I was very excited when I first began online angel investing in 2014. I loved the concept. So I invested in 15 deals within just a few months on AngelList and FundersClub. I thought they were high quality picks. And I eagerly waited to see how they would do.
But after a few months, I realized the startups weren’t giving regular updates. I got frustrated with the lack of news.
Some founders provided regular updates. But that was the exception rather than the rule.
There are many reasons for why a startup might not provide investors with updates. Sometimes they don’t want to share sensitive information with hundreds of people. Other times their venture capitalists will encourage them not to share news. And if things are not going well, they will be understandably hesitant to share disappointing updates.
It’s simply one of the frustrating things about startup investing. Founders don’t provide as many updates as they should to their online investors.
I continue to invest in high quality opportunities even with this annoyance. And more importantly, I have found some ways to track private startups. Follow them on social media. Subscribe to their newsletter. Track them using Google Alerts. There are also services like Owler (and their Basic plan is free).
These methods give investors the ability to watch companies. Even without founder updates, you can get a good sense as to how a startup is performing.
It’s not a perfect solution. But I think it’s a fair trade-off for the chance to invest in amazing private companies.
Startup investing is a long-term game. Startup shares are fairly illiquid — which means you can’t sell your shares easily. You have to hold onto your portfolio positions and wait. And sometimes, even the startups you doubted will surprise you. I’ve had startups who hadn’t ever updated me get sold for a 6x gain. Others have gone on to raise from top VCs, again without a single update to online angels. That’s OK. I’ve come to terms with it.
If you’re going to be an online angel, I suggest you do the same.