Why do you angel invest / what got you into it?
Jason Klein: I ran a national-local ad network, the Newspaper National Network, for nine years, starting with solely print and building it out into online. I had a lot of experience with tablets, mobile, Real Time Buying, etc. I then started thinking about how I could capitalize on this and what I wanted to do with the next stage of my career. I had made a couple of angel investments through a good friend in the past but I was investing in him; I did little further due diligence. Now I wanted to get more sophisticated about investing. I joined NY Angels and Harvard Business School Angels. It completely changed my conception of angel investing. There is a discipline about it, a best practice. I was surprised by how many accomplished business people are devoting their full time efforts to angel investing.
I am most excited about what is happening in the NY startup community. I am incredibly bullish about the future of the NYC ecosystem. I wouldn’t be as committed to angel investing if I lived in Silicon Valley (which is too crowded) or Boston (which doesn’t have critical mass in my areas of interest). I am very impressed with this generation of entrepreneurs. Many of their peers in the corporate world have an unfortunate sense of entitlement. The 20 and 30 year olds in the startup world are very different, hard working, and passionate.
When/What was your first angel investment? How did it turn out?
My first angel investment since getting serious about it was an e-commerce startup 72Lux. Having come from the publishing industry, I knew 72Lux solved an enormous need: to enable content publishers to build out and control their own e-commerce business easily and quickly. 72Lux has some strong early customers – they just launched Wall Street Journal Select – and have a strong pipeline of first quarter launches, and are preparing for a big push around the 2013 holidays
What investment do you most want to brag about / why?
Certainly 72Lux would be one of them but I’m also very proud of my investment in the Entrepreneurs Roundtable Accelerator. It’s not an individual company. They are an incubator with 10 companies per round and I get a tiny slice of each. Having been to pitch events and demo days throughout 2012, I felt their class was head and shoulders above any of the others I’d seen in NYC. They have the best selection of companies, the best mentorship, the best growth in the companies they backed.
Notable/amusing train wrecks and lessons learned?
The advantage of being early in the process is that I haven’t had any train wrecks so far. I will say this: I am a big student of “The Common Wisdom.” Everyone will say “it’s a numbers game” and there are studies that say you need to make a minimum of 8 investments to hope to have a positive return, maybe more like 15-20 investments. That’s what the historical data say but as far as my investing goes, I don’t like the idea of expecting failure. It’s important to have a clear focus, to invest in companies that have a strong CEO in place, and to have your sights on early M&A exits. Most current exits are via M&A and I’ve been on the other side of that table. I often ask myself if I see this company being an attractive acquisition in a few years.
Startups you backed that should have hit but didn’t / why not?
Most humbling experience (relating to angel investing)?
There was one company that I’d been looking at for quite a while. Clearly there was some kind of miscommunication and they topped off their funding much sooner than I had expected so I lost the opportunity to invest.
What’s the smartest thing someone pitching you (or who you invested in) said / did?
I don’t know about “the smartest” but I what really like is when an entrepreneur is incredibly concise in giving his or her pitch. I was trained at McKinsey: give the client the answer and the 3 main supporting points upfront. A truly exceptional pitch would capture my imagination right at the opening. A lot of presenters lose it by going off on a tangent about their background or detailed stats about the industry. While you’ve got everyone’s attention, give me the main kernel upfront and then you can tell the story afterwards.
What’s the dumbest thing?
There have been a few occasions when I shook my head and thought “Gosh, what an annoying individual!” In most cases it’s when they act as if it is a game. They think we’ve seen it all and they need to do something crafty to stand out. Get my attention with an innovative, winning idea, clearly stated and supported.
One other thing: If you are a food startup, bring samples!
What makes you better (e.g., more helpful, more valuable) than the average angel?
I’ve built and grown companies. I’ve started businesses. I’ve bought companies. Even within large companies, I’ve created and overseen small, decentralized business units that were basically startups. I understand how to operate in that environment and bring a lot of direct, relevant experience, particularly in the media and information world. This isn’t always true of other angels with different backgrounds.
Pretend that it’s 2019 and complete this sentence, “[Technology X] is less than 5 years old and now I can’t imagine life without it.”
100% digitally integrated retail. Geo-targeting plus ecommerce is still very early. If you search for a car online, you are cookied and retargeted all over, but this has yet to expand into other sectors. Geo- and digitally-informed retail will grow well beyond banner ads into sophisticated lead gen, deep content integration, and other ways of getting the right offer to precisely the right person at the right place and time.
For more about Jason Klein:
If you are an active NY-area angel (or know someone who is) and would like to be profiled for AlleyWatch, please contact me here at email@example.com.