How You Can Invest In My Deals

http://www.fourhourworkweek.com/blog/2013/09/23/youd-like-to-be-an-angel-investor-heres-how-you-can-invest-in-my-deals/

by _pius • 13 years ago

62 38 13 years ago

graeme• 13 years ago

Just came here to submit this. It's a fascinating development. He's pulling an end-run around mid-level VCs.

Tim has a good eye for startups + the ability to personally boost their efforts + get them publicity. Now he can get them money without the hassle of individual negotiation with investors.

Can someone more knowledgeable comment: is there a maximum amount of money this can be used for? Or could this conceivably be used for much larger rounds as well?

prostoalex2• 13 years ago

https://angel.co/help/syndicates

It could be used for larger rounds, but there's understandable fear about "lead-less" rounds.

ljd• 13 years ago

The investment pitch is interesting and while I own my own startup I don't think I have the knowledge it takes to take a page of text and determine if I should invest, even if the sum is small.

Regarding Shyp, it would be great to imagine a huge untapped potential market around "the first mile" problem but it's hard to see the market there.

For example, in almost any sized company I've worked in, FedEx or UPS would pick up daily from the office for free. So there is a ceiling for this to become B2B and there is already distribution and experience doing this with other carriers such as FedEx and UPS.

Also, I've been able to print shipping carrier labels on packages before and have them picked up directly from the carrier for free so there is already a mechanism there for residential albeit I don't know the details for this program.

But more importantly, while I hate taking my packages down to a UPS store as much as any one else, I rarely do it. And making it easier for me doesn't mean that I would do it more. It just means that it would be easier to do it a few times a year. Which is a scary thought for a business; to think that perhaps you are entering a market that has no room for growth and that the best thing you can do is take a small market away from a large company with more potential to squeeze your margins.

I wish Shyp the best of luck, and if this company is successful it's just a testament to how I probably don't have the wisdom to take a page of text and make a decision on whether or not it will be successful.

EDIT

-----

I've done some more research and here is what I found:

For $10/week (Flat) UPS will pickup daily from your house [0]

For $5.50/pickup UPS will do a one time pickup [1]

[0] http://www.ups.com/content/us/en/bussol/browse/pickup.html [1] http://www.ups.com/content/us/en/shipping/time/service/value...

pbreit3• 13 years ago

I pretty much never sell on Ebay because I envision the shipping pain. I think you also missed the point that they pack it up for you, too. And that you get FedEx/UPS-like service at USPS prices.

jonnathanson2• 13 years ago

Indeed. As a frequent seller on eBay, Craigslist, and other markets, I can testify to how big a deal the "first mile" problem really is. Finding time to package something properly, take it to a UPS or FedEx or USPS outlet, and get it out the door is a serious PITA for the time starved.

Big, big need with a large TAM, in my opinion. Logistically, it seems very hard to scale. But the potential is there.

kevingibbon3• 13 years ago

Co-founder of Shyp here. We don't only just provide a pickup on-demand service, we also package and provide an amazing experience the entire way through. Take a picture with your phone and tell us where its going. That's it.

We do all this for the same price as USPS retail.

We do charge a $5 pickup fee if you only have one item. The reason for this is because the largest cost for us is the pickup so if we are able to incentivise you to hold until you get 2+ items everyone wins.

Oh, did I mention we don't charge anything for packing materials either (tape, box, air pockets etc.)

negamax2• 13 years ago

How can someone invest in you without being accredited investor?

isamuel• 13 years ago

If I'm reading the SEC rules correctly, to be an eligible investor, you must have an income in excess of $200K. Is that right?

gbelote• 13 years ago

You need an income of $200k/yr ($300k/yr if married) for at least two years, or a wealth of over $1m (excluding the value of your primary residence).

xhrpost• 13 years ago

I believe the JOBS act is supposed to eliminate this requirement but it hasn't been implemented by the SEC yet unfortunately.

mcdougle• 13 years ago

Or a net worth >$1mil

At least, that's what it's always been. I'm not sure if the new law changes this; it was pretty ambiguous about that (at least to me as I skimmed over it). This is the first I've heard that they changed the laws for being a VC

lukethomas• 13 years ago

Yes that's right - for more information on when this type of investing will be available to everyone (sometime next year...hopefully), check this out:

https://wefunder.com/post/37-what-founders-need-to-know-abou...

prostoalex2• 13 years ago

http://www.sec.gov/answers/accred.htm

msrpotus• 13 years ago

While Shyp might be a great company (it seems like a great idea), I worry about this being the start of a flood of dumb money into startups. I wouldn't consider myself knowledgable enough to invest in a new startup and I follow tech news; what happens when everyone with a few extra dollars tries to spot the next Google?

Major_Grooves• 13 years ago

I was invested by crowd-funding via a platform in the UK, called Seedrs. I have 60 investors and raised £30k to build my MVP. I think at this level of funding (which is different from Angelist syndicates - I think Seedrs is £150k max) there is no real dumb money. I just needed the sort of money that people from wealthy backgrounds dismissively refer to as "friends and family" money.

