How I became an investor as a BROKE silicon valley Founder!
Yes, you read that right!
The year was 2017. I was an immigrant founder in silicon valley on a dependant visa. I had not raised any angel or venture capital. Anshul, my partner had a tech job and I was doing 2-3 part-time jobs. Now I know what you are thinking! How could you become an investor when you are bootstrapping your startup, living paycheck to paycheck, and don’t have a trust fund 😩
So here you go, let me walk you through, how I did it. This is a part of my story that I haven’t shared EVER! But it is one that has helped me become independent and create a good amount of assets. This is the path that allowed me to bootstrap my startups, not worry about making ends meet and taking it slow!
NOTE: THIS IS IN NO WAY INVESTMENT ADVICE. PLEASE TALK TO A LAWYER AND SEE YOUR SITUATION. DO YOUR RESEARCH AND TAKE YOUR UNIQUE PATH.
Alright! Let’s go. So in 2016, I started becoming curious about investing in stocks and started putting some on my part-time income (Think $100/month) and buying stocks that were VERY SAFE in my view. You know the usual, big 5 which were here to stay. So no clear logic and again, I wasn’t doing it to be rich! And then Anshul started talking about cryptocurrency and blockchain. And I was hooked.
A little background here, my dad taught me how to invest in stocks really early in my life and my mom taught me all about mutual funds when I was growing up. So financial literacy has been part of my upbringing for a while.
My parents came from REALLY humble backgrounds and had to learn this all by themselves. My parents struggled and though they couldn't give me an inheritance, they gave me the education to build one.
They thought that I should start young and honestly, I loved it. So while I was investing and saving in India, it gave me the confidence to understand the financial language and the courage to ask people when I didn’t understand.
Lesson #1: Don’t be afraid to look foolish!
I still don’t understand so much but I love to ask and get educated. If learning something new will make me better, then YES I WANT TO BE A STUDENT ALL MY LIFE!
Ok so coming back to 2016. Anshul told me about bitcoin and blockchain. It sounded really unbelievable to me. So I put on my student cap and started learning. I read every piece of literature online which at that time wasn’t much. Then I used the spectacularity of silicon valley and started attending all the blockchain events. I sat in rooms where I didn’t know anything and asked them all my #STUPIDQUESTIONS. Now that I heard so many intelligent people talking about it, I wanted to start experimenting myself.
Lesson #2: Take small bets
In 2017 I was ready. I started investing part of my salary here. (Think $500). I decided I could stop eating out and either way, I wasn’t a foodie 😏. Now I knew, I had to only invest the money I was ok losing! PLEASE REMEMBER THAT. You start with knowing that you WILL FAIL!
Bitcoin was $2000 and Ethereum was $350 in early 2017 and that is when I started my crypto investing journey. Slowly, month over month, I started connecting with experts in the field. The women in the crypto network in Silicon Valley were my saving grace. They taught me everything!
Lesson#3: Find mentors
Through networking, I found some brilliant women VCs in the blockchain space. I loved their drive and I asked them if they could teach me venture investing and how it works. Now remember, I had a full time startup with me and 2 part time jobs. This was really a hobby for me. It made me so excited, still does, and gave me a break from thinking about all the rejection I was facing to raise my own startup’s round.
So I started learning about white papers, initial coin offerings (ICOs), and accreditation that you needed to be an investor. Thanks to Anshul’s tech job and my 2 part-time jobs, we qualified to be accredited which meant I COULD INVEST in startups. 😎 Read here about accreditation. And see if you qualify. Many people don’t know that they can qualify to be angel investors. Finding the right mentors helped me learn this. And now there was no looking back.
So at the time, to invest in ICOs as an angel you had to be accredited too. I am not sure if that has changed now. So I started reading white papers of companies that were really building cool things. My investments were already growing so I could just reinvest my earnings without putting in any additional money. I invested in 5 blockchain companies as an angel investor in 2017 and 2018. (think really small checks: $1000 to $5000).
My Investment Portfolio:
2 of them shut down 6 months after the ICO and ran away with the money 😩
1 returned us the money as they weren’t able to build the technology as it was too early in the market.
1 is still running and thriving. They have an interesting case that will become mainstream with time and they are a brilliant global team focused on impact. See more about them here. (Babb Coin)
1 is doing some really cool things in DEFI And NFT space. Check them out! (Origin OGN)
Lesson #4: Pay it forward!
One lesson that I have learned and experienced is if you want to be successful, the people around you need to be successful too. And that is why I want to surround myself with brilliant minds or take everyone with me and help them in any way I can. I know I have a special gift of storytelling and teaching so that is what I did. In 2018, I started bringing experts to my home and hosting crypto and blockchain lectures. We taught everything from KYC, creating an account, learning about the basic tech, options available.
In 2019 and 2020, I was so busy with my startup and then re-couping from the burnout that I took a break from investing. I have done a few angel investments in 2021 which will be a post for another day!
But if you are a founder and looking to write small checks, check whether you are accredited. As Elizabeth Yin of Hustle fund shares in this Twitter thread: ‘if you've raised at $5m cap & own 30% of your co, you're worth $1.5m & are accredited.’ (Please NOTE THIS IS NOT LEGAL ADVICE. CHECK WITH YOUR LAWYER.)
Most times we think that investing is only a rich person’s game. While that may be true a little bit, there are avenues where you can start building your wealth too.
What are my options? (This is not financial or legal advice)
If accredited:
Angellist: Join a Syndicate (what is a syndicate?)
Write small checks for your founder friends if they are doing something phenomenal.
Connect with VC and learn more about founders who are looking for angel checks and you can provide them with your expertise too.
If NOT accredited:
ICOs on Republic or Coinlist.
Stocks, High yield bank accounts.
Fixed deposits, Mutual Funds, Index Funds
Before you do anything though, find an expert and learn from them. Take time to understand this well and then take a calculated decision based on your learnings and capacities. If nothing else, you would know your options and that is quite empowering 👊
I hope this helps!!
Until next time!
Love and light,
Arjita