Malcolm Gladwell claims that it takes a generalized total of 10,000 hours of practice in order to become an expert in any particular field of work. This equates to about 10 years of experience. By working as an associate in the Rebel Venture Fund, I have realized just how valuable time is in the angel investment world.
From experience, the time you have to familiarize yourself with an entire industry is much less than 10 years. Having said this, I’m sure that professional venture capitalists have expertise in fields that they particularly focus investments on, but here at RVF one member may be looking at the gaming industry one month and the banking industry the next. So, how can an investor gain the necessary information to make a justified investment decision in just a few weeks?
It is very important to do individual research of the organization and the market; the key word being individual. This builds a unique understanding of the organization/market and generates questions that others may miss. If you go directly to the investor or experts in the field without a basic understanding of the market, it becomes difficult to distinguish legitimacy from hot air. Doing your own research provides a foundation of knowledge that simplifies the entire learning experience for an investor.
Meet with Experts in the Field
As investors, the idea of becoming an expert in every field is outrageous. Meeting with people who have expertise gives you the ability to understand the product from an internal perspective without taking an exhausting amount of time on research. The other crucial benefit of seeking the guidance of an expert, is that it lowers reliance on the entrepreneur’s word. Here at UNLV, we have access to a broad range of brilliant minds in many different fields of education. This network of people provides a reliable source of information that we use to evaluate potential deals.
Meet the Team
While doing personal research and meeting with experts, it is also very important to meet with the entrepreneur and his or her team. After all, these are the people that are receiving the money. You may not be able to become an expert in the industry, but you can become an expert on the team background. Look at their personal brands as individuals to gain trust in their capabilities. Get contact information of previous employers as proof of reliability. Analyzing an organization’s team is extremely important in start-ups; revenue is rarely established and you are trusting that the team can act on their promises.
In my time at the Rebel Venture Fund, I have relied heavily on the entire group to get the information needed to make a decision. Many of us have busy lives outside of the fund so it is important to work together to attain the information and build knowledge about the potential investment.
In my opinion, there are two key attributes that need to be considered in a successful investment decision: one, a student oriented mindset, and two, a strict schedule. First, a student mindset allows you to learn throughout the entire due diligence process. Essentially, when you start a deal you are a student of the organization and industry. A profound willingness to learn, is sometimes more effective than superior knowledge. Second, a strict schedule must be followed. As students, each of us has commitment outside of the fund making it easy to lose track of time. It is very humbling to deal with real entrepreneurs; a strict schedule allows us to respect their time as well as our own time.
It all boils down to effort… How hard are you willing to work to get the information needed to make the correct decision?
About the Author
Tyler Franek is an associate at Revel Venture Fund and an economics major at the University of Nevada, Las Vegas. Tyler grew up in Colorado and played baseball at Garden City Community College prior to attending UNLV. He has now decided to focus on his education and future after school, whatever that may be.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of RVF or UNLV. In addition, thoughts and opinions are subject to change and this article is intended to provide an opinion of the author at the time of writing this article. All data and information is for informational purposes only.