Learn and Profit From the World's Best Startup Investors

By Wayne Mulligan, on Wednesday, December 11, 2013

Every year, Forbes Magazine publishes the “Midas List” – a list of the top U.S. venture capital firms.

The folks on this list are professional investors with a track record of success – so if you’re interested in early-stage investing and want to emulate the best of the best, you should pay attention to their names, right?

Uh, wrong.

Today, not only will we show you who should really be on the early-stage Midas List – we’ll also show you how to “follow” them so you can invest alongside them.

And since our topic today is about how to leverage the best startup investors (and, yes, since it’s holiday time), we’re also going to share with you a special report we just published. In this report, four professional early-stage investors reveal how they’d approach equity crowdfunding if they were in your shoes.

The Midas Touch?

Venture capitalist Fred Wilson (Managing Partner in Union Square Ventures and early investor in such companies as Tumblr and Twitter), believes the Midas list is mistakenly capturing all kinds of investors – whether they’re “Seed” and “Series A” investors who write checks when a company is little more than an idea on the back of a napkin, or “Later Stage” investors who invest when a company is more mature.

As Fred wrote, “For me, the firms who invested in the Seed and Series A rounds of $1 billion+ exits is the only list I care about.”

You see, most of the firms on the Forbes List are “later stage” investors. Instead of investing small amounts of capital into unproven startups, they put a ton of capital into later-stage companies.

By the time a later-stage venture capital firm like Kleiner Perkins invests, a “startup” might already have hundreds of employees, and millions in revenue. They might even be on their way to going public.

What Fred is saying is that by the time the “Midas” investors put money into a company, it’s no longer a question of if the businesses will succeed, but rather a question of whenthe success will happen, and how big it’ll be. And if that’s the case, what could early-stage investors like us – investors focused on opportunities in the equity crowdfunding market – possibly learn from the folks on the Midas list?

The answer is this: Not much.

The Real Midas List

But what if we could put together our own Midas List? A list of investors who actually have the “golden touch” like old King Midas?

Let’s give it a shot…

Based on Fred’s criteria, let’s look for professional investors who have invested in multiple startups at their earliest stages – startups that have eventually been acquired or gone public (often called an “exit”) for over $1 billion.

According to a recent article on TechCrunch, since 2003, 39 venture-backed startups have been valued at over $1 billion. Some of the companies have yet to “exit,” so we’ll focus only on the ones that have already been acquired or gone public.

Using CrunchBase (an amazing tool for any early-stage investor), we can look for investors who were involved in these companies’ Seed or Series A rounds of financing.

Below is our “Midas List” – I’ve included the name of the firm or individual, and the number of “billion-dollar exits” they’ve been involved in. (Finding the names of individuals can be challenging; finding the name of firms is a piece of cake.)

1.    Sequoia Capital ¬– 5

2.    Greylock Partners – 4

3.    New Enterprise Associates – 4

4.    Peter Thiel (including Founders Fund investments) – 4

5.    First Round – 2

6.    Charles River – 2

7.    Union Square Ventures – 2

8.    SV Angel – 2

9.    Austin Ventures – 2

How This Helps You

Now, you may be thinking, “Thanks for the great list, Wayne – but how does this help me make money?”

Well, if you read the article I wrote in October:  3 Super Investors to Follow for Crowdfunding Profits, you’ll recall that I showed you a way to invest alongside top angel investors by “following” their activity on AngelList, a high-quality crowdfunding platform.

Now you can do the same with our “Midas List” above.

You see, even though many of the names are firms as opposed to individual investors, we can still find and follow people that work at those firms. For example, if you look up Greylock partners on AngelList, you’ll see that, 2 months ago, one of the partners, Josh Elman, started to follow a company on AngelList called memoir.

At the time, memoir was raising a seed round. In addition to Josh, there were a number of other successful angel investors following and investing in the company.

As we’ve said in our essays – and in our 10 Crowd Commandments white paper – it pays to be a follower when it comes to equity crowdfunding. You just need to be sure you’re following the right people!

Speaking of following the right people, we have a free gift for you today that’ll introduce you to some of the “rightest” people in the early-stage universe…

Our Gift To You

As you know, my business partner Matt and I are very excited about equity crowdfunding and its potential for individual investors. So we’ve been talking to everyone we can about this new market – not just about ways we can help our readers navigate this new world, but ideally, how we can help them make money.

And some of our venture capitalist friends offered to help us out.

Recently, we sat down with four of these friends for several hours to discuss how they’d approach equity crowdfunding if they were in your shoes – for example, what types of opportunities would they look for, and what would their investment process be?

Based on these interviews, Matt and I created a new white paper to share with you today.

Essentially, it’s an insider’s look at how professional venture capitalists would invest in equity crowdfunding. We’re calling it, “Tips from the Pros” and you can download it for free today »

We hope you enjoy it, and please send us your comments, questions and feedback. We’d love to hear from you.  (feedback@crowdability.com)

Again, the report is free (for now) and can be downloaded here »

Best Regards,
Wayne Mulligan
Wayne Mulligan


If you enjoyed this article, subscribe to updates:

Sign-up today and you'll receive our daily insights on early-stage investing, as well as our FREE "Equity Crowdfunding Action Kit" – where you'll learn:

  • The Ins & Outs of Equity Crowdfunding
  • A step-by-step path to get started
  • Tips from dozens of Venture Capitalists
subscribe to updates

Thank you for subscribing!

Tags: Equity Crowdfunding Crowdfunding Venture Capital Venture Capitalists

Share This:
comments powered by Disqus