Conway says he moved from founding Altos Computer into angel investing after mentorship from Sequoia’s Don Valentine. He and Ben Rosen focused on disruptive industries with rapid growth, and Conway says SV Angel evaluates the founder’s character before the idea. Determination, integrity, and focus on users and goals stand out in founders such as Mark Zuckerberg.
Startup Investor School Day 4
Speaker
Ron Conway, angel investor at SV Angel, discusses founder selection, portfolio strategy, and supporting startups with a Y Combinator Startup Investor School audience, alongside the host.
Conway says 40 to 60 percent of invested companies may fail, so investors need a portfolio where a few large wins can cover losses. He identifies founder dishonesty and co-founder conflict as problems, and recommends meeting the whole team and watching how co-founders interact. He cites Google’s early team as a reason to look beyond the most visible founders and understand a company’s culture.
Conway says investors can help startups hire, find distribution partners, and access useful contacts at companies such as Apple, Twitter, Facebook, and Google. He also urges investors to push founders to make decisions and execute, while remembering that founders run their own companies. His advice to new investors is to choose a sector they understand and build a portfolio across five or ten companies.
Conway describes being a good investor as contributing to the community, including encouraging founders to be civically engaged. For Demo Day, he recommends taking notes, paying attention, and making decisions promptly. He closes by urging investors to act with honesty and transparency, including sharing how investment conversions are calculated.
Takeaways
- Judge founders by their determination, integrity, and how they work with teammates.
- Meet the full founding team and pay attention to how responsibilities and disagreements are handled.
- Expect many investments to fail; spread risk across a portfolio and rely on a few large wins.
- Invest in a sector you understand so you can help with hiring, partnerships, and distribution.
- Give founders clear advice, then let them make company decisions and move quickly.
Mentioned in this talk
Altos ComputerSequoia CapitalNational SemiconductorAcerJeevesBrightmail
PayPalSV Angel
Google
Y CombinatorAdWords
SAFEAngelCalcInternet softwareBlockchain and cryptocurrencyAngel investingFounder-first investingPortfolio approachCivic engagementbuilding in publicPaul Graham
Mark ZuckerbergSalar KamangarChris SaccaJessica Livingston
PayPalSV AngelGoogleY CombinatorAdWordsSAFEAngelCalcInternet softwareBlockchain and cryptocurrencyAngel investingFounder-first investingPortfolio approachCivic engagementbuilding in publicPaul GrahamMark ZuckerbergSalar KamangarChris SaccaJessica LivingstonSearch inside this talk
What was claimed 15
- usesinvestment focus
“The best investment decision I ever made was to invest just in Internet software.”
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- previously atRon Conway previously at National Semiconductorfirst job
“My first job was at National Semiconductor.”
YouTube Unverified1 source· Talk
- acquiredAltos Computer acquired Acer
“after we sold Altos to Acer”
YouTube Unverified1 source· Talk
- foundedRon Conway founded Altos Computerco-founder
“I was a founder at Altos Computer.”
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- invested inRon Conway invested in Brightmail
“There was also an anti-spam company called Brightmail.”
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- invested inRon Conway invested inPayPal
“Ask Jeeves and PayPal were two of our first companies that we invested in.”
YouTube Unverified1 source· Talk
- invested inRon Conway invested in Jeeves
“Ask Jeeves and PayPal were two of our first companies that we invested in.”
YouTube Unverified1 source· Talk
- featureRon Conway: Prioritizes founder character and determination in investment decisions
“We invest in the founder first, the idea second.”
YouTube Unverified1 source· Talk
- metricRon Conway: 40 to 60 percent of invested companies will go out of business
“40 to 60 percent of every company you invest in is going to go out of business.”
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- metricRon Conway: Three crooked founders among 750 investments
“Out of 750 investments, we have three founders who were literally crooked.”
YouTube Unverified1 source· Talk
- builtSalar Kamangar built AdWordsbusiness model
“Salar Kamangar figured out the business model—the entire AdWords model.”
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- featureY Combinator: Screens founders and provides advice and mentoring
“They were screening founders well. The advice they were giving them was so impeccable.”
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- role atChris Sacca is introduced Ron Conway to Y Combinator atY Combinator
“Chris Sacca introduced me to Y Combinator.”
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- featureRon Conway: Recommends investing about $25,000 in each of five or ten companies
“I would invest a little money, like $25,000 each, in five or ten companies.”
YouTube Unverified1 source· Talk
- featureRon Conway: Advocates transparency in startup financing, including clear conversion information
“If you're getting converted, you should be told your conversion price and how it was calculated.”
YouTube Unverified1 source· Talk
