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The X Factor: Invest In People With An All-In Mentality

Remember the Angel Kings' four must have personality factors, or otherwise called our "PASS" formula:

1.  Passionate, but with a purpose.

2.  All-in to their endeavor.

3.  Shows no fear of failure.

4.  Surrounded by equals or those greater.

In this article, we will be discussing #2 of our formula.  

 

The All-in mentality

 

All passionate and purposeful founders or inventors must be asked whether or not it’s their full–time venture or just an idea they’re pondering perfunctorily.  Why?  If it’s not their full–time, all–in moment, don’t bother writing a check.  Not one of the top 10 billionaires in the world ever took on an idea, product or service part–time. 

For Musk, his all–in mentality has driven him to a level of obsessive compulsiveness that one could blame for a divorce and much strife within his own life.   Musk was all–in to PayPal – and to every venture he pursued.   Musk worked day and night, and in fact, slept in the office and shared a tiny apartment to save on expenses.  Musk would do everything he could to make sure that his company succeeded.

Normatively, is this good or bad?  Who knows… your job as an angel investor is to find the best founders who can bring you a massive return on your angel investment.  No, we don’t want, wish or hope for any of our founders to suffer personal strife or deal with major pains, but look to none other than Steve Jobs to know it can happen to the best.

 When we say all–in, just like in poker we want you to treat any investment – $25,000 up to $10,000,000, which we’ve seen at Angel Kings – as possibly your only startup investment.  A founder expecting you to write a check should be just as committed, if not more so, to building her product as you are in giving precious dollars to help her fulfill her vision.  She has to understand that receiving your check does not mean the work gets easier.  If anything, she has to become so hyper–focused in making her vision succeed that her level of commitment to both your investment and her vision becomes a bit daunting.

The all–in mentality is a two–sided coin for both investors like yourself and founders. 

On the one hand, you need to be willing to go all–in and have enough of a meaningful investment for it to hurt if the startup doesn’t succeed.  As Mark Cuban says, you need to have enough “skin in the game” to care about whether the startup succeeds or fails. 

On the other hand, the founder should be willing to play her cards right, not be distracted by different commitments, and remain fully committed to making your investment profitable.  If a founder is hedging her bets by thinking that “if this doesn’t work out, we can always do something else,” then it’s not going to work.  There’s a limited amount of time during which your startup investment should take off, and the founder can’t squander that time bouncing around ideas and splitting her time between different companies.  The all–in mentality requires focus, decisiveness and cooperation between the founder and the investor. 

As an investor, you have to be discerning about the founders of your startup investments.  Although a founder may have a great idea and is brimming with passion, she must be able to shoulder the level of risk that your investment carries.  Just as in poker, the founder must play every hand as if it were her last hand to play. For every hand dealt – whether pocket Aces or deuce–seven – a founder must be all–in as though her life is on the line.  Even when tired, exhausted and ready to give up because she feels like nothing is going right, the best founder always gets up quickly before the self–pity worms its way in.  There is a level of tenacity, shrewdness and optimism that a founder must possess in order to make sure her vision succeeds.

 

For the investors…

As an investor, your big moment could come at any time.  Again and again, you’ll be pitched on ideas, products and services that will be the next “big thing.”  You have to know when and how much you should bet to get a fruitful return, one in which you’re not just in the money but you’re the grand winner …  Yes, it’s possible.

 

For the founders…

View every hand you’re dealt as if it’s your last.  Look at an investment as your ticket.  You will never be dealt pocket Aces every hand.  You’re likely to be dealt just as many terrible cards as the next guy.  In fact, you should be happy to even be sitting at the table instead of working a boring job!

 

If you’re distracted or not fully committed to each hand, you will fail.


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ross-blankenship

Ross Blankenship is an expert on startup funding,  angel investing and venture capital.

Ross Blankenship is also the Founder and CEO of AngelKings.com.  Angel Kings is an investing platform that provides accredited angel investors the opportunity to invest in top startups and companies in sectors like cyber security, biotech, mobile, data and financial services.  Angel Kings provides both venture capital funds for startup investing as well as private equity funding for early and middle-stage investments.  

