Tracking your investments
Warning: you are not going to love these answers
How can I see how my investment is performing? How much have I been diluted? How much have I been marked up?
Not to state the obvious, but when you write an angel check, you are investing in a very early private company. Private companies share very little detailed financial information with anyone but their biggest investors, who have “information rights.”
Let’s say a company does a Series A investment round, and you see the valuation published in TechCrunch or announced by the founder in their monthly updates. You can maybe get a “rough” view of your markup. But you can’t really calculate your ownership or the actual markup on your investment because valuation is just the tip of the iceberg. Some of the most critical information is only shared with lead investors and board members. Angels (and even early-stage funds, as time goes on) won’t usually know:
What other SAFE notes were signed after you invested, and at what valuation cap?
How big is the option pool, or was founder equity trued up?
Were any warrants issued? Did the company take on any secured debt?
What type of liquidation preference did later-stage investors get?
You might not even know what all of these things mean. But all of this can affect your ownership percentage as an early investor and how the proceeds from a liquidity event will “waterfall” to everyone on the cap table.
It’s frustrating not to know all these details. But even if you knew them, it wouldn’t affect the outcome of your investment. And while markups can be exciting, they are not exits. Only the final returns matter.
That’s why we suggest building a diverse portfolio each year. The non-financial ROI of angel investing delivers dividends every day. The long-term financial results from a diverse portfolio have historically been very attractive.
Side note: By the time you make even a handful of angel investments, you will thirst for a dashboard to manage them all. We have personal investments spread across every platform imaginable, and it's the number one request we’ve heard from every angel we’ve talked to—so we get it. Unfortunately, there is no universal API for angel investing. So, it’s Notion templates and Google Sheets as state-of-the-art..
Does investing through an SPV limit this transparency further?
There are plusses and minuses to SPVs.
The biggest plus is accessing high-quality, vetted deals without being an industry insider. SPVs also allow you to write smaller checks to build a more diverse portfolio, no matter your budget.
There is a very real financial and administrative “cost” for every investor who shows up directly on the cap table, which is why most founders set higher minimum check sizes for direct investors.
The downside of investing through an SPV is that some, most nearly all are managed like black boxes. This is where Play Money is different.
We provide your contact info directly to the founder so they can include you in their regular stakeholder updates. For founders who provide those updates, we are building a tool to help them access the expertise and networks of the investors in their Play Money SPV. More on that soon.
Really, no numbers?
Who are we kidding? We are just like you. We like to dream. Here is our favorite online calculator. You can use it to model different scenarios on individual investments—pure joy.
More questions? Leave a comment. Click on the green diamond to chat. Or drop into a new member welcome session on Fridays. Sign up here.
