Our third investment

Back in late November, TechU Angels made our third investment. Although we are very excited about the opportunity, we have decided, in concert with the founding team, to keep our participation unannounced for the time being due to competitive and other commercial considerations. What we can tell you is that the team comprises perhaps the world’s leading experts in natural language processing and artificial intelligence, and they are building an application which already has commercial players in the automotive space salivating.

Looking forward to sharing more when the time is ripe. I think you’ll be as excited about it as we are when we do.

Investment in LedgerX

I’m happy to announce that back in early November 2014, TechU Angels invested in LedgerX.

Overall, we have been very high on the cryptocurrency space for some time now and have been actively looking for opportunities to support. LedgerX is not just another cryptocurrency or trading platform, but at the forefront of bringing global legitimacy for BTC as a regulated financial instrument. The team is building an options and futures trading platform backed by BTC, and is working with the appropriate authorities and channels to obtain the blessing of the appropriate US financial regulatory bodies. Yes, a very big challenge, but one that we are very confident they will be able to meet head-on.

The team is led by former MIT alumni and Goldman Sachs high frequency traders who are greatly experienced in the options and futures markets and who bring a depth of knowledge and relationships within the field which are unparalleled.

The round was led by Lightspeed Ventures, and included returning investors Google Ventures and SV Angel.

If you’d like to learn more about them, I’d recommend you review their coverage in the WSJ announcing the round (link here), their public comments on the NY State Department of Financial Services Proposed Virtual Currency Regulatory Framework (link here), and other press from around the web (more here). It’s clear to our team that Paul, Juthica, Ethan and the rest of the team are building a disruptive force, and will be well positioned to take advantage of a strong first mover advantage. We are excited to partner with them during this exciting period.

Our first investment – Hydration Labs, Inc.

It’s been a while since I’ve shared any updates and I know that it’s been due for some time. I’ll try to be more consistent going forward, so here goes…

Back in May 2014, I attended the TechStars demo day in Boston. There were some great companies there, but one which really happened to catch my eye. That startup was Hydration Labs, Inc., and the CEO was Sean Grundy, together with founders Frank Lee and Eliza Becton.

Sean and team are working on disrupting beverage delivery for offices (a $3B+ annual market) by introducing a specialized filtration machine called the Bevi.

The Bevi creates drinks which are customizable, taste great, are environmentally responsible, and actually save customers a TON of money – all at the point-of-sale. Their early beta testers include some of the largest corporate offices in the Boston region, and the inbound demand and feedback has thus far been INCREDIBLE.

I can’t get into too many details at this stage, but they have some really grand plans. Their next product iteration should really set them apart. One of the factors that really got us excited about the opportunity is the fact that none of the founders are industry insiders. We like that they bring a fresh perspective and have a strong focus on what users require and demand. This is a stale industry led by incumbents who have had up till now little incentive to be creative or actually listen to what customers want.

The team’s focus on user experience and design is truly inspiring and evident when viewing a machine for the first time. We also liked that Sean and Frank are fellow alumni of MIT Sloan. Given our team’s background at TechU, we feel a strong sense of responsibility to give back, and we can’t think of a better way than with partnering with MIT founded companies.

After several meetings my partners and I decided to pull the trigger back in late October.

Thank you to Sean and team for bringing us as your partners, and we are looking forward to joining you on this exciting journey.

On Launching TechU Angels

After a year of planning, in February of 2014 I very quietly launched TechU Angels LLC, a seed and venture investment firm, together with Aaron, Alexander, Lisa, Tony, Eddie and Gautam – all friends that I met through my time at MIT. This group of global all-star angel investors, entrepreneurs, and operators came together because we were all frustrated with the current state of seed funding and felt that true support for entrepreneurs in the early stages was not completely where it needed to be.

From the very beginning we realized that the current angel capital models were broken, and we decided to push the envelope and do things a bit differently, because that is what startups and entrepreneurs need in this current environment. We realized that to best support our startups, we needed to be and act like a startup ourselves. That means continually iterating and innovating at every step.

