Takeaways From Columbia Venture Investing Program

I recently had the opportunity to attend the Venture Investing For Professional Athletes Program ran by Columbia Business School. It was a very informative program that I wish I had gone to sooner. Having had the opportunity to invest in different companies and be exposed to the venture capital space throughout my career, it’s important to understand how to navigate in this space. Not every athlete will have the knowledge of someone like Marques Colston or Ryan Nece or Ryan Mundy, all former players that are active in the venture capital space. That’s why it’s paramount, athletes do their homework especially as this space continues to grow and more athletes become exposed.

VIPA 2019 Group Photo.jpg

Here are some takeaways from the program that we learned:

Athlete Advantage

As an athlete you have an advantage that brings you a unique perspective and value ad to the venture capital space.

  • Your ability to give insight in unique ways

  • Status as a trend setter or brand ambassador

  • Capital

  • Network with other big players in different industries and sectors that can move needles for startups both big and small

Due Diligence

As a high net worth individual, it’s easy to just throw capital at a deal because you can but in order to be successful you need to make sure you do your due diligence. There are many different risk involved with venture capital whether it’s business risk, people risk, or legal risk. It’s important to do your independent research on topics such as the market opportunity and business model but these 6 materials are the most important for you:

  • Investor Deck

  • Financial Model

  • Marketing Plan

  • History

  • Capitalization Trade

Structure Of The Deal

How you are able to structure the deal can play a huge role in investing in a deal or not. The term sheet. The capital structure. These are very important for an investor to understand because if not, you may be in for a rude awakening. For example, simply knowing which type of stock you are getting is important. Like the difference between getting common stock vs preferred is the priority on cashflow.

Quality VS Quantity

When it comes to angel investing and early stage investing it’s almost as important if not more important to focus on quantity of deals you are involved in over the quality of the deal. I was surprised to learn this because of how risky venture investing is. But that’s exactly why it’s important.

Not every deal you invest in will be a win, sometimes you will break even, or lose money, or make a 2x return, and if you are lucky get a unicorn. That’s why it’s better to make a larger number of small investments than a smaller number of large investments.

More Bets More Chances …..Just Be Smart About It

Alignment Between Founder and Investor

Making sure you are aligned with the founder if you are an investor is vital to have any sort of positive outcome from investing in a deal. If you are coming to the table expecting something totally different from what the founder of the company is offering, it doesn’t make sense to invest and you will only stress yourself and the founder you invested in.

Rich Vs Wealthy

Yes, you may make a lot of money but as an athlete especially it’s important to understand where you fall in the pecking order. There is a difference between rich and wealthy and understanding that can be the difference between being smart with your financial management or losing money trying to maintain a lifestyle you can’t keep up with.

Asset Allocation

Dividing your asset into three buckets is the best approach to tackling money management

Bucket 1 : Conservative Assets

Bucket II: Liquid

Bucket III: Illiquid

*Here are seven key questions to help determine your asset allocation:

  • How much capital you need to be comfortable

  • How much do you need after tax per year to maintain your standard of living?

  • What percent of capital can you tolerate losing without worry?

  • What percent of capital are you willing to have illiquid?

  • What are your return expectations for your portfolio over the next 3-5 years?

  • What’s your time horizon?

  • What are your preferences?

Books that were recommended during program for further learning

Zero To One

The Start Up Checklist

The Richest man in Babylon

The Intelligent Investor

The Essays of Warren Buffett

A Random Walk Down Wall Street

Irrational Exuberance

Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School

The Wall Street Journal Guide to Understanding Money and Investing

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

Thinking, Fast and Slow

When Genius Failed

The Long Tail

The Hard Thing About Hard Things