The 4 Ways Investors Find Great Startups

The 4 Ways Investors Find Great Startups

Investing in seed stage startups can be exhilarating and highly lucrative, but it can also be incredibly risky and time consuming. Identifying the most promising new companies requires a lot of cutting through the weeds – I interact in one way or another with well over 2,000 entrepreneurs a year and take meetings with over 200 of them, all in the process of finding just the 15 I’ll invest in. When I first began investing, I wasted a lot of time. Tracking down the most promising entrepreneurs was a crapshoot and I didn’t know where to start. But as I developed as an angel investor over the last 8 years however, and now in running Arena Ventures, I’ve recognized the pattern of where my investments come from…where I get the highest ROI on my time. There are 4 activities you can do as an investor to get to the good deals most quickly: hunting, trapping, farming, and trading. #1) Hunting Hunting is outbound work – hustling at events and parties, scouting for products online, reading and reaching out to people. You go anywhere you can to find great people. You don’t have a specific target in mind, you’re simply looking for unique, brilliant founders. When you first start investing this will probably be the majority of your time until you have a reputation, network and better idea of what you want to invest in. A good example of hunting is Klout: I found the earliest version of Klout in 2009 while scanning Twitter posts and then tracked them down via friends in Boulder who knew Joe Fernandez. I pursued Joe...
Welcome to In The Arena

Welcome to In The Arena

Welcome to In The Arena, a blog/magazine by Arena Ventures. Our goal with In The Arena is to publish insightful advice, stories, and interviews about the world of startup investing. We hope this will be much more than just a company’s blog – we want it to be an engaging publication and educational resource for the wide range of startup investors around the world and for entrepreneurs seeking a deeper understanding of how investors think. There are many quality media outlets and blogs online to guide new entrepreneurs and tell their stories, but comparatively few resources for new investors. Given Arena’s goal to activate 10,000 new angel investors through our hybrid model of venture capital and crowdfunding, we decided to step in and start filling that gap. Early stage investing operates in an entirely separate sphere from other fields of finance: it’s not about Excel docs and financial models, it’s first-and-foremost about understanding people, then secondly about creativity. It’s a culture where the smartest minds work in t-shirts and old sneakers experimenting with new product ideas, not sitting in corner offices wearing Armani suits. Investing in startups, either as an angel or a venture capitalist, is an exhilarating adventure that rewards creativity, contrarian thinking, and entrepreneurial hustle. We’re fortunate to be investing during a pivot point in man’s relationship with technology: the pace of technological innovation continues to accelerate faster than ever before. A future with driverless cars, 3D printing, and artificial intelligence is no longer science fiction, but reality. The industry of venture capital and angel investing has historically been shrouded in the mystery of backroom deals and...