Is this a FAST LANE Strategy? :Being an INVESTOR to start up companies (minority equity share, loan & royalties sharing) and not starting own business

[Leroid Ace]

Hi Fast Lane Community,

I would like to get your thoughts on this matter : Not building a business, but rather just investing to start up companies/businesses (as an angel investor) a Fast Lane approach?

I am in my process of shifting from Slow Lane route to a Fast Lane strategy, but came across this possible inflection point in my Fast Lane road.

Thank you.

 

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[Hong_Kong]

Hi Fast Lane Community,

I would like to get your thoughts on this matter : Not building a business, but rather just investing to start up companies/businesses (as an angel investor) a Fast Lane approach?

I am in my process of shifting from Slow Lane route to a Fast Lane strategy, but came across this possible inflection point in my Fast Lane road.

Thank you.

I guess if you have enough capital. But at the same time one thing mentioned in the book is control. If you are just an investor it limits your control.

The success rate on 'VC' style investments is low, but the returns on the big wins is very high (power law distribution). You need to invest in a lot of startups to get wins in the VC space. This will mean you need a lot of cash to get started. Also how will you find deals?

Investing in cash-flowing businesses is much more likely to make you money.

If you buy the whole business and run it, then you gain control.

 

[Albert KOUADJA]

Hi Fast Lane Community,

I would like to get your thoughts on this matter : Not building a business, but rather just investing to start up companies/businesses (as an angel investor) a Fast Lane approach?

I am in my process of shifting from Slow Lane route to a Fast Lane strategy, but came across this possible inflection point in my Fast Lane road.

Thank you.

most good investors are successful entrepreneurs. That is, people who have made enough money through a fastlane business. As a beginner, it's not good to invest yourself in small businesses. .save and invest in your own business fastlane is better.

 

[larryous]

Hi Fast Lane Community,

I would like to get your thoughts on this matter : Not building a business, but rather just investing to start up companies/businesses (as an angel investor) a Fast Lane approach?

I am in my process of shifting from Slow Lane route to a Fast Lane strategy, but came across this possible inflection point in my Fast Lane road.

Thank you.

Much like previously mentioned, the challenge with being an angel investor and just taking a chance on these lottery opportunities, how much capital do you need to gain a worthwhile return? Having all of your capital in one deal is risky because chances are slim you can pick a winner from the early pitches; having your capital split into several deals would be difficult to anticipate which deals can outperform and make up any losses from others. It comes back to control - you don't control anything with regard to operations so you can't be certain these prospects will perform well once they're sitting on your capital.

 

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[Leroid Ace]

I guess if you have enough capital. But at the same time one thing mentioned in the book is control. If you are just an investor it limits your control.

The success rate on 'VC' style investments is low, but the returns on the big wins is very high (power law distribution). You need to invest in a lot of startups to get wins in the VC space. This will mean you need a lot of cash to get started. Also how will you find deals?

Investing in cash-flowing businesses is much more likely to make you money.

If you buy the whole business and run it, then you gain control.

Thank you for the inputs.

Good point of this being a Violation of the Commandment of Control. Thanks for highlighting that.

Also, this engagement (especially with just a Loan Agreement without equity share) limits the return to the investor - to only the rate of interest - regardless of how exponential the growth of sales will be.

And the limitation on the availability of deals.

I will be testing this in the coming months, ill circle back to this forum to post my learnings/experience.

Appreciate the help. Thank you

 

[Leroid Ace]

most good investors are successful entrepreneurs. That is, people who have made enough money through a fastlane business. As a beginner, it's not good to invest yourself in small businesses. .save and invest in your own business fastlane is better.

Thank you for this. This is a good pressure-tester to the idea of coming into the fastlane domain as an investor first rather than entrepreneur first. Kind of counter intuitive to what is happening on the ground.

However, to further seek help - can you expound on the part where you said 'NOT GOOD to invest in small businesses, INVEST in your own business'? What are they key areas of the fastlane that this 'investor first' strategy violate?

I am aware of the Commandment of Control violation, and puts a limit on the returns.

Just wondering other areas that I am missing. Thank You.

 

[Leroid Ace]

Much like previously mentioned, the challenge with being an angel investor and just taking a chance on these lottery opportunities, how much capital do you need to gain a worthwhile return? Having all of your capital in one deal is risky because chances are slim you can pick a winner from the early pitches; having your capital split into several deals would be difficult to anticipate which deals can outperform and make up any losses from others. It comes back to control - you don't control anything with regard to operations so you can't be certain these prospects will perform well once they're sitting on your capital.

Yeah, thanks for the response. Really violates the commandment of control.
Might makes sense to declare this strategy as 'slowlane', rather than natively 'fastlane' in nature off the bat.
Appreciate the help!

 

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