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Earlywork #31: Playing Devil’s Advocate on Angel Investing
We chatted with Doug Oliver, Head of Platform at TEN13, and angel investor to spill the tea
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There’s something real alluring about being that lone-wolf type of person who takes a crazy bet on a startup and having it pay off handsomely.
In our last Earlywork Community Masterclass, we got to hear from Doug Oliver, who’s currently the Head of Platform at TEN13 and an angel investor. Recently, one of his investment companies, Go1 raised $273 million at a unicorn valuation. Did we mention the one and only Steve Baxter invested in the seed round too?
He kicks off the session with this:
We don’t really understand just how big a billion is. To put it into perspective, a million seconds is like 11 days. A billion seconds is 31 years.
“You’re a time billionaire, how will you invest your time? Hint: probably not angel investing”
Damn, Doug, why you gotta crush my overnight-millionaire dreams like this? 😫
What’s interesting though, is that the principles of angel investing have some parallels with how we can approach our careers. Let’s read on.
Introducing Doug Oliver and TEN13.
Doug was an aspiring Olympic swimmer until he caught the startup bug, and now he’s the Head of Platform at TEN13 and a regular angel investor. In between he’s worked internationally as a startup/accelerator consultant, led compliance for European neobank N26 before landing at TEN13.
TEN13 is a syndicated investment platform that allows “sophisticated investors” co-invest with the family office of Steve Baxter. Yep, the same Steve Baxter from Shark Tank. TEN13 is fast becoming one of the most active early-stage investors in Australia. As of June 2021, they’ve completed 19 rounds in 13 companies, deploying $26M from 225 investors. Some of their portfolio companies include Carted, Mr Yum, Chipper Cash and recent-unicorn Go1.
How does Angel Investing Work in Australia?
Frankly, it’s pretty difficult to become an angel investor in Australia. Currently, ASIC and AFSL rules state that you must be a “sophisticated investor” to invest over $50K in startups. So, for anyone interesting in dishing out some big cheques, you’ll need a spare $2.5 million in assets and have made $250K in the last 2 consecutive years.
The good news is, you don’t need to be “sophisticated” to make investments under $50K. You can also claim a 20% tax offset up to this amount. However, you won’t be able to access most VC or angel funds.
Crowdfunding sites do a better job at giving the average person access to these startups, but they’re not a substitute for effective due diligence (the fancy VC-term for “research”). The deal isn’t always that great since they mainly offer ordinary shares, as opposed to preference shares, which will give you decision-making power in the company. Oh, you also get paid first when you hold preference shares 😉.
Ok, Doug, let’s spill the tea on angel investing.
1. Don’t expect any overnight success - it’s a lot of hard work
Unfortunately, angel investing is not as simple as having a meeting with a founder, saying their idea is brilliant and writing them a cheque to seal the deal. It all boils down to “due diligence” - remember that fancy work for “research”, and TEN13 does a lot of it.
Over 300 hours of due diligence goes into each deal at TEN13, and the team will produce a 6-8K work memo which is sent around to their investor network. It’s a lot of work but they move quickly. The investors are given 3-4 days to decide if they want to buy in (or even less time if the investment fills up!)
2. It’s a horrible way to reliably earn money
The thing is, as an angel investor, you’re always hunting for great returns. But 90% of startups will fail. As Doug puts it:
“Angel investing is like saying ‘Give me 30% of what you own. In 5-10 years there is a small chance I will give you back 0-1000x this.”
You might not get every opportunity that goes by, you might not get a return from every investment. But, the silver lining here is that you will learn a lot from each investment
3. Develop a thesis to invest with purpose
There are a lot of startups working on interesting problems now, and a lot of them don’t really need your money. VCs are often scrambling to get a piece of the pie these days. You really need to earn the right to invest, going back to the point about hard work. As such, investing with purpose is key and that starts with having an investment thesis.
Doug personally likes to invest in these two things:
Time - “A lot of people talk about saving time in an industry, but in my opinion, if people are willing to give up time or spend time on a product, that’s way more important”
What are your investment theses?
So, what’s this got to do with my career
1. Just like angel investing, career development is a lot of hard work.
I think we can all agree that job-hunting is no easy thing. A lot of us can probably relate to sending endless applications for “intern at x”, “graduate at x”, “analyst at z” roles hoping for the chance to progress to an interview. Doug talks about how he applied to over 30 companies and got rejected. The key here is resilience.
2. What is your career thesis?
Again, it’s all about being purposeful, in what you apply for and what opportunities you take on. Having a thesis here about how you invest in yourself (just like how you’d assess a startup!) will really help guide your decisions.
Doug’s framework is simple:
“Find something you love, and learn a lot about it. Once you don’t love it anymore; move on”
He also recommends setting simple goals that aren’t specifically about a career. For example, he wanted to work at a company that would be a unicorn while he was there, so he looked into N26.
At the end of the day, it’s all about PB’s
Consider this: thousands and thousands of people go for jobs, create companies and graduate universities. They submit resumes, pitch decks, join graduate programs and so on.
If you’re doing this, it makes you one of the thousands, if not millions of people who do this.
“You really don’t want to be another statistic, so ask yourself; what is your personal best?”
Doug recommends taking advantage of the access you get given to people every day - Twitter, LinkedIn (and perhaps the Earlywork Community too 😉). He says “Your advantage is being digitally native. Create content, be obsessed and be curious. Treading on the line of ignorance or stupidity”
I reckon there’s some space for us to tread on these lines. After all, we’re time billionaires.
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1️⃣ 🕐 💪 One Minute Hustle
We are back once again with One Minute Hustle, a bite-sized interview with an emerging Australian young startup founder or operator. This week, let’s get inside the noggin of Steph Weiss, Co-Founder and CEO of Arula.
Steph Weiss, Founder & CEO @ Arula
⚙️ What are you working on?
Our mission at Arula is for every woman to feel comfortable in their own skin! We have designed fully customised external breast prostheses that are fitted for weight, shape, and movement. We have done this by using 3D printing technology and anatomical considerations when designing. Our product is 75% lighter than the current market!
🌱 How’d you get started?
I am currently in my final year of biomedical engineering at University of Technology Sydney, and I had always wanted to work on something that truly made a difference to someone’s life. So when the opportunity came to join the founding team of Arula as Chief Technical Officer, I thought I may as well go for it. Fast forward 1.5 years, I am now the CEO and have had the most incredible opportunities. Within a month of starting, we were invited to the in-person interview stage of Y Combinator (world’s leading accelerator program) where we were interviewed by startup powerhouses such as Kat Manalac (ex-CoS @ Reddit) and Paul Buchheit (Founder @ Gmail). Though we didn’t get in it was the craziest 10 minutes of my life and I will forever remember the experience.
🤔 Why do you do what you do?
Though it is not where I thought I would be after university, it certainly feels like the right place to be right now. Arula has allowed me to combine my passion for helping people and my love of maths and problem solving. Speaking to my user testers and hearing how much this product will help them is just the best feeling! I have to say it’s easy to keep moving forward when the product is so beneficial to a person.