Jeff Clavier and Andrea Zurek - Startup Investor School Day 3
Jeff is someone that I met in the very beginning of my venture into venture. When I first started investing a long time ago, he taught me as many lessons about how to be a good investor. In two senses, how to be a good investor by making good choices and how to be a good investor partner to the founders with whom I would invest and become partners. I don't think anyone in the industry is as helpful as Jeff—an extremely smart, perceptive investor. I've learned a ton from him.
His comment that hits home and that you all should pay attention to with the founders that you work with is that he says, "I wish startups focused more. There are always too many things on their plate." It's actually true of Jeff generally; there are always too many things on his plate. I'm very grateful that he added one more and came and talked to us today.
So, Jeff Globby, thank you so much. He's a great investor without anyone else helping him, so it's a pleasure to be here. It's super exciting to see so many people who are ready to do the most exciting thing that you can think of, which is see the future through the eyes of founders and try and help them—with a bit of capital, help them with a lot of help. So congratulations for that.
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I decided to cover what seems to be a boring subject, and yes, it's kind of boring—asset allocation and construction—but I hope that with my talk you'll realize why I'd say to spend the next minutes on that. It's actually really important to think about all those things as you get on your Android journey.
Sort of brief bios: I was born French. I used to start up in the financial services market in France, got acquired, spent seven years at Reuters as a senior exec. So, you know, the big company thing. Moved here eighteen years ago to become a traditional VC. Then, in 2004, I saw this emergence of web-tool companies. At the time, believe it or not, there were just a handful of angels actually backing those entrepreneurs who were looking to raise a few hundred thousand dollars. So I jumped in and became one of the then super angels.
Uncork—you might have heard of us as Soft Egg—is now 14 years old with two hundred deals and a bunch of successes. Some of the companies that we backed—bloody bloody blonde—those are the funds. So we're now investing about fund five; it's something. Meanwhile, we have a growth fund as well.
What I want to spend time on is this part: fourteen years ago, when I was investing my own capital as an angel. What I like to do in those kinds of events is go back in history and talk about, "Hey, this is what I wish someone had told me then," as opposed to me discovering it.
It's kind of important to figure out how much of your net worth you should be investing or risking with entrepreneurs because it's a pretty bold thing to do. It's a very long game. I'm sure you've heard that already over the past couple of days while sitting with all those sort of awesome angels. The thing that people don't always appreciate as angels is how long it's going to take to sort of get this massive outcome that you're hoping for.
Yes, there are billion-dollar outcomes that happen within one or two years of the company being founded, but that's the extreme kind of example that almost never happens. For most angels, it will take 8 to 10 years, so start being ready for that. Obviously, it's very risky, so you're going to have losses; those will come very fast—typically, so bad news comes first in our industry.
Something which I've seen with our funds is getting in the money. So let's say you decided to invest 250K in a portfolio of companies. It will probably take six years to get that cash back, and then you will get into profits. That's what VC funds do; they get the fund back to LPs within six years and then we start getting carry. It's really super risky, and so at the end of the day, you have to be modest and realistic and understand that anything you invest has a likely high likelihood of just being wiped out...