“When you’re starting out as an investor, the most important thing is to be helpful.” — Elad Gil
When you don’t have a large check to write, or even if you do, you need to find creative ways to add value to a project. “People will make space for you if you’re really helpful,” says Elad. “You should really be focused on helping the founders and doing what’s right for them and for the company, versus swapping deals with other investors or doing other things that are really optimizing for you over the company.”
On the first episode of the Spearhead Podcast, entrepreneur and angel investor Cory Levy speaks with serial entrepreneur, Elad Gil. Gil is a serial entrepreneur, author and investor who has helped companies from Twitter to Airbnb grow. In this episode, Cory and Elad talk about how Elad got started as an investor, how to help companies post-investment, proactive vs. reactive investing, how much time to spend with a team before investing, advice for founders who are interested in becoming angel investors, and more.
Elad became an investor after working with early-stage founders who would ask if he wanted to enter a round of funding. It can be difficult for an angel investor at the start to find their way into deals. For new investors, Elad recommends that each take three steps:
- Be Helpful
Elad says that the top thing each investor should do when first getting started is to be helpful, even if there may not be an initial return tied to their investment of time and effort. “Number one is be as helpful as possible for the companies that you’re involved with or just the companies you need. I think there’s a lot of reputation that gets going just by helping people even if you don’t get anything out of it.”
- Reach Out
Successful investors find creative ways to make connections with companies they want to invest in. Elad advises new investors to reach out to offer help to companies and founders they want to work with. “If there is a company you’re really excited about, reach out to the founders and tell them you want to help and see what you can do, and that may lead to an investment opportunity.”
Elad believes in the importance of building a brand, and part of that effort is creating content that engages and provides value to a target market. In other words, Elad suggests blogging and creating content that showcases you as an investor worth working with. “I do think content and writing and blogging really helps people establish themselves as investors,” says Elad. “If you look at the biggest venture brands, it’s people like Fred Wilson, it’s people like Marc Andreessen and Ben Horowitz, it’s people like Reid Hoffman. It’s people who built these content brands for themselves. You see other people now producing really interesting books or content…I think writing, if you’re good at it, is actually a key component in some sense of both communicating ideas, but also attracting founders to you versus you going to them.”
After establishing relationships with founders and being invited to enter a round, there is still a lot of work to be done for an investor. In the interview with Elad, Cory asks how often Elad meets with a founder before investing. In addition to meeting with the founder and CEO of the company several times before investing, Elad learned the importance of meeting with a group of founders at the same time. “Optimally, I’d want to meet with them and their co-founders just to see that dynamic and see if people creating space for other founders to talk, and for their co-founders to participate and how do they interact and what’s the vibe, and is their tension or people arguing,” says Elad. “I remember there’s one company that I was helping out informally a couple years ago where I met with one founder and he just seemed great. Then I met with he and his co-founder together and it was clearly a terrible situation in terms of two founders who just didn’t really respect each other.”
Before analyzing the founders of a startup, Elad carefully evaluates the market, which he believes is the single most important aspect of a potential investment. However, he doesn’t restrict himself to a single market. “I may be inclined to think certain markets are really interesting, but I think founders in general are going to come up with way more interesting ideas globally than me just saying, “You know what? I’m going to be a real estate tech investor, and that’s all I’m going to look at.”
Keeping an open mind has helped Elad enter into many profitable rounds of fundraising and learn from leading high growth tech companies. Elad recently published High Growth Handbook, which is a repeatable playbook that details the common patterns of the most successful tech companies he’s worked with.
For more insight from Elad Gil, listen to the full interview here on the Spearhead Podcast.