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The angel investor "boot camp" held by the tech coworking center Betahouse earlier this month has produced its first Boston-based soldier of high-tech fortune. Going Inc. founder Roy Rodenstein and four other entrepreneurs have put together a group they are calling Hacker Angels.
The group – including Delicious founder Joshua Schachter, Punchfork founder Jeff Miller, Hotornot.com founder Jim Young (all three from the San Francisco Bay Area), Duck Duck Go founder Gabriel Weinberg (Philadelphia), and Rodenstein – tapped startup advisor and former VC Simeon Simeonov for help with researching strategies for early-stage private investors doing three to five deals a year.
The group’s formation was first reported last week on Miller’s blog. It’s currently close to closing its first two investments – one of which is in Boston, in the mobile space. Rodenstein, currently running a local group at AOL that reports to AOL Ventures founder and executive vice president Jon Brod, is the group’s only Boston-based investor. Rodenstein's Going Inc. was bought by AOL last June. He talked with Mass High Tech reporter Galen Moore about the group’s investment strategy.
MHT: You did some research before forming this group. What did you find?
Roy Rodenstein: The modeling that Jeff Miller did and (Simeonov) pretty much backed it up is, you probably want to be in a position to do at least about 10 investments to reduce your chance of most of them blowing up. To have at least a 50 or 60 percent chance of at least breaking even. If you only do five, it’s quite possible just through sheer luck that all five of them will blow up. Ten to 20 looks to be an ideal number.
MHT: How can small angels hope to hang on and get a meaningful return at exit, as portfolio companies move on to bigger rounds with VCs?
RR: We’re probably not going to be in a position to do a lot of follow-ons. If they go to the millions in a VC round, we’re probably not going to be able to do that. One, we want to look at valuations in the $300,000 to $400,000 range. We feel if the company ends up exiting for $20 million or $50 million, we still have a decent chance of return, even if we do get watered down a little bit. Two, we are looking at companies that have a clear path to revenue.
MHT: What areas are you personally interested in?
RR: I’m definitely looking a little more at consumer and mobile. There’s a lot of point apps that are trying to provide some utility. I think they’re fine, but I don’t know if they have enough value to become real businesses. And then there’s a couple of spaces that are hot but perhaps becoming overcrowded. One is the discounts – local deals and local discounts.
MHT: Why ‘hacker’?
RR: We do focus on people that are hackers and are really pushing the product forward rather than just pure concepts or people looking for co-founders to execute. The ideal scenario for us is getting in very early because we can provide a lot more support and advice. We’re comfortable with a little more high risk.
Editor's Note: An earlier version of this article used a misleading headline. Please note that Hacker Angels has not yet made any investments.
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