Randi Zuckerberg is an influential investor, having invested in 50+ startups across a variety of industries. Randi recently sat down with Lisa Carmen Wang to share her story, advice, and tips for new investors. Here are some of the key lessons that Randi shared during our conversation:
Deconstruct the myth of what being an investor means
“People believe the myth that you need to have money to be an investor.”
It’s been a long held myth that the angel investor is a mysterious billionaire who spots a diamond in the rough, pouring all of their dollars into what will eventually become a Fortune 500 company. This sends the wrong message to many founders, who have to constantly fight for funds and investors’ attention.
According to Randi, as little as $100 can dramatically affect a company's mindset. Any investment at all is a physical representation that you believe in that founder and what they can do. For so many startups, just having someone in their corner means more than you’d expect.
You also don’t need to just support financially. In fact, being a value-add investor means more than money; you can give a company advice, experience, and most importantly—your network to help that company get more support.
Look to the founders
“I want to make sure that when the going gets tough—which it will—that they have the grit and the passion to get through the challenges. I need to walk away from the meeting feeling like it’s the founder’s life work to solve the problem.”
Randi shared that some companies she invested in early on looked completely different several years down the line. That’s to be expected because as an early stage investor, you’re betting on the jockey, not the horse. What she looks for is the energy and commitment of the founder. How well did they know their industry? How passionate were they about their company?
At the end of the day, the founder and the startup are inextricably linked. No matter how good an idea might be, if the founder is non-committal, arrogant or unenthused, that company is never going to succeed.
Do your research!
“It’s about getting involved in the industry, step-by-step. If I learned from scratch—so can anyone!”
You can’t invest in an industry you know nothing about. Without that crucial background knowledge, you aren’t going to be able to make informed investment decisions. Once a company catches your eye, take the time to listen to a podcast, read a book, or discuss the company with professionals in that industry. You’ll be able to better understand what the company’s – and industry’s – strengths and weaknesses are.
Learn by doing
As with all things, the best way to learn how to be a successful angel investor is to get your feet wet and dive in. After all, “it just takes one to be successful.”