Source Deals Through Usage

Shaan Puri shares his experience and strategy for sourcing startup investment deals, emphasizing that while he receives many inbound opportunities, the highest quality investments come from direct outreach to founders whose products he personally uses and believes in.

• Don't wait to be wealthy to start angel investing

  • Being creative and resourceful can help you access capital
  • You can start by partnering with existing investors who have capital

• Portfolio Strategy Requirements:

  • Need about 30 bets to be a proper angel investor
  • Typical investment size is $25k per company
  • Total portfolio requirement around $750k
  • Expected distribution:
    • 4-5 companies go to zero
    • 2-3 companies return 1-3x
    • 1-2 companies do 10x+
    • Ideal scenario: find a 1000x+ winner

• Deal Sourcing Approaches:

  • Inbound leads provide quantity
  • Direct founder outreach provides quality
    • Best approach: Reach out to makers of products you personally love
    • Message them as a genuine fan first
  • Friend referrals are also valuable

• Alternative Path to Start:

  • Can be a scout/venture partner for established investors
  • Typical deal: 10% carry with no capital requirement
  • Benefits:
    • Zero financial risk
    • Builds portfolio of logos
    • Gains credibility for future deals
  • Personal goal: Invest in 5-10 companies per year
    • 5 is the sweet spot
    • Can do more with additional free time

• Strategy for Those Starting Out:

  • Think of yourself as an investor from day one
  • Find people with capital who need deal flow
  • Can work with multiple capital partners simultaneously
  • Focus on building relationships and track record