The X Factor: How To Invest In The Right People

When Angel Kings invests in startups, we look to the founders first.   Our team looks for that future icon: the next Steve Jobs, Bill Gates, or Elon Musk.  Those names are pretty big shoes to fill.  We want someone who will swing for a homerun every chance he or she gets; someone who creates a new industry or platform to solve a problem; someone with an all–in mentality from day one until the day we meet him or her. And just to be clear: We meet the founders behind every potential investment them before we write a check.  And you should, too. 

The “People” factor accounts for a large percentage of our investment formula.  We’re disclosing this not because we want some sycophantic founder to pitch us and tell us how “passionate” and “dedicated” he or she is; in fact, to the contrary. 

The investment formula is about selecting the right people, and informing and educating them so that they don’t bother pitching us unless they fit our proprietary “PASS” Formula. 

Here are Angel Kingsfour must have personality factors before we make an investment in an idea from a founder or founders.  We call this the “Angel Kings’ Personality Profile” model:

1.     Passionate, but with a purpose

2.     All–in to their endeavor

3.     Shows no fear of failure

4.     Surrounded by equals or those greater

 These four personality traits are hard to define objectively.  After all, how do you define passion?  What does it mean to be “all–in?”  How can you tell if someone has no fear of failure?  How do you know if a founder has people on her team just as good as she is?  And does this matter?  Let's start answering these questions by further discussing #1 in our "PASS" Formula.

Passionate, But With A Purpose

It is vital for every founder to be passionate, since passion is what fuels a startup to success.  Think of a startup as a car, and every founder as the driver.  That driver’s passion is what fuels that car.  It’s the gasoline that keeps the car running through every bump on the road; every storm it has to weather; every passenger it has to carry.  We’ve been pitched countless times, and 99% of the time, the founder will say how passionate or dedicated he or she is about an endeavor.  However, if passion fuels a startup to success, it is purpose that will guarantee that a startup remains headed in the right direction.  Every founder that has had tremendous success has had both passion and purpose embedded in their companies.    

Take a look at Elon Musk.  Having founded some of the most successful companies in modern times – PayPal, Tesla, and SpaceX –Musk perfectly fits each of the Angel Kings’ personality traits.

usk starts each new company with a fundamental question: will my idea completely revolutionize an age–old industry for the betterment of the people?  Most startups see a personal pain point and decide to fix it for themselves.  However, Musk sees fundamental stagnation in an industry, and delves head first into solving a problem that will change commerce.  Musk begins to answer his own question by building a product he would use personally, which is important, but he then tests immediately whether others would use it too by asking if they would pay for it… and invariably they do – in droves.

PayPal, Tesla and now SpaceX have changed the financial and transportation industries to the point that traditionally embedded players, like banks and NASA, are forced to rewrite how they can compete within the market they used to dominate.   Musk will remain an icon of the VC and angel investors industries because he persists in challenging the classic players with innovative ideas.  His passion is complemented by a real desire to purposefully drive change and to produce new solutions to existing problems.

Passion is important as the basic trait, but a better marker of a future icon or success is whether there is a genuine purpose behind an idea.  Passion, purpose and money aren’t mutually exclusive, either.  What we’re saying is that you are more likely to make money investing in someone if he or she has passion and purpose combined.


If you'd like to learn about startup investing, or if you want to see if you're an accredited investor, apply here. Angel Kings are the angel investing and venture capital experts.

Ross Blankenship is an expert on startup funding,  angel investing and venture capital.

Ross Blankenship is also the Founder and CEO of AngelKings.com.  Angel Kings is an investing platform that provides accredited angel investors the opportunity to invest in top startups and companies in sectors like cyber security, biotech, mobile, data and financial services.  Angel Kings provides both venture capital funds for startup investing as well as private equity funding for early and middle-stage investments.