As I mentioned earlier, David Rubenstein is hilarious. He also runs a billion dollar hedge fund. Usually the two are mutually exclusive.
One of the most impactful things he said at lunch was a fire-hose answer to the question: how does one assess putting money with you, or with anyone else for that matter. He crushed it, and frankly, it applies to angel investing as much as it does private equity. David said, in matter of fact staccato “I’d look for ten things before investing with someone”. Ten? Damn, let me get out my pencil (and I sure did).
- People. Would you cross a desert with them? Or invite them to your BBQ?
- Performance. Has the performance of the fund been in line with the class. Note, not way above superior, or certainly not inferior.
- Process. Do they have a documented process for assessing, investing, and managing their portfolio? Do they stick to it?
- Junior. Do the juniors who are doing the work have the same integrity, work ethic, and domain expertise as the seniors?
- Seniors. Are the people who may have generated all those returns, back in the day, still around and still part of the execution team?
- Relevance. Do the skills and experience of the team match the strategy and it’s requirements?
- Integrity. Are the people you are investing with of high integrity?
- Stability. How long has the team and the strategy been in place and delivering returns?
- Who else is in. Are there other investors I consider “smart” that are also invested?
- Core Values. Do they have them? What are they? Do they work by them?
It’s a good thing he didn’t say 11 things- I would have never written them all down. Really have a lot of respect for the guy. He’s damn good, though his venture fund didn’t work… everything else did.