How I Made My First Angel Investment
Did it work out? đ
Original Post: efficientvc.com/my-first-angel-investment (for most updated version)
I made my first ever investment back in 2013 (I was 21).
No, this wasnât an angel investment. I bought a company on the NASDAQ that I loved. Research In Motion (though you may better know them as BlackBerry).
Why, might you ask? Well - I started my first business (CyberBytes Inc.) in June of 2010, and I thought having a BlackBerry made me a more legitimate business owner (back in high school), because, well, I could write emails more efficiently with the physical keyboard. Right?
I lost a lot of money from my first investment
By a lot, I mean the $4,000 investment turned into something like $2-3k
And hey, that was a lot of money for me back then - I only made $5-10k/yr for my first four years in business. But thatâs a story for another day.
Even with the major losses on paper, that wasnât enough to keep me away from starting the unofficially-official weekly BlackBerry podcast. We did 142 episodes over the course of 3 years, had over 250,000+ downloads, and brought in over $400/mo in support via Patreon (trust me, Iâm getting to the point here real soon).
That said, it probably sounds way more successful than it actually wasâŚ
(Wrote more about that specific journey and how I built and launched an app for BlackBerry here)
Through all of that, I learned one super valuable lesson:
Just because you love something, doesnât mean itâll be a good investment.
And so I finally sold my $BB shares in 2018 after I finally accepted the above point.
What I Learned #
Cool, so it took me 5 years to learn my first valuable lesson in investing - after managing to lose about 6-7% per year when averaging out the losses. Hey, I mean compared to someone shorting the S&P500 during that same time, I guess I could have done worseâŚ
The Gap from Then to Now #
By 2019, I was playing with a lot of software in my free time. CyberBytes pivoted from web development and online marketing to streamlining businesses, implementing SaaS, and building custom automation and integration.
I didnât know that I wanted to get into angel investing, but I did know that I loved some of the software that I worked with.
I was super frugal at the time (well⌠if you want to call it that, I was just putting 95% of my income into the stock market while continuing to live at home - donât worry, primarily QQQ this time, because I learned my $BB lesson).
I just knew that deep down, I was saving up for some future opportunity. I didnât quite know what that meant, I just knew that having money (or rather, liquidity) would allow me to take advantage one day.
Jump forward 2 years (2021), an opportunity struck in an unlikely place.
I was in the bathroom responding to a super old message on Instagram when getting ready for the night (I was avoiding social media - still am), pressed back on the message, and was thrown into the feed. Scrolled down a bit and was hit by an ad (Zuckâd again!) for a company with the domain âinmotion.appâ.
I had no idea what it was, but what I did know is that I appreciated that they too used the .app website domain (hat-tip to our companyâs domain: efficient.app đŹ)
Anyway, I checked it out, it looked like some sort of calendar/scheduling tool, and I decided to give it a shot.
The following day and about 2 hours into using Motion, I ran over to Andra (my now wife) to say:
âI think I found something that I canât live without, and have 3 days to decide on if I should purchase it for the year or notâ
Damn Pricing Models #
They had a cheeky pricing model. $35/user/mo or $19/user/mo (if paid annual). Oh, and a 5-day free trial? I mean really⌠I thought? Well yeah, it worked.
I got Andra onboard, played with some of the team scheduling features, and then said goodbye forever to Calendly, Woven, ChiliPiper, and everything in-between.
Should I Invest? #
So this was that same feeling, but would it be another BlackBerry? No, this was different. I was already using all of the software in the space and Motion felt, well, different.
I proceeded to use their software for a month, while connecting with all of their team on LinkedIn (there were just 3 co-founders at the time: Harry, Ethan, and Omid), emailing their team regularly with feedback.
They built fast - I hadnât experienced this before, sometimes an hour after writing in a request, it was built. 2 engineers and a product person. A beautiful trifecta.
Erm Wait - Actually, Can I Invest? #
I threw the idea out in the middle of some email banter between some product feedback. The investment comment was ignored (I donât think they thought anything of it).
After a bit more prodding andâŚ
Sorry, weâre not raising right now.
Oh, wait⌠so this is how the angel investment space works? đ And it was over just like that.
Except, it wasnât.
I also had no idea what was involved with angel investing. I read online about things like âAccredited Investorâ status being required. Was I that? Could I get that? Why does it even matter if I canât even get into the company that I want to though?
At that point, I made it my mission to figure out how this space worked. I knew that Motion went through Y-Combinator, so I reached out to a friend that also went through YC, Evan. I asked him if he knew how someone might go about investing into a YC startup. He asked which one I was interested in? I answered âMotionâ, and he was familiar.
Oh, I was actually just going to reach out to their team and give their product a try, Iâll introduce you!
Cool! So I got some sort of in. And hereâs how the conversation went:
Evan (YC Friend): Hey, I have a buddy thatâs interested in angel investing, you guys raising?
Harry (Motion CEO): Nope, sorry.
Evan: Okay cool, thanks.
Harry: Wait, so who is your friend?
Evan: Oh, his name is Alex Bass
Harry: Oh, no way! Hah, we love Alex! Tell him to shoot us an email!
Evan: Oh, okay đ
Then it came back to me
Evan: Okay, so they already knew who you were and told me to tell you to just reach out⌠Why exactly did you want me to reach out?
