I invest in three types of deals. The first group are founders I know well; in this business founders are everything. I am very comfortable backing superstars based on little more then their involvement (though that rarely happens as they almost always have a great idea.)
The second group is comprised of companies in sectors where I have a great deal of experience such as ad tech, marketing, email, enterprise saas, some consumer tech and data. I look hard for original, defensible ideas that have the potential to become huge. I would rather lose on a bunch of companies than to miss out on one of the big ones. This is a business of swinging for home runs and being comfortable with striking out. Cruise Automation is a great example of this strategy. When we invested in Cruise a lot of folks thought it was a weird investment; six months later it was sold to GM for or a billion dollars. Also, one of the greatest advantages of Angel List is that it enables significant diversification to have a better chance of getting into one of the winners. I don't consider myself an index investor (in the public markets I have a 30.9% IRR over the last seven years), but I love the value of smart diversification.
The third group are deals that I get access to as a result of my network where a great VC or angel whose investing I respect is leading the round and I can get a small allocation. Basically a smart follower strategy. In those deals I like to put in a small amount of capital and syndicate the rest so that you all can share. Another great way to diversify in the hunt for the nonlinear returns. In 2016 we invested along side A16Z, Greylock, NEA, Founders Fund, Resolute, Accomplice and many other great VC firms.
Here are a couple podcasts where I discuss my investment thesis and approach:
As a ten year startup CEO I built a very large network of founders, angels, VCs and friends. All of my deal flow comes from those relationships.
