In 2011, Ron Conway was interviewed before an audience of graduate students at Stanford University to discuss investing in start-ups. Conway has been an angel investor for over 15 years and has had great success along the way. He spoke for almost an hour and offered up lot of valuable advice, conjured up from his trials and tribulations. Currently, he invests in roughly one start-up every week. His most successful investment – the one that really got him going in the right direction – was in Google in the late 90’s. He goes into great detail discussing that experience and it is quite inspiring.
In 1995, Conway decided that he was only going to invest in start-ups that dealt with the internet. Early on, he was aware of the potential power that the medium could eventually have. To this day, Conway invests in exclusively in internet-based start-ups.
To be a successful investor, he believes it is important to get great deal flow. You need to help the entrepreneur get a good reputation, process the good deal flow and do your “due diligence” with the deal. He urges investors to do their homework and make sure that they have a firm grasp on exactly what they are investing in. He also prefers to invest in a start-up at its seed stage when the company only consists of co-founders.
“Anyone who has the guts to start a company should get funded.” Conway believes entrepreneurs deserve the opportunity to get funded because of the extreme difficulty of starting a business. When asked what he most looks for in a start-up, he responded by talking about how the team is the most important element to consider when deciding whether or not to invest.
Mr. Conway urges those starting a company to “boot-strap it” and go as long as you can before seeking out an angel investor. He talks about how some companies never need an investment and how you should milk it as long as you can.
40% of the companies Conway invests in go out of business, yet he is still wildly successful. Whether you are investing money or starting a business on your own, he urges you to “be decisive and trust your gut.”
There is no better way to learn the ropes than to listen to somebody who has already been in the ring. Whether you are an entrepreneur or a potential investor, I suggest taking some time out of your day to watch this interview.