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Is Angel Investing Right For You?

Everyone knows that angel investing is risky, but the mind-boggling returns continue to attract new investors hoping to cash in on the next big thing. It takes a certain personality type to embrace the rollercoaster ride that is angel investing. These investors are realists, fully understanding the slim odds of success, yet at the same […]

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Everyone knows that angel investing is risky, but the mind-boggling returns continue to attract new investors hoping to cash in on the next big thing. It takes a certain personality type to embrace the rollercoaster ride that is angel investing. These investors are realists, fully understanding the slim odds of success, yet at the same time, wholehearted optimists, believing that they could be the ones to discover the big win.

Readbelow to see whether angel investing is a good fit for your personality, orwhether you should stick to other asset classes.

 

Are you willing to take the risk?

It seems as though every day we readabout another startup exit. Techcrunch and Venturebeat are flooded with the successstories that stir up jealousy in all of us. The twenty something year old entrepreneurwho just raised seed funding and already sold his company for hundreds ofmillions. And let’s not forget the angel investor who recognized the potential
and made the investment of his life.

It is easy to get excited by these
stories, but the harsh reality is much different. According to the National Venture
Capital Association, 25% to 30% of venture backed businesses fail. However,
according to Shikhar Ghosh, a senior lecturer at Harvard Business
School, the venture capitalists “bury their dead very quietly. They emphasize
the success but they don’t talk about the failures at all.” According to
Ghosh’s research, about 75% of all VC backed firms in the US don’t return
investor capital. It is important to note that this research is just for VC
backed firms, and the reality is even harsher when taking into account all
startups.

As
angel investing is very risky and the chance of success is pretty low, it is
recommended to only risk a percentage of your portfolio that you wouldn’t mind
losing- usually 1-5% of your net worth. Assume that most of the investments
will fail, and hopefully a few big wins will make up for the losses.

This
mentality is explained by Dave Berkus, a California based entrepreneur who
had a number of exits in companies that he invested in. Of the 108 deals that
he made since 1993, 26 companies have gone bankrupt and 50 are unlikely to ever
be sold. “Ninety percent of the money I ever made as an angel investor came
from four investments,” Mr. Berkus said. “It’s the gambler’s mentality
mitigated by the ability to select intelligently.”

Are you good at identifying the next big
thing before it is big?

As
an angel, you need to be able to pick the high potential startups. The ins and
outs of angel investing are explained by Paul Graham, programmer and venture
capitalist, who co-founded Viaweb (which later on became the Yahoo store) and Y
Combinator. In his blog post “How to be an angel investor,” Graham explains that the trick to
being a good angel investor is all about knowing how to pick the startups that
will make something that will be really popular, before they do so.

According
to Graham, “To be a good angel investor, you have to be a good judge of
potential. That’s what it comes down to. VCs can be fast followers. Most of
them don’t try to predict what will win. They just try to notice quickly when
something already is winning. But angels have to be able to predict.”

In
addition to identifying strong ideas, a good angel investor has to be able to
identify a successful entrepreneur. This is often times more important than
being familiar with the industry, term sheets or valuations. As is often said, the
people are what makes or breaks the company. According to Graham, you must
identify founders that are “relentlessly resourceful.” What does this mean? He
explains that it is the “opposite of hapless. Bad founders seem hapless. They
may be smart, or not, but somehow events overwhelm them and they get
discouraged and give up. Good founders make things happen the way they want.
Which is not to say they force things to happen in a predefined way. Good
founders have a healthy respect for reality. But they are relentlessly
resourceful.”

 

Do you have the patience to wait?

When
investing in early stage startups, it can take years until a liquidity event
can materialize. According to CB Insights, in 2007 it took a company 70 months to
get from the first funding round to IPO and 59 months to an M&A. In the
past couple of years, the time to IPO has increased year over year, but the
time to M&A has remained largely constant.

image

Successful
angel investors will tell you that patience is key, and early stage investments
are a marathon race with winners identified in the long term.

Ron
Conway, founder of SV Angel and the “godfather of Silicon Valley”, has invested
small sums in over 600 early stage startups since the 1990s. This includes an
investment in Google in 1999, before the search engine became the market leader
that it is today. He has had his share of disappointments, with hundreds of companies
shutting down. However, he knows that this is a long-distance race and has the
patience necessary, waiting years until his early stage investments in Twitter,
Square, Dropbox and Airbnb built billion dollar enterprises.

Shelly Hod Moyal

Founding Partner, iAngels

Source: https://www.iangels.com/2015/02/is-angel-investing-right-for-you/

Private Equity

Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform. RBC Dominion Securities describes the A+ as the next level of wealth management.

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Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

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The A+ is for you if “you require serious investment management for your serious money.”

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform.

RBC Dominion Securities describes the A+ as the next level of wealth management.

For select clients with serious money, the platform provides greater convenience, customization, RBC’s Unified Managed Account technology, access to elite money managers worldwide, and tax efficiency.

Accelerate’s Alt ETFs on RBC A+

The range of alternative ETFs from Accelerate allows investors to diversify beyond stocks and bonds by including alternative asset classes in their portfolios.

The firm is known as a pioneer in institutional caliber alternative ETFs including hedge fund and private equity ETFs. It claims it is “disrupting the asset management industry by offering performance-oriented alternative investment strategies previously reserved for wealthy investors at a fee significantly lower than competitors.”

“We are pleased to be chosen by RBC Dominion Securities, a global leader in wealth management, as one of the select group of high-quality investment managers on the exclusive A+ platform for RBC Dominion Securities advisors and their clients,” said Accelerate CEO Julian Klymochko. “In an era of rock-bottom interest rates and record-high stock market volatility, we are pleased to provide investors with diversification, alternative yield, and alpha generation solutions through alternative investment strategies including absolute return, arbitrage, enhanced equity, and private equity replication.”