As it turns out my investors range from millionaire entrepreneurs, city lawyers, to my mate's girlfriend. It's great to start off with 60 super-fans that have a vested interest in promoting you to their network.

negamax2• 13 years ago

That's pretty much how all the money move around. What's $200-$300 for most people here as fun money on KickStarter is what it would be for some people for 10-100x that sum.

VladRussian2• 13 years ago

that blog post looks and reads like a typical "make huge money working from home"/"buy this investment report" webpage for me. Even the similar green/lime colors.

7Figures2Commas4• 13 years ago

The new general solicitation rules permit a company to solicit investment publicly if certain requirements are met. One of those requirements is that the company file a Form D with the SEC 15 days before its offering is advertised, so I don't see how it's possible for a company to be soliciting publicly today.

IANAL but I would be incredibly uncomfortable as a founder if one of my investors was taking the new rules to mean that he could solicit investment publicly on my company's behalf.

pbreit3• 13 years ago

Maybe they submitted the Form D 15 days ago?

7Figures2Commas4• 13 years ago

There's none that I can find on sec.gov.

kevingibbon3• 13 years ago

Take a look at Wefunder response above.

"waiting period for Form D is a proposed rule that has never been voted on"

npt4279• 13 years ago

That's not exactly true. I'm the founder of Wefunder, so I know a fair bit about this.

The 15 day waiting period for Form D is a proposed rule that has never been voted on. The law of the land - right now - does not require it. That's why we have 25 or so companies on Wefunder fundraising today.

I wrote a blog article explaining this all in excruciating detail at: https://wefunder.com/post/37-what-founders-need-to-know-abou...

7Figures2Commas4• 13 years ago

Good post. Thanks for sharing.

I'd be fascinated to hear your thoughts about investors in a company soliciting investment on their behalf as is the case here. Some of the comments on Tim's blog are cringe-worthy:

----

Hi Tim,

Thank you for this opportunity, I was just looking into Angel investing but found out that I lack the capital required for most investments.

Does your offer apply to international backers? I’m based in Europe.

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just funded. question – if I sign up for automated backing, is that what it says it is, ie I am committing $2500 every time you make an investment? or – is it guarantee that I can back but get approval before I have made the commitment?

thanks!

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Does the money in a 401k count when calculating the net worth for an accredited investor?

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Gak, I don’t fulfill the needs to be accredited, so close though. I’d love to invest with you :(

I even dropped my lunch and ran home from campus to jump on my computer. I guess I will have to wait.

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In order to invest as a syndicate it states; “You must be accredited to invest.” How does an individual invest if they are not accredited???

mathattack2• 13 years ago

Just so that I follow... You're not investing alongside him as a VC or angel, you're investing through him, where he acts as the VC and collects the 20% carry, correct?

GrinningFool• 13 years ago

Correct - and the 20% carry is on any profit, not on the investment itself.

mathattack2• 13 years ago

Yes - typical VC structure.

jessepollak• 13 years ago

Two random thoughts:

1. Shyp is raising $2+ mil at a $5mil valuation — doesn't that seem a little iffy for a first round.

2. I hate it when people capture my scroll, please stop that.

Other than that, Shyp looks awesome and syndicates looks great.

pdfcollect• 13 years ago

$5 apart from already high postage?

snowwrestler• 13 years ago

Looks like a great deal for Tim Ferriss: more leverage with a 20% upside and no downside.

pierrebai• 13 years ago

That is slightly incorrect, at least if one takes "slightly" to mean "widly". Actually, as the blog points out, he invests 25K while the invited investors can pitch in up to a totla of 250K. He gets 20% of any profit off this 250k, which is 10 times his own investment. So for every point of profit on his own investment, he gets two additional point back (250K/25k x 20% = 200%). That's a nice scheme were there is no increase in risk yet there is 3x the return on investment he'd normally get. So, for a corral of startup that would net 5% on average, he'd get 15% average instead. No additional cash nor risk involved. Meanwhile, the invited get 4% instead of 5%. Would you invest in a scheme were the risk are the same but the return 20% less? Yet again, the riches get richer.

abalone• 13 years ago

Yes, but it's also a good deal for the startup too, because it incentivizes people like Tim to do raise funds for them from smaller investors.

It's true smaller guys make less than they would investing directly. But only if it were feasible to directly invest a couple thousand dollars in your own picks. The economics of that don't really work out for either party.

bobbygoodlatte• 13 years ago

It's odd that the carry applies to each deal individually. In contrast, VC's take a carry on the aggregate return of all of their investments.

If a VC does twenty $10MM investments, and sees a $100MM return on two of them, they break even. No carry would be charged to LP's (although management fees would apply).

Meanwhile an "LP" auto-backing an AngelList syndicator pays a carry on every winner, but still loses 100% for every loser.

That's a big deal in angel investing — generally you're counting on very few winners to cover the costs of your losers. Shaving 15-20% off every winner can very possibly turn your overall returns negative.

Finally, the syndicator has a mis-aligned incentive to broker as many deals as possible. It's now possible to net a profit via carry, even if your losers would have outweighed your winners investing alone.

Tim has fantastic taste in startups. His investment in any startup is a strong signal. But AngelList's terms are pretty iffy for syndicate backers. If the carry was applied to his deals' collective return, I'd be the first in line.

How You Can Invest In My Deals

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