In the “It Took This Angel Investing Millionaire 4 Years to Learn This Lesson | My First Million Podcast,” Shaan Puri, an angel investing millionaire, shares his insights and experiences in angel investing. He highlights the high risk associated with investing in early-stage start-up companies and emphasizes the importance of diversifying one’s portfolio to minimize risk. Puri recommends investing in companies that have the potential to provide a return of 2 to 3 times or more than the initial investment. He also discusses strategies for selecting the right companies to invest in and the need to consider oneself as an investor from the beginning, rather than waiting until wealth is obtained.
The My First Million podcast, hosted by Shaan Puri and Sam Parr, focuses on celebrating builders and providing tools to turn ideas into reality. Puri shares his personal experience with angel investing, including regrets about not investing in his friends’ companies earlier. He talks about a specific company called Lambda School and the challenges he faced in finding a way to afford it. Puri also highlights the importance of building a network of investors and bringing investment opportunities to multiple investors to increase potential returns. He concludes by encouraging others to become angel investors and take advantage of the high-risk, high-reward nature of startup investments.
Angel investing millionaire, Shaan Puri, reveals what took him 4 years to learn and how he had his start in angel investing. His advice, tips, and strategies on angel investing are of high value to any aspiring investor or current investor. He explains how investing in early-stage start-up companies presents a high risk of failure and that diversifying your portfolio is critical so that at least 30 percent of the companies potentially give you a return around 2 to 3 times or more than your initial investment. He goes onto explain how to pick the right companies to invest in and the strategies he uses to succeed as an angel investor.
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Lesson Learned: Investing in Angel Startups
When it comes to investing in angel startups, there are several important lessons to keep in mind. One of the key factors to consider is the high risk of failure associated with these early-stage companies. Investing in startups is inherently risky, as many of these companies do not have a proven track record or established revenue streams. It is essential to be prepared for the possibility of failure and to not invest more than you can afford to lose.
In order to mitigate this risk, diversifying your portfolio is crucial. By spreading your investments across multiple companies, you increase your chances of success. It is advisable to invest in a minimum of 10 companies per year, as this helps to maximize your potential returns. This diversification strategy ensures that even if a few companies fail, you still have the opportunity to see significant returns on your investment.
Background: Shaan Puri and the My First Million Podcast
Shaan Puri, an angel investing millionaire, has gained a wealth of knowledge and experience in the world of angel investing. He shares his insights and experiences on the “My First Million” podcast, which he co-hosts with Sam Parr. The podcast focuses on celebrating builders and providing tools to turn ideas into reality. Puri’s advice and strategies for angel investing are highly valuable to both aspiring and current investors.
Regrets and Early Experiences
One of the key regrets that Puri highlights in his angel investing journey is the missed opportunities with his friends’ companies. He reflects on how, if he had invested in these companies when they were still in their early stages, he could have seen significant returns as they grew and became successful. This highlights the importance of recognizing potential in startups and taking advantage of investment opportunities before they become widely known.
Puri also shares his experience of investing in Lambda School, a company that he saw great potential in. However, he faced the challenge of not having sufficient capital to invest in the company. This early experience taught him the importance of building a portfolio of investments to mitigate risk. It is not enough to invest in just one company; a diversified portfolio provides a greater chance of success.
Entering a Partnership for Investments
Recognizing the need for capital to invest in startups, Puri entered into a partnership with a friend who had the financial resources. This collaboration allowed Puri to invest in companies and share in the upside. By leveraging his friend’s capital, Puri was able to expand his investment opportunities and increase the potential for higher returns.
Building a portfolio of investments is crucial in angel investing. It spreads the risk across multiple companies and increases the likelihood of finding success. Collaborating with a partner who shares the same investment goals can provide a solid foundation for building a diversified portfolio.
Building Investor Network and Accessing Capital
Puri emphasizes the importance of considering oneself an investor from the beginning, even before amassing significant wealth. By adopting an investor mindset, individuals can start building a network of investors and accessing capital early on. This network can provide valuable connections and opportunities for collaboration.
Finding ways to access capital is a common challenge for angel investors. Puri encourages aspiring investors to be resourceful, creative, and determined in seeking out capital. This can involve leveraging personal savings, selling stocks, or forming strategic partnerships. Being proactive and thinking outside the box is essential in securing the necessary capital to invest in promising startups.
Building a network of investors is also crucial in the angel investing space. Collaborating with other investors increases the potential to bring deals to multiple investors and enhance overall returns. By sharing investment opportunities and leveraging collective knowledge and resources, investors can achieve greater success.
Bringing Deals to Multiple Investors
Puri highlights the benefits of bringing deals to multiple investors. Collaborating with other investors allows for increased capital deployment and diversification. By pooling resources, investors can collectively invest in a greater number of companies and increase their chances of success. This strategy maximizes potential returns and spreads the risk across multiple investments.
Puri shares a success story of a young person who brought them a promising investment opportunity. This example showcases the importance of networking and collaboration in the angel investing world. By working together with other investors, individuals can tap into a wider range of opportunities and increase their chances of finding exceptional investments.
Investment Strategy and Goals
Puri recommends investing in 5-10 companies per year to build a well-rounded portfolio. This strategy allows for diversification and maximizes the potential for high returns. By spreading investments across multiple startups, investors can increase their chances of finding the next breakout company.
The goal of angel investing is to take advantage of the high-risk, high-reward nature of startup investments. While there is always the potential for failure, the possibility of significant returns makes the risk worthwhile. Investors should approach angel investing with a long-term mindset and be prepared for both successes and failures.
Conclusion: Becoming an Angel Investor
Becoming an angel investor can be a rewarding endeavor for those willing to take on the high risk associated with investing in early-stage startups. Shaan Puri’s insights and experiences serve as valuable lessons for aspiring angel investors. By recognizing the importance of diversification, building a network of investors, and accessing capital, individuals can increase their chances of finding success in the angel investing space.
Investing in angel startups requires a proactive and entrepreneurial mindset. By adopting the perspective of an investor from the beginning, individuals can position themselves for opportunities and build a portfolio of investments. While the road may be challenging, the potential for high returns makes angel investing an attractive option for those with a passion for supporting and nurturing innovative new companies.