Selected ETFs

The alternative ETFs on the RBC Dominion Securities A+ platform include:

  • Accelerate Absolute Return Hedge Fund (TSX: HDGE) – a diversified, liquid, and performance-oriented long-short equity hedge fund
  • Accelerate Arbitrage Fund (TSX: ARB) – provides exposure to SPAC arbitrage and merger arbitrage investment strategies
  • Accelerate Enhanced Canadian Benchmark Alternative Fund (TSX: ATSX) – combines exposure to the S&P/TSX 60 plus a long-short Canadian equity overlay
  • Accelerate Private Equity Alpha Fund (TSX: ALFA) – designed to provide investors with private equity-like investment returns

Related Story:  Liquid Alt ETF Provider Accelerate Offers Ready-Made Alternative Investment Strategy                                                

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Source: https://dailyalts.com/accelerates-alt-etfs-now-on-rbc-dominion-securities-a-platform/

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Private Equity

Venture Capital: AgTech Startup Benson Hill Lands $150M

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures). It uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

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Venture Capital: AgTech Startup Benson Hill Lands $150M

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Benson Hill uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures).

The company said other strategic and ESG focused investors also participated. These included Argonautic Ventures, Caisse de dépôt et placement du Québec (CDPQ), Emart, GS Group, Louis Dreyfus Company, iSelect Fund, Fall Line Capital, Mercury Fund, Prelude Ventures, Prolog Ventures, S2G Ventures, and additional strategic and family office investors.  (FOOD navigator-USA.com)

Benson Hill technology

Benson Hill uses biotechnology, data science, and AI to enhance the nutritional qualities, flavor, and sustainability of crops and vegetables.

The firm’s “Cloud Biology” is the fusion of data, machine learning, and AI techniques with biology. Its “CropOS” is a proprietary platform that facilitates the accessibility and actionability of Cloud Biology.

The CropOs platform uses plant phenotyping, predictive breeding, and environmental modeling algorithms to better control the plant breeding process and realize these advantages:

  • Produces plants that are highly productive, highly nutritious, and better tasting
  • Better texture
  • Reduce the number of processing steps
  • Reduce the need for additives
  • Grow plants that “do more with less,” thus boosting sustainability

The company’s work so far has been concentrated around soybeans.

Its new, ultra-high-protein (UHP) soy products spiked the interest of investors. They come from a highly productive non-GMO soybean that is rich in oleic oil content.

Use of funds

Benson Hill plans the commercial launch of the first Ultra-High Protein soybean varieties in 2021, among other product launches.

It also plans to expand its team by adding top talent and continue the development of Cloud Biology and CropOS.

“As a society, we’re at a crossroads made more evident as the pandemic has revealed strengths and vulnerabilities in our food system,” said Matt Crisp, Benson Hill CEO. “Food choices that create enjoyment, make us stronger, and help preserve our environment need to be accessible to everyone, and the power of plant diversity and technology innovation can help fuel that evolution.

Related Story:   Smart Farm Technology To Take The Drudge Out of Plant Breeding

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Source: https://dailyalts.com/agtech-startup-benson-hill-lands-150m/

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Private Equity

FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital platform for $450 million of which $100 will be paid through Alliance stock. The transaction would expand Alliance Data’s own digital offerings by including buy-now-pay-later (BNPL) products.

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FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

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Alliance Data will pay in cash and stock for the acquisition.

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital buy-now-pay-later (BNPL) platform for $450 million of which $100 will be paid through Alliance stock.

The transaction would expand Alliance Data’s own digital offerings by including BNPL products. BNPL is a major trend now that consumers have embraced the interest-free, zero-fee facility to pay in installments. Alliance is a provider of data-driven marketing, loyalty, and payment solutions. (Alliance)

Digital BNPL is particularly popular with millennials and the younger set. They prefer not to run up credit card debt and like the speed and convenience. The technology and products acquired from Bread will address this segment of the population.

Bread already has tie-ups with merchants such as online jewelry seller Noémie, the luxury watch seller Hublot and Newton Baby, the crib mattress provider.

BNPL customer experience

“Bread’s flexible, easily-integrated payment solutions, coupled with Alliance Data’s Enhanced Digital Suite, will improve the digital customer experience and support increased acquisition and checkout rates, offering the best payment product to the right consumer at pivotal moments in the customer’s online shopping journey,” Alliance said in a statement.

Alliance intends to leverage Bread’s solutions along with its own existing private label, general-purpose and commercial products.

COVID-19

Its brand partners will therefore get another advantage in the eCommerce channel, with online businesses already getting a boost from COVID-19.

“With the timing of the holiday season upon us, the COVID-19 pandemic has accelerated the adoption of digital technologies, and perhaps nowhere as significantly as in financial services and payments,” said Val Greer, chief commercial officer, Alliance Data.

BNPL is now crowded with cash-rich players

Payments giant PayPal (NASDAQ: PYPL) announced in August that it would begin offering BNPL services, recognizing that COVID-19 had triggered a dramatic increase in their popularity.

Other players in the BNPL field include Klarna, Affirm, Afterpay, and Quadpay.

In a recent study, Tech Crunch found that PayPal had the highest retailer coverage with a presence of 65% retailers. Afterpay was a distant second at 10%, then Affirm 6%, Klarna 5%, and QuadPay 2%.

The study concluded that PayPal was primed to dominate the BNPL wars.

Related Story:   PayPal Challenges Klarna In U.K. BNPL Tussle                                                

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Source: https://dailyalts.com/alliance-data-buys-bnpl-fintech-bread-for-450m/

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