Think you need to be worth millions of dollars to be a successful angel investor?
As we learned during our research for The Angel Initiative, some of the most successful early-stage investors are just ordinary folks.
In fact, today we’ll introduce you to a regular guy who’s made a fortune.
Ordinary Folks, Extraordinary Investors
Meet Dave Cohen.
Dave grew up in DeLand, Florida, and attended college close to home at the University of Central Florida.
After he graduated, he didn’t go to work at a tech start-up in a big city, or a prestigious venture fund in Silicon Valley, or a hedge fund in New York.
He took work where he could find it – at a small software company in Florida.
Gradually, as he got into the details of his job, he became curious about other software companies – and eventually, he even tried starting one of his own.
Then, through various friendships he’d made from having his own company, David began to invest in start-ups.
How’s he done financially?
Let’s take a look.
One of his first investments was into a tiny software start-up called SocialThing.
SocialThing helped people manage all the content they were creating on social networks and blogs.
The year was 2007, and David scraped together enough capital to invest about $15,000.
Just one year later, SocialThing was acquired by AOL for millions…
David made 40x his money.
Was he just lucky?
Sure doesn’t seem like it:
Over the years, literally dozens of his investments have turned into winners:
BrightKite was acquired by Limbo…
FiltrBox was acquired by Jive Software…
IntenseDebate was acquired by Automattic…
And the list goes on and on.
It really makes you wonder:
How did Dave – just a regular guy from central Florida – make millions as an early-stage investor?
Dave Had a System
As we’ve been alluding to for the past few weeks, successful early-stage investors like Dave stick to a proven system.
For example, Wayne wrote about how – before these investors invest a dime – they determine what percentage of their overall investment portfolio to allocate towards early-stage deals.
Then we showed you why they insist on investing in these companies while their “valuations” are still low – while they’re still inexpensive. And we even took a page from Mark Cuban’s playbook, showing you why successful angels diversify their investments across many, many start-ups.
And finally, we revealed some of the “red flags” they look out for.
All these rules are part of the system that investors like Dave use.
Putting it All Together
To see how it all comes together, let’s take a closer look at Dave’s portfolio:
First of all, Dave’s backed about 500 companies over the years – that’s a highly diversified portfolio. (Don’t worry: you don’t need anywhere near that many investments to be considered “diversified.” At Thursday’s live training event, we’ll tell you the exact number you need.)
Then, when it comes to valuation, Dave insists on being thrifty – just like the system dictates:
The average valuation for the vast majority of his Dave’s investments is about $1.5 million. That’s well below the level Wayne taught you about here.
The Proof’s In the Pudding
By consistently using this system, Dave’s experienced tremendous results:
- A 1,000% Return – Dave invested in a company called DocTrackr when it was just getting started. When it was taken over just a few years later, Dave made 10x his initial investment.
- Another “10 Bagger” – Yahoo acquired another of Dave’s investments called Wander. Again, Dave made an estimated 10x.
- 20 Times His Money – And when another company Dave backed called Senexx was acquired, Dave made even more – he made an estimated 15x to 20x his initial investment.
To be clear, Dave’s had plenty of failed investments, too – but even after we factor those in, Dave’s portfolio has earned an estimated annual return of 25.6%.
That’s pretty close to the historical 27% average return for angel investors.
And keep in mind: that’s almost 4 times higher than the stock market average.
The Full System
But Dave and the other successful angels we studied and interviewed during The Angel Initiative evaluate other key factors, too:
They study certain key aspects of the founding team…
They look at the company’s financials…
They analyze the market it competes in.
And so on and so on…
To learn all about the full system that Dave and other successful angels rely on, join us this Thursday at our live webinar.
You don’t need to register in order to attend – simply visit www.TheAngelInitiative.com this Thursday, March 26th at 8:00 PM Eastern.
This is a live training session, hosted by Wayne and me, for anyone who’s serious about making money as an angel investor.
During the webinar, we’ll also announce the specific date the SEC has set for opening up the Private Stock Market for all investors.
See you there.