I joined my friend Harry Stebbings on a recent episode of 20VC to discuss trends in early stage investing including the state of scout funds, the whitespace for “triple threats” who operate, angel invest and have their own beat on social media and why I believe more operator angels should start their own funds.
In this essay, I’ve split the discussion into a few key phases with tactical suggestions for each phase.
While there’s no single path to start investing, The Angel J-Curve is a guiding framework to better understand the opportunities available for operators in Silicon Valley based on your time and revenue (social/working capital) in the ecosystem.
Where are you on The Angel J-Curve?
Let’s start with a definition of each phase and high-level overview before we move into tactics and recent examples:
Super Connectors: early career operators who seek high-growth opportunities such as startups on the Breakout List³ or look for well-funded startups backed by a16Z, Sequoia and top-tier firms. These operators build a broad network that later converts to professional opportunities, such as an internal referral at a hot company or opportunity to invest in a friend’s company.
Tldr: Social capital converts to professional opportunities
Workhorses: operators who build a track record and reputation by helping early stage startups on evenings & weekends. Capital can come from a number of sources including small personal checks, scout funds and some choose to raise outside money as Operator Angel Funds.
Tldr: High value per dollar invested based on operator angel’s skill/sector/stage alignment
Show horses: super angels with a trusted reputation and proven track record based on breakout tech experience and subsequent breakout angel investments. While many still operate with similar characteristics as a Workhorse, the real value is in their signal to other investors.
Tldr: High social signal irrespective of sector/stage/dollars invested
What are the guiding principles for each phase?
Based on your time and revenue (social/working capital), there are a number of guiding principles and baseline activities to build a track record.
For Super Connectors, geographical location and a hyperlocal network is an important factor to accelerate social & knowledge spillover.
These operators learn by simply being exposed to other super connectors, workhorses and the occasional show horse at an event or conference.
Silicon Valley has the highest concentration of early stage startups and hyper compressed environment for Super Connectors who want to accelerate both professionally in their tech career and socially as an angel investor. However, many operators outside of the Bay Area have built a reputation through tweeting, blogging and podcasting. We’ll look at examples from both Silicon Valley and beyond.
Without working capital, Super Connectors build a reputation using social capital and ‘cool as a currency’ meaning these operators have a unique ability to discover new products, spot trends before they blow up and build, ship and share on social media.
A few baseline activities for each phase:
Build, ship and share on social media
Find your beat aka “be known for a thing”
Breakout Super Connectors become a go-to person for a specific topic, sector or area of interest, which requires consistent publishing around a specific topic.
Founders building in the space and investors should be able to articulate your beat in a few words, so others can easily seek you out based on your known expertise.
Optimize for a high-growth experience
Choose your next career move based on where you’ll have outlier potential with high-growth experience and a valuable network of Super Connectors.
In the first two years in the Bay Area, the relationships you build will influence your view of the world and your professional opportunities in the future.
Look for entrepreneurial cultures where the person sitting next to you is likely to start something new.
If you’re a Super Connector, say 👋
I host a monthly happy hour in SF and would love to follow your newsletter and compare notes on your beat.
A few Super Connectors to follow:
Sar has mastered the power of Tech Twitter.
In a matter of months, his name was consistently mentioned in coffees with founders, Monday partner meetings at VC firms and he’s consistently tagged in relevant conversations on Twitter.
Sar is by all accounts a Super Connector or as I call him the DJ Khaled of Silicon Valley: he knows everyone, hypes everyone and gives up-and-comers more visibility.
He reads a tweet, jumps in with relevant commentary and tags individuals who have recently shared similar ideas or have deep expertise in the space.
A lot of great original thinking gets lost in the Twitter feed, so Sar’s ability to invite relevant people to a discussion is incredibly valuable.
Reggie’s newsletter Product Lost covers things he’s seen, heard and experienced (typically well before anyone else). While his discussions are not directly startup or business strategy related, it consistently delivers big ideas and new opportunities for founders and investors to explore.
Harry started 20VC long before he started his own VC fund.
One of his secret weapons for building his network is sending cold emails. Before every episode, Harry emails founders, investors and mutual friends to prepare for each guest.
