By guest authors Irina Patterson and Candice Arnold
Irina: From all your sources, how many pitches do you receive a month, approximately?
Geoff: It’s kind of hard to say because I’ve only just cranked this thing up again. For a while, I was very involved with Y Combinator, so it was kind of dominating [my time], so I don’t know.
How many different deals do I see per month? I would say it’s almost as many as I want. I think I get more than I can handle. I guess probably right now what I see is three or four deals, maybe five deals a week.
Irina: And if you see a promising deal, what is your next step?
Geoff: My next step is usually to sleep on it. Let me explain what I mean by that. I think that it’s very easy to fall in love with a deal. You know, the entrepreneur is said to be passionate and excitable, and so forth.
So, a lot of times after the first meeting it’s all very exciting and fun and you’re more likely to say, “Oh, my God that’s the greatest thing ever!” Then you wake up after the drugs have worn off and you’re like, “Oh, my God I have a headache. That’s the weirdest thing ever.” So, the next day, if the deal still feels as good, it’s a great sign.
Then what I usually do is I think more about it. I look at it some more. I’ll probably have another meeting with the folks, and I’ll probably talk to whomever I can who might be involved, who might think about it and try to find out as much as I can, if I can get any references on the folks – a lot of times you can’t – sort of get a feel for the entrepreneurs.
Irina: In the past twelve months, how many investments have you made?
Geoff: In the past twelve months, I have made ten deals.
Irina: What was the average dollar amount that you invested?
Irina: How long does it take for a company to receive funding from you?
Geoff: Two or three weeks.
Irina: Do you think in terms of valuation when you invest in a company? Is there a specific number that you have in mind?
Geoff: Yes. I prefer it to be under five [million dollars].
Irina: So, do you think in terms of equity?
Geoff: I used to think I wanted to have more than 1% after the company got passed the series A. I don’t think that they give up that so much anymore.
Irina: Do you think about the returns over a particular period?
Geoff: I think that I’d like to get my money back. I like to be able to say I got a good return. For me, I think angel investing is more of a hobby than a vocation, for sure. I tend to argue that by calling it angel investing, it’s by definition more of a hobby than a vocation.
I’m not really trying to earn my keep doing this. I do it because I love working with entrepreneurs. I love working with people who are passionate and who have an idea and who want to change the world. And I think it’s usually important for Silicon Valley and for the world and for the economy. I just really like it.
There’s also a bit of me that certainly wants to be part of the next big, big thing, and if you can invest your $100,000 or $50,000 in the next Google and make $1 billion, that would be cool, too.
That’s not really my purpose for doing it; there’s a lottery aspect to it. And it’s certainly a high when you get an exit. I’ve had seven positive exits so far, and they’ve all felt absolutely wonderful.
Irina: At what stage of a business’s development do you usually invest?
Geoff: It varies. Generally, as early as possible.
Irina: An idea on paper would do?
Geoff: Yes, if it’s the right idea. I prefer to have a demo. I’m a product guy. I like to see the product.