Angel Chronicles: The Man Who's Made More than 1000 Startup Investments
Fabrice Grinda has over $300 million in exits and 700 angel investments. Along with his investments done through FJ Labs, he’s made more than 1000 startup investments. So, it’s a no brainer that he is known as one of the most active angel investors in the US. His impressive track record as an early angel investor includes Alibaba, Airbnb, Instacart, Lending Club, Delivery Hero, Viajanet, Peopleperhour, and Brightroll.
He was the co-founder and CEO of OLX, one of the largest free classifieds sites in the world. Launched in 2006 as a Craiglist alternative for the world outside the US, OLX grew to become one of the largest classifieds sites in the world, with over 200 million monthly unique visitors. It was acquired by South African media group Naspers. OLX is the largest classifieds site in India, Brazil, Pakistan, Poland, Ukraine, Portugal and many other emerging markets.
Prior to that, Fabrice co-founded Zingy, one of the largest media companies in the US, and Aucland, one of the largest auction sites in Europe.
Currently, he is investing in startups through FJ Labs, which he co-founded with Jose Marin.
Fabrice Grinda's entrepreneurial journey
Fabrice holds a BA in Economics from Princeton University. He graduated with honors in 1996, receiving the Halbert White Award for Most Outstanding Business Student and the Wolfe-Balleisen Memorial Award for Best Paper.
Fabrice began his entrepreneurial journey in 1998, at the age of 23, when he co-founded Aucland in France. Auckland quickly developed into one of the largest auction venues in Europe. Before starting his own business, Fabrice worked as a management consultant at McKinsey & Company.
His strongest passions are business productivity, consumer internet, crowdsourcing, e-commerce, email, health and wellness, location-based services, marketplaces, online travel, SaaS, and social commerce.
The what and how of his investments
Investment check size: between 10k & 300k
Fabrice’s current portfolio allocation: 20% cash, 70% early-stage tech startups, 10% real estate.
His prediction for the current climate: The best investments in the past 10+ years were made around 2008-2009. For the coming decade or so, the equivalent will likely be investments made in 2023-24.
His current 8-step investment thesis:
In a nutshell - Verticalizing of many industries. Invest in as many industries as possible.
1. While many VCs spend their time on low-return startups, Fabrice takes funding independently of LPs and focuses on high-return founders
2. Many VC are business model agnostic, but Fabrice only supports the most profitable business models: platform-based startups
3. Fabrice focuses on the platform industry as a sector, whereas VCs tend to focus on more traditional verticals
4. Fabrice has chosen to focus on a "blue ocean" segment of the finance chain: seed and series A, rather than compete with VCs in the same fields
5. Unlike established companies, which base their decisions on overall company economics, Fabrice bases his on unit economics.
6. While many investors focus their decisions on a team's quality, Fabrice bases his evaluation of a team's relevance on 3 different qualities: eloquence, storytelling, and analytical capabilities.
7. Something most investors do which he doesn’t is, and might come as a surprise is - he doesn’t conduct a thorough due diligence and valuation
8. He doesn’t wait around, he exits when demand for promising startup shares is high
What Fabrice looks for in founders
– Do we like the team?
– Do we like the business?
– Do we like the deal terms?
– Does it meet our thesis of what the world currently is and where it is going?
- Extraordinary storytellers and super analytical founders.
What matters most when making investments is the decision making process with the information you had at the time, rather than the outcome. Especially since so much of it is based on luck.
He believes even if you invested in a company and you didn’t do well, as long as you were aligned to your strategy when the decision was made, it’s fine.
How NOT to approach an angel investor:
Send a LinkedIn message or a cold email saying: “I have this great idea, do you want to invest? I need money to build the code.”
What to do instead:
Get an introduction via someone who is connected to the angel.
If you can’t, make sure you send a very, very tailored cold message. Show that you’ve done your research on the investor at the very least.
You need to show that you know what you are doing and most people don’t do that. The reality is most deals angels receive are very low quality.
His advice to angel investors:
It is important to specialize and find your niche; but your niche can be broader than commonly assumed.
For example, while Fabrice specializes in companies with a marketplace business model, there are many types of marketplace companies (horizontal, verticals, “pick”, B2B) and there are many industries (musical instruments, staples, logistics, food delivery, chemicals, steel, crypto, beauty, etc…) and there are also many different countries.
Therefore, he is left with a large range of potential companies to invest in.
Check out this awesome chat between VC Harry Stebbings and Fabrice Grinda.
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