For early career Workhorses on their first or second startup, this is where you start to cultivate a more strategic network based on your beat.
Build your intercompany peer network
Want to be known as a go-to product person?
Make a list and meet every product person at breakout companies.
Find something to work on together: organize a monthly dinner, host office hours for startups, any excuse to get together on an ongoing basis.
Advise for free or minimal equity
The best advisory relationships happen organically and will likely come from your Super Connector network, however if you’re new to advising startups you can seek out opportunities to help startups that are one to two funding rounds behind your current startup.
In this phase, optimize for experience and build/iterate on your offering as a startup advisor.
During this phase, I taught classes at General Assembly as a way to build my own offering and continuously iterate after each class.
After 4 years, I had taught over 5,000 students without ever writing an angel check. I did however amass a mailing list of 8,000 readers through consistent coverage in General Assembly’s mailing list.
Start writing $1-5K checks
If you’re a helpful operator, there is rarely a minimum check size.
Start to build a small, concentrated portfolio and remember your check size can easily scale up or down based on your personal working capital and conviction level based on relationship with entrepreneur and your skill/sector alignment.
At this stage, your goal is small checks into pre-seed companies especially founders before they apply to YC or similar program that serves as a strong signal for future investors.
For later career Workhorses, this phase requires consistent, compounding activities that both strengthen your existing networks and create access to startups outside of your immediate network.
By this point, you’ve had a number of shots on goal and likely have access to a number of alumni syndicates to invest in founders that you’ve worked with directly or have enough first degree connections to get to conviction quickly when referencing the founding team.
A few baseline activities for this phase:
Subscribe to alumni syndicates, newsletters and events
Determine scout potential: if you’ve been an operator at a breakout company or have coverage across a number of startups, reach out to VC firms to gauge scout interest.
Prioritize external visibility: To become a magnet for startups, you’ll need top of mind awareness and visibility in the ecosystem
This exercise is different for everyone. If writing or speaking at conferences is not your thing, choose to work on external facing projects.
For me, I made the strategic decision to work on startup-facing products at Zendesk which included Zendesk Apps Marketplace and building Zendesk for Startups for broad startup coverage and an accelerated strategic network, which included partnering with incubators, accelerators and VCs.
In parallel, I spun out of General Assembly and used the same content to start my own program called SaaS School.
Rather than building this alone, I asked my intercompany peer network to join me including product leaders from Dropbox, Drift, Slack, SurveyMonkey and other operators I had previously met at SaaS Growth events hosted by a friend/mentor Guillaume Cabane at Segment.
Because there’s a great deal of nuance when it comes to scout programs, self-funded angel portfolio construction and the rise of Operator Angel Funds, I will cover this in-depth in future posts.
In the meantime, here’s the deck I used to raise $5M from Marc Andreessen, Eric Yuan and early investors in my new fund Work Life.
The most common Show horses are growth stage and post-IPO CEOs who both LP in Operator Angel Funds and continue to invest on a deal by deal basis.
Show horses are well capitalized and typically build a concentrated portfolio of Series A+ investments. They have access to the best deals via their existing relationships with top-tier firms and strong CEO network.
In recent years, many Show horses have hired a dedicated Workhorse to serve as an investment partner to both meet early stage companies and help scale their portfolio support while they continue to operate a high-growth tech company.
Now, where does this leave the Silicon Valley Elite?
The Angel J-Curve is a guiding framework with a fairly linear path for any operator who wants to build a track record as an angel, so by definition the Silicon Valley Elite are an exception to this model.
For simplicity’s sake, the definition of Silicon Valley Elite is defined as outlier operators who are part of a collective ‘Mafia.’
Some Show horses may swing in the same social circles as the Silicon Valley Elite, which means they have similar access however they do not benefit from the compounding advantages of the ‘Mafia’ network: first look at alumni founders and ability to compete head-on with ‘Mafia’ peers at other top-tier firms.
If you’re based in Silicon Valley, say hello @briannekimmel!
I host a number of angel dinners and events throughout the year for angel investors across all phases of The Angel J-Curve.