How are we different from a traditional angel investment group or firm?

  • Global nature – given the advances of technology and video conferencing in general, we don’t believe it makes sense to have an angel group focused on a specific city or region (like most are today). The world is global and so are we. You can find our partners in the thriving startup ecosystems of Boston, San Francisco, New York, Tel Aviv, Singapore, and Mumbai.
  • More efficient due diligence process – although discussions may stretch over a period of time, once we decide we are in on a deal, we aim very strictly to keep our due diligence process to less than 3 weeks. We think that is fair for the entrepreneurs and also for our time. We don’t think 3 to 6 months is right or makes business sense and we hope other angel firms move away from that model.
  • Open and honest feedback, each and every time – we say what we think and feel about your startup because we know that is what will help you in the long run. If we decide not to invest, it’s only fair that we are clear and open about how we feel. There is no point in having you run after us for weeks (or months) if you can be making better use of your time finding folks who are more aligned with what you’re trying to create. If we can share feedback along the way that helps, why not. We want you to succeed regardless.
  • Using technology to make things easier – we may be the only angel investment firm in the world to develop our own due diligence and deal evaluation platform all directly in house. We have built proprietary technology which helps us evaluate deals faster, and more efficiently than others in the space and we think that will give us an added advantage.
  • Ability to invest across stages – we think it’s pretty poor business sense to invest in the seed stage of a firm, but not join the Series A (or B) rounds for those startups that are on a tear. This is called pro-rata rights and we intend to acquire it whenever possible and make good use of our long-term ability to support our startups over several stages. We are building our follow on investment capabilities and we are particularly fortunate to get guidance in this area from late stage investors like Dr. Henry Kressel, a veteran tech investor and MD at Warburg Pincus who serves as one of our advisors.

Over this period (since February), we’ve reviewed and met with over 200 startups and we’re glad to announce that we recently completed our first two investments in Hydration Labs, Inc. (“Refresh”) and ledgerX. You can read more about them on our Investments page and see the fantastic news they’ve garnered from publications like the Wall Street Journal, Dow Jones, International Financial Times and others on our News page.

We were the lead investors in the Refresh round and co-invested with Lightspeed Ventures, Google Ventures, and SV Angels in the ledgerX deal.

We are especially proud that our first two investments came from the MIT ecosystem given our strong ties to the Institute and what MIT has meant to us professionally and personally in our lives. We expect MIT to be the primary (though not sole) focus of where we find good opportunities.

Since many of you will ask, I will share this information here. For those startups who wish to get in touch with us, the best way to get started is by filling out a very brief form at the following link. We try to be as efficient as possible and aim to respond super fast.

Finally, I started this blog a few weeks back with the intention of maintaining it as the one source of news and updates about our work and firm. If you’d like to stay on top of what’s happening with us, please click on the menu bar (up top) and add your email as a subscriber to this blog. I promise not to send clutter.

Thank you for being a part of our journey.

What I learned from buying a bike

Last week I bought my first bike in a very, very long time (basically since I was 7). I was prompted after all these years by an increased desire to support a healthier lifestyle. I am fortunate enough to be one of the lucky few (at least from my group of friends) who gets to live and work in the same town. While everything here is definitely close-by, it’s not necessarily walking distance and that is where a bike comes in handy. Instead of using the car to get around town, I hope to transition to a bike, as long days behind a desk can really be a drag.

My bike? A 2015 Trek 7.4 FX, a real beauty.

Trek 7.4

The purpose for writing about my experience is not really to discuss specs of the bike or my new found appreciation for exercise, but rather what I learned about the dynamics the bike manufacturers use to promote monopolistic behavior intended to keep competition at a minimum. To clarify, I am not claiming that anyone is partaking in any illegal activity here, just that their actions discourage competition, and smell of a hint of collusion.

The findings that I have come across were through several candid conversations with bike shop professionals. In these discussions, I learned:

  • The big players in the space (include brands like Trek and Cannondale) restrict sales of their