There are more seed deals than series A now then ever before. Q2 of this year was the biggest quarter in more than a decade of VC investing in the US. Geographically, Silicon Valley dominates the destination of angel funds, receiving 77% of the $8.1B funds invested in US-based companies throughout Q2 2012, 4 times as much as the total amount invested within New England, according to historical trend data. This weekend, at the TechCrunch August Capitol summer party, I spoke to two friends and investors, Ed Roman and Salil Deshpande, about their 5 tips to investing in 2012. This is their advice: 1) Have enough money to invest. It's generally difficult to make money investing if you're investing small amounts (less than $100k) since you dont' have enough leverage to negotiate deal terms that are favorable to you. It's also tough to get into the best deals without having the financial means to do so. You're also going to want to reserve some money for follow-on investing for the startups that do well. All of this requires a substantial bankroll. 2) Have enough deal-flow. If you are a new investor, you're going to want to see many deals before pulling the trigger on any of them. Try to learn as much as you can about the market before investing. 3) Try to stick to a sector focus. By staying in a sector, you'll become an expert and be better-informed to make decisions by observing patterns within your industry. 4) Diversify across a set of investments. Any given startup has a very high chance of failure. By investing in a series of startups you reduce the variance of your return. 5) Look for great teams in big markets. Look for teams that are focused on customer development and who listen to clients. Those teams have a substantially higher chance of achieving product/market fit, and will likely pivot into the right idea eventually. So the specific idea isn't necessarily as important as the team's approach, and the size of the market. Ed Roman is an angel investor in 8 companies. Prior to starting his investment portfolio, he was founder & CEO of Ghostfire Games, making exercise games for the Nintendo Wii. His game, Rage of the Gladiator, won critical acclaim as a top-rated Wii title. He was founder & CEO of The Middleware Company, a Java training/consulting company, which I grew over 4 years then sold to Precise Software and Salil and Ed co founded this company together. Salil Deshpande is General Partner at Bay, and focuses on areas in which he has operating experience and thus some intuition. Since 2006, he has invested approximately US$75M into 20 companies across two themes: (1) open source and enterprise software infrastructure, and (2) infrastructure and platforms around social graph APIs.
Visibility: 2136
Duration: 2m 7s
Rating: 8