106. What angel investors REALLY need to know about tech

Even the smartest professionals who don’t have backgrounds in digital businesses make the same mistakes when it comes to tech start-ups.

They often want vanity metrics, as opposed to what truly matters, and because they don’t know how a tech product gets made, they don’t know how to properly evaluate an opportunity. 

In this episode you'll learn 3 core tech concepts and how they apply to early stage investing.

Learning notes:

  • There are fundamental differences between software products, that are especially important at the early stages. This is because, when a product is very new, it is still in development mode. This is why understanding product development is vital at the early stages.

    For example, evaluating Airbnb as a listed company focusses on typical investment metrics: revenues, costs, growth etc. These would have been unavailable when Airbnb first launched, so investors must look for other signs.

  • Tech products are always evolving. For example, YouTube started as dating site. Its evolution was not an act of randomness, but a series of product and growth experiments. 
  • Product metrics are not business metrics, and they change over time. Traditional investors are used to putting business metrics into Discounted Cashflow Statements. This system does not work in early stage tech start-ups. 
  • Marketing is part of product development. Growth is part of the discovery process, and the growth hacker and product manager are often the same person in an early stage business. This means investors need to know how to include marketing spend in product development cost.

Resources mentioned in this episode:

To learn more, join the

Introduction To Tech For Angel investors course

You will learn:

  1. Core differences between tech & traditional businesses
  2. Which metrics are important at which stage
  3. Who does what on a product team
  4. How much different stages of development cost

 

 

Listen here on Apple Podcasts

Listen here on Spotify

-----

If you like learning about how tech products and profits get made, you'll like our newsletter.

It's funny too. Sign up here.

-----

There are 2 ways to apply this work to your goals:

For individualsAPPLY FOR A CONSULTATION CALL for Tech For Non-Techies membership.

For companiesIf you want to increase productivityinnovation and diversity, then your non-technical teams need to learn how to collaborate with the techies. 

BOOK A CALL to discuss bespoke training & consulting.

We love hearing from our readers and listeners. So if you have questions about the content or working with us, just get in touch on [email protected]

 

Say hi to Sophia on Twitter and follow her on LinkedIn.

Following us on Facebook, Instagram and TikTok will make you smarter. 

 

(Photo by Ludovica Dri on Unsplash)

Close

50% Complete

Sign Up

Get insights on what non-techies really need to know about tech to run companies, transition careers and make smart investments.