Building a successful startup takes more than just a great product idea and a talented team. It also requires careful management of resources, effective decision-making, and a thorough understanding of the market and competition.
In this episode, Shelly Hod Moyal shares her insights on venture capital and investing strategies, addressing key concepts like managing dilution and diversification, balancing personal investing requirements with potential returns, and determining whether a deal is a good deal.
Learn how to maximize returns and manage risks in venture capital investing with expert advice from Shelly Hod Moyal, co-founder and co-CEO of iAngels.
About Our Guest
Shelly Hod Moyal is a finance and investing expert, having built her career on Wall St. prior to co-founding iAngels. As the co-CEO, she works with global investors to invest in some of Israel’s best startups. As a GP and Kellogg MBA alumna, Shelly holds numerous board positions and is actively involved in bringing value to iAngels portfolio companies. Living in Tel Aviv, Shelly and her husband have 4 children, and as a passionate art aficionado, Shelly is a member of Yedidim at Bat Sheva and Tel Aviv Museum of Art, as well as Laniado Hospital
Here are some power takeaways from today’s conversation:
- Defining venture capital
- Managing dilution and diversification
- Balancing personal investing requirements with potential returns
- Determining allocation to a down round
- Discerning if a deal is a good deal
- Offsetting the write-offs
[08:43] What is Venture Capital and How It Works
As an investor, investing in different rounds of a company involves taking different risks and potentially earning different returns. The earlier the round, the more risk and potential for high reward there is. Dilution is a common issue that requires reinvestment to maintain ownership percentage. Venture capital investments are illiquid and require a long-term mindset that entails holding onto the investment until the company goes public or gets acquired to receive returns. To protect ownership percentage, anti-dilution provisions can be negotiated.
[12:38] Managing Dilution and Diversification in Venture Capital Investing
Venture capital investing requires a careful consideration of dilution and diversification to minimize risk and maximize returns. Each round of funding dilutes your percentage of ownership by approximately 25-30%, and investing in individual companies carries a high failure rate. Building a diversified portfolio and keeping funds available for follow-on investments can help manage these risks. It’s important to remain defensive in situations where you need to protect your investments and to invest in around 20 companies to reduce risk.
[18:21] Balancing Personal Investing Requirements With Potential Returns
Investors may agree with the value of a company but choose not to invest based on their personal investing requirements, risk tolerance, and potential for returns. It’s common for angel investors to stop investing when the valuation becomes too high or if they are already heavily invested in a particular opportunity. Ultimately, the decision to continue investing in a venture capital opportunity requires weighing the potential risks and returns against your investment goals.