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TOPIC: DISCUSSION THREAD: Episode 24 - David S. Rose

DISCUSSION THREAD: Episode 24 - David S. Rose 1 year 6 months ago #1

  • amkc
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What a treat it was to have someone of David's calibre and pedigree on our program. Although angel investing is not my field of expertise, I'm sure many of you can get excited about the prospect of investing in start-ups that have the potential for big returns.
Last Edit: 1 year 6 months ago by ErikTownsend.
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Episode 24 - David S. Rose 1 year 6 months ago #2

  • Pepe le Moko
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Thanks for the informative interview. I had no idea that this type of investment was a thing.

So if I understand this guy right, I need to have about $100,000 of invest-able money for each of 20 or 30 companies. I'm looking at two or three million that might or might not go bye bye. I can see how this is an acquired taste. I'm guessing that you would need to have about eight million or so and be very bored to justify this kind of risk.

The other thing that grabbed me was the simple fact that thousands of other people have your exact idea. I think that there are lots of good ideas out there and that Mr. Rose only sees the ones that look like money makers to him ( i.e. that can be easily plugged in an elevator pitch )

Have you ever heard of Atlantropa? Herman Sörgel spent a good chunk of his life promoting the idea of damming up the Mediterranean The idea had a lot of currency during his lifetime, but never got off the ground. My theory is that he failed to attract sufficient investor interest. The plan was feasible, but Sörgel was not a good enough salesman. The idea needed more than an elevator pitch. It needed a media campaign and a PR firm. It was not sold hard enough.

Just in case there is any doubt, I do NOT think that his colonialist idea had merit. This is just an open ended question about the idea of investing and angel investing in particular.
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Episode 24 - David S. Rose 1 year 6 months ago #3

  • ErikTownsend
    Erik Townsend
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I think you misunderstood David's assertions about minimum investment levels slightly. Let me clarify...

What he said is that you need a bare minimum of $100k to dedicate specifically to angel investments. He didn't say it explicitly in the interview, but I believe this was based on an assumption that the minimum you can invest in any single deal is $10k and you need at least 10 deals to have a diversified portfolio. When I dabbled with angel investing myself almost 10 years ago, there were plenty of people only investing $10k in deals, so back then, at least, this was entirely possible.

However, as he did say in the interview, $25k is more typical of angel investments these days, and I would think the more appealing/worthwhile deals would more likely have that minimum. So by that measure, $250k would be the minimum allocation to this asset class, and if you wanted to be conservative and only allocate 10% of total assets to the class, that would imply the need for a $2.5mm net worth. With a 20% allocation to the class, you could get away with a $1.5mm net worth.

Bottom line, I think any accredited investor ($1mm minimum investable asset base) can play in this game, but I agree that $2mm+ opens the door to investing in deals with $25k minimums, which is probably where the best opportunities lie.

FYI, the Amazon page for David's book has quite a bit of interesting content in the free preview "Look Inside" page, including some discussion of why he thinks 100k is the minimum to allocate to this asset class if you want to play.

All the best,
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Episode 24 - David S. Rose 1 year 6 months ago #4

  • tankumo
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Thanks for the great show. Though Angel Investing is not for me, but it's nice to know about it.
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MACRO VOICES is presented for informational and entertainment purposes only. The information presented in MACRO VOICES should NOT be construed as investment advice. Always consult a licensed investment professional before making important investment decisions. The opinions expressed on MACRO VOICES are those of the participants. MACRO VOICES, its producers, and hosts Erik Townsend and Nathan Egger shall NOT be liable for losses resulting from investment decisions based on information or viewpoints presented on MACRO VOICES.

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