 million of a $100 million company. Not bad! It turns out that when things are good, things are quite good!
Unfortunate, it's discovered that your product is actually the torment nexus. Users flee, the bubble pops, the entire sector goes bust, your remaining users sue you, you run out of money. Your board fires you and the new CEO takes on a new round of investors. They issue 950 million shares, at a $one million valuation.
Fuck.
For all your hard work, your blood sweat and tears. Failed personal relationships. Your 2 million shares are now 2/1000 of $1 million, or $2,000. That's right, two thousand dollars only. Do not past go, Do not collect money to FIRE, hope you can get a job running Door Dash, except that got automated away so you can't do that.
Edit: Before commenters reply, That's not possible! I have preferential rights written into my contract. They won't and can't do that! And maybe you're right. Maybe you've got a totally iron clad contract written up by a lawyer who experienced the com bust and there are provisions against the exact scenario written above isn't possible. Except you were collecting a founder's salary of $50,000 /year and don't have $200k in savings to afford a high-powered corporate lawyer to sue and get back what's left of your company. Say you do regain control, it's got a $1 million valuation for a reason. Maybe it'll be like Pebble and you win, and you can run it as a life-style business because there are enough loyal customers who like your brand of torment nexus, and you eke out $10,000 of revenue (gross, not net) per month. Not bad per se, but still not the NYSE bell ringing IPO you were hoping for. Plus you're in debt to your lawyers and it's going to take forever to pay them off.
If they led a pre-seed, they’d be happy to see someone else lead the seed round because then it’s easier to make the case within the fund that they should maintain or increase their stake.
External validation means a lot when the company is young.
Syndicates are much stronger than a sole VC leading everything. There’s just way more capital and help with a syndicate.
I also take issue with calling this angel investing:
> I angel invest primarily through my scouting relationship with the VC firm Andreesson Horowitz. They give me a budget for investing in each fund and I get a fraction of the carry.
Deleted Comment
1. You're extremely rich. 2. You see it as a learning opportunity or you enjoy helping, without thought of financial reward.
What will happen, at the slightest whiff of success, is that professional investors and VC will swoop in at a moments notice, and dilute you to pieces.
In the end, you will have paid for the company while it was small, to get it started, and then the VC:s will snatch it away by diluting you. Hence nr 1 above, but be prepared to spend!
Angel investing is a fools game, unless you enjoy it for its own sake.
How is Kevin Durant (pro basketball player) a strategic angel for a monitoring/observability company?
Idk why nobody's done a good feature on him.
[1] https://finance.yahoo.com/news/kevin-durant-investment-portf...
[2] https://parlemag.com/2025/04/kevin-durant-business-ventures/
Aside: Saquon Barkley's (pro football player) portfolio is insane https://www.readtheprofile.com/p/saquon-barkley-investment-p...
How helpful can a person who spends less than 5 hours over 5 YEARS be? How much time are they even spending learning / thinking about the company?
Not really anything actionable there.