Julian Shapiro’s Framework to Angel Investing

One way Julian finds deals is by setting up alerts on Tweetdeck for when founders announce they’re raising on Twitter. He also regularly filters through AngelList and Crunchbase for new deals.

In his outreach to founders, he shares how he’s helped companies build growth teams and identify viable growth channels.

If the founder is receptive, Julian schedules a call.

“My aim when we speak is to show them how I can reverse engineer their customer acquisition goals and pattern-match ways to overcome whatever challenges they face,” Julian said.

Making the Investment Decision

Julian places a lot of stock in “founder formidability.” He defines a “formidable” founder as someone who’s biased towards action, resourceful and ambitious, and insightful.

• Biased towards action. The founder doesn’t defer when the correct answer is clear. They premeditate decisions and come strategically prepared to gather information. When determining whether a founder is formidable, Julian probes their decision-making process on past decisions.
• Resourceful and ambitious. A founder whose career trajectory shows proactive hustle. A resourceful and ambitious founder has a history that substantiates why they want to pursue this particular mission.
• Insightful. The founder is a clear communicator, strategic decision maker, objective thinker, good brainstorming partner, and can shut out the noise and politics around them. To gauge founder insightfulness, Julian asks for prior investor updates to assess how the founder communicates critical information and prioritizes thoughts.
  

He also considers the company’s customer acquisition strategy, perceived customer demand, and market size. If the startup and market are compelling, and if the founder is formidable, Julian then evaluates the business against a handful of optional “conviction boosting” factors:

• Are they a second-time founder?
• Is there embedded optionality (the product can wedge its way into new markets in the future)? For example, fintech companies often have embedded optionality because of their AUM, which allows them to expand into new markets like loans, credit cards, and banking.
• Do customers evangelize the product to others (i.e., word of mouth marketing)?
• Is the idea only recently possible (i.e., “disruptive” tech)?
• Does the company have traction (i.e., users, revenue)?
• Are there a limited amount of hurdles to overcome?
• Is the company building a platform?
• Does the company generate recurring revenue?
• Does the company iterate quickly?
  

If the answer is “yes” to some of these questions, Julian is more likely to invest.

The size of his check corresponds to how the deal compares to his other deals (based on the customer acquisition strategy, perceived customer demand, and market size). If it ranks near the top on these criteria, Julian will write a large check. If it ranks near the bottom, he may write a small check or not invest at all.

In Summation

Julian’s process for startup investing:

• Use go-to-market pattern-matching to assess startups and markets
• Proactive outbound
• Evaluate startup by customer acquisition strategy, customer demand, market size, and founder formidability
• Evaluate startup for optional conviction boosting factors
• Size check accordingly
  

To learn more about Julian Shapiro, visit his blog or Twitter. To invest with Julian, click here.