Angel Chronicles: The footsteps of Naval Ravikant

In this week’s Angel Chronicles we’re covering the legendary Naval Ravikant. If there’s anyone to learn valuable investment and life lessons on happiness from, it would be him. 

Who is Naval Ravikant?

Naval is most famous as the co-founder of AngelList, but he also co-founded Epinions, The Hit Forge, Genoa Corp, Vast.com, and MetaStable. He is popular for his blogging and podcasting activities at Venture Hacks.

He is an active angel investor, and has invested in some of the most prolific startups. There is also a book written by Eric Jorgenson which is a compilation of Naval’s tweets and essays on life and business philosophies -  "The Almanack of Naval Ravikant: A Guide to Wealth and Happiness."

Naval’s philosophy on life, business, and personal development has gained him a large following on social media and in the tech industry. He often shares his insights on these topics through podcasts, interviews, and his personal blog. You can listen to one of the most downloaded Tim Ferris podcast episodes featuring Naval over here.

The driving force behind co-founding AngelList was his passion for supporting entrepreneurs, mostly because he hated saying “no” to promising startups from around the world and wanted to have a way of helping them out. 

What he saw was that typically the first companies to get funded were also the ones that least needed it, partially because these are less risky to invest in since they have strong operating histories, auditable financials, predictable cash flows, etc..

Some of his most notable angel investments

He has invested in the early venture rounds of Uber, Twitter, Wish and Thumbtack, Yammer, Clearview AI, Wanelo, Flipagram, and is a general partner in a cryptocurrency fund called MetaStable investing in blockchain technologies such as Bitcoin, Ethereum, and Zcash.

Naval's investment portfolio

- Over 240 angel investments

- Over 60 exits

Other investments include: Blowfish, Pylon, Stonks, Magic, Eight Sleep, OpenSea, Hebbia, NexHeatlh, Primer, Alchemy, Anchorage Digital, and more. 

His latest investment was in Shef on March 1st, 2023. 

Exits include: Twitter, Opendoor, Teachable, Postmates, Udemy, Streamlabs, Trusted, Fieldbook, and more. 

Naval’s take on angel investing

Angel investing is one of the few professions where you can objectively improve every day until the day that you die. And success isn’t only because of a lot of diligence, but also a lot of luck, especially when it comes to tech startups. It’s all about the right place, right time, market forces, timing, and regulatory action against or pro.
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The fund Naval ran is on track to return 10-20x the capital it raised and his individual portfolio is up by dozens of times. His thesis is that angel bets and venture bets are great because on the downside you can only lose 1x (where x is your investment) and on the upside, you can make 10,000x.  

His most potent and important advice to angel investors ‍

- To start a company first and experience first-hand what it takes to succeed. 

- Know the pyramid well. It’s very risky to invest in companies that don’t have access to venture, and investing at venture valuations in angel-stage companies means that your portfolio will likely generate negative returns. 

- Sometimes, you may have to back an entrepreneur a few times until they succeed, but entrepreneurs don’t fail over a long period of time. 

‍Green flags he looks for in founders

For Naval the most important thing is that he genuinely likes the founders, and goes into every deal with the assumption that the founders will be part of his life for the next ten years. 

Intelligence - they have to be smart and know what they’re doing and have specific insights and knowledge.

Energy - Founders need to be able to persevere in the competitive world of startups, even when they’re not doing well or it looks like things are not working out. 

Integrity - Without integrity, the other two factors means the person is just an intelligent crook. 

His general investment advice

- The best investing attitude is contrarian, patient, informed optimism.

- The biggest gains in investing come when you bet against a gloomy crowd, on the upside. The low price already bakes their opinion in. Your losses are limited to 1x, and your gains are uncapped.  

- Venture and value investors outperform via patience. Active trading is just another get-rich-quick scheme, with the same results.

‍Investment regrets

Passing on Twilio, Square, and Pinterest even though he had a chance to invest early in both of them. Even with Twitter, he wishes he had gotten a bigger piece! 

Not becoming an Advisor and taking stock at YouTube when he was helping them out in their early days. 

‍Other fun facts

Naval graduated from Dartmouth College in 1995, with a bachelor's degree in economics and computer science. After that, he moved to Silicon Valley to work for an internet service provider called @Home in 1996.

In 2018, Naval was ranked 6th out of top angel investors, with the most exits. He was named Angel Investor of the Year by TechCrunch and received a Crunchie award during the 10th Annual Crunchies Awards. Naval is also recognized as one of the leaders in the cryptocurrency world, and in 2017 CoinDesk ranked him as the fourth most influential person in the world in the blockchain industry.

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