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Tuesday 11 February 2020

A Place for AI in Angel Investing?

In response to a question filed to @ask1angel from @hinchmanmax : 

Q: ‘There is a reemergence of decentralized early stage investment funds in crypto space. It is basically a community run funds that makes investment decisions based on the majority voting decisions of its members.
What is your take on decentralizing the decision making process in early stage investing? What are some benefits and downsides that immediately come to mind based on your experience in angel investing?’

1/ Ok @hinchmanmax - think I understand - I’m going more #longform on this, so I’ll put this up on my blog site but I’ll also put the reply in sections here, so thanks so much for your question - here are some purely personal observations: 

2/ As an #angelinvestor (but not in Crypto, yet) I’m sometimes caught out seeing #startups I pass on gaining strong traction & vice versa, so naturally question what I missed (out on). 

3/ So after finding a syndicate or platform that curates to weed out the no-hopers, should I maybe passively invest & put the same amount into all prospects, if it’s that tricky to assess the best? Not done that yet, but considered it sometimes, briefly usually, esp. for funds run by people I respect.  The ‘star’ #investors get it wrong too sometimes though.

4/ The investment part is just that- #angelinvesting for me is a privilege in terms of access to and interaction with #startup #founders and their teams, new business areas and #technology.

5/ Will #AI do better in picking & sizing #startup #investments than my process? Maybe, but good syndicates already ‘decentralise’ and there’s a ‘herd’ momentum that can attract and repel some undecided less experienced investors (if we’re being honest 😀)

6/ Its not #AI but can be very effective #collectiveintelligence, especially in assessing founders. 

7/ I use asset-allocation based passive/ index based investing in many areas but not in micro caps. It may be tricky to execute if you have lots of top-up rounds, whilst the good ones will appear with punchy #valuations and you may have just one shot to get aboard for a run to multi-Xs; good luck with that piece of #AI . 

If these observations have been of interest or value for you, visit for more.