Me: Oh, no way! Ah, yeah, I donât know, because they didnât take me seriously when I first asked, so I figured this would show them that I was more qualified? đ
So I reached out to Harry and asked if I could invest:
Harry: Yeah man, so while we arenât raising, youâve been so crazy helpful with product feedback the past couple of months, so we could give you the same terms as our last investment (they had just taken some additional investment in a few months prior) - we could do $5 or $10k, would that work?
Me: Ah! Dope, okay cool, yeah Iâm totally up for that! But⌠I was really hoping to get more involved than that⌠thinking more like $30-40kâŚ
If thereâs one thing I knew, it was that I believed in this product and team, and a $5-10k check just didnât feel like enough skin in the game for me to continue putting in as much time/thought into the product. I enjoyed giving product feedback and getting involved. I needed to put enough in that I felt like I could justify that time spent and have more of an upside.
Was I Crazy? #
Well, Harry thought I was crazy, having wanted to put in that much. He felt humbled by the huge vote of confidence but urged me to really think about it for a couple of weeks. He said I would be putting in a check the size of some of their largest angels, who have 10x the net worth that I had. He also reminded me numerous times that it was likely that the entire investment would go to $0.
Harry: I have one more question for you⌠If you put this money in and you lost it all, how would you feel?
Me: I understand itâs more than likely Iâll lose it all, and Iâd genuinely be fine with that. I just donât think I could have this type of gut feeling and not invest. Iâm prepared to lose everything, and know that being along for the journey, with a meaningful stake in the company, will lead to more growth than the cost of admission.
I passed the test.
He gave me his cell, told me to text/call with any questions I had at all about angel investing and startups. He was adamant about not wanting to destroy our new and budding friendship over money. It was super nice of him to say, it made things feel a bit more safe (like he actually had my best interest in mind đ¤Ż).
I reminded him that I actually do business with my closest friends and that Iâm good at separating the two (hell, my wife and I even work together). And after that, we called it a night.
I second-guessed myself like crazy for a couple of days, sanity-checked myself with my wife, some friends, and sought out a few people in the VC space on LinkedIn to try and pick their brains (was I crazy?).
It worked by the way, got 3 calls and they were all super nice (although, a surprisingly large number of the above people urged me against it - recommended putting in smaller checks into more companies). With that, I knew I had to trust myself because I knew what I saw in Motion, they didnât have as much context. For a week, I played with the idea of putting in less. It didnât sit right with me though. I knew that this was the opportunity I had been waiting for, so I just went for it.
Come In On It With Me? #
It was after I decided to put in $30k, that I convinced Andra to go in on it with me (mind you, we were dating and living together for just over a year at this time). Oh yeah, and that whole accredited investor piece⌠Something I actually needed to figure out now.
And that I did.
Thereâs a slight loophole. For context, you need to have a personal net worth of at least $1m (or have made $200k/yr the past 3 years), or if youâre married (or have a spousal equivalent - ding ding ding), then a joint net worth of $1m, excluding your primary residence. Counting my existing investments, possible business valuation, and Andraâs investments, I should be okay â
Fun tidbit: Early on, we actually toyed with the idea of getting married to make the accredited investor piece check out, before learning they added the âspousal equivalentâ piece in recent years. Iâm telling you, I was not going to let this opportunity get away from me.
She didnât say yes to joining in with me on the investment immediately. I reminded her how this would give us both access to an incredible company, and an asset class that very few people get to play within.
She had to think about it. Though she was also building a relationship with the Motion team alongside me. Weâd go for a walk, talk about product features, and what could be improved, and then record a Loom video together, giving feedback, to finally send over to the team. She told me that with how passionate I was about their product, it was infectious, and there must have been something there that I saw. Not to mention sharing this experience with each other this early into the relationship. Thatâs special.
So with that, Andra came in for $5k - so we did $35k at an undisclosed post-money valuation (I should be able to share the finer details one-day).
Howâs It Going? #
I wish I could say more, but thatâs all confidential and not yet the right place and time.
Update! (9/19/2022)
Motion: We raised $13 million in Series A to automate team project management
https://www.usemotion.com/blog/we-raised-13-million-in-series-a-to-automate-team-project-managementTechCrunch: Motion wants to automate task planning using AI
https://techcrunch.com/2022/09/19/2393012/
Letâs just say that we are more excited than ever about Motion, and you should go sign up for a free trial here. Theyâve pivoted since we first invested, and they have done a stellar job. They are an AI-powered time management project management platform. Think Asana, but if it actually paid attention to your schedule.
Worth The Risk? #
I knew that Harry and his team were smart and that even if this investment went to $0, just surrounding myself with their team, learning from Harry, and being tied in with his network would be worth its weight in gold.
It has been.
This investment has directly led to 2 additional angel investments through Harry pulling me into his network and vouching for me.
And one of which, you might have even heard of:
SpaceX đ
Until next time â¤
Alex Bass
P.S. In writing this, I just had the realization that my first-ever investment was into a public company named âResearch In Motion (Later rebranded to BlackBerry)â and then my first-ever angel investment was into a startup just called âMotionâ - some sort of strange coincidence hereâŚ?
Want to be alerted when I post more angel investing content?