I launched my syndicate, Striking Markets, 6 months ago when we made our first investment into Odin. It’s been an incredibly educational journey so far.
I am starting to writing periodic reviews to reflect and share my progress. I’ve benefitted from some of the great educational content by angels, syndicates and emerging GPs who build in public, and aspire to do the same.
First let me explain why I’m angel investing. While I was still running my previous music businesses, my personal interests were always in markets and tech. It led to a hunch that I should get involved with early-stage technology. After my exits, I wanted to validate that hunch. I thought I would have an edge because of my operational expertise, ability to network and identify talented individuals. Now that I have some experience, I believe I was right — I’m greatly enjoying the process and it feels like I’m uniquely positioned to be doing this. I’m excited to continue down this path!
Since the start of the year, we’ve made the following investments:
- Odin: democratising private investments
- Sonomo: making music rights investable
- Intros: AI networking assistant
- Aflorithmic: AI audio production
I’ve also made a personal investment in AltHQ, which was too early stage (pre-product/rev) to offer to the syndicate.
Let’s look at the numbers:
|Average post-money valuation (”PMV”)
|Average gross investment (prior to SPV fees)
|Median gross investment
I’m really happy with these. We’re remaining sensitive to price while finding firmly revenue generative companies that are likely to raise follow-on rounds and have bright futures. I’m also seeing our average investment size increase as the syndicate grows. This is good for founders since they get more $ from us for equivalent effort in diligence, and it’s good for investors since they pay a smaller percentage of their investment in SPV fees.
At this pace I am on track to do 8 deals a year. But I’d like to get to 10. Of course, never at the expense of quality. The more the syndicate and my network grows, the more qualified dealflow I’m getting. So this seems like an achievable target.
As I get more practice, my investment scope is becoming ever clearer:
- Focus on pre-seed and seed stage companies, <$20MM valuation. At this stage the organization is small enough for the contributions of myself and the syndicate to still make a difference. And with our smaller investments it means we still buy a reasonable portion of equity and/or tokens.
- As a serial bootstrapped founder I want to see initial traction. Show me users or revenue. I know that some businesses can’t be built without funding, but it’s a huge plus if founders show grit by hustling together a team and MVP to start validating their thesis. I will only deviate from this if I have great conviction in the founding team.
Some other observations:
- It’s an opportune time to be investing in early-stage companies. VC capital deployed is down tremendously and it’s reflecting in valuations. Many founders are raising flat rounds and are struggling to fill them. Therefore they are looking to angels more. The result is better opportunities at more reasonable valuations.
- Blockchain founders have been spoiled by years of easy money. At Deus Ex DAO, the investment DAO I founded, we’re seeing rationalization too. Better pre-seeds are now priced at $10-15MM and deal structures have become more investor friendly. Instead of token-only investments (via a SAFT) being the norm, it’s shifted to an equity instrument (mostly SAFE) with a token warrant. This gives investors equity protections and ability to participate in value accrual to both the equity and token. Unfortunately many founders are still averse to basic diligence, or unprepared for it. Angels and VCs haven’t been doing proper diligence and set a poor standard. I’ve made no blockchain seed investments in the first half of the year, as my other dealflow has provided a healthy and more attractive comparison. I remain on the lookout for great teams who are the exception though.
It’s been a thrilling year so far. I’m excited to keep learning, expanding the syndicate and serving more founders. I’m also grateful for my early supporters - thanks for taking a chance with me! I look forward to building this into something great with you.
Building something awesome and think we’re a fit? Please pitch me here. I review all submissions.
If you’re interested in co-investing or sharing dealflow, you can learn more about my thesis and process here. I’d love to hear from you.
Striking Markets Newsletter
Reflections on blockchain, markets and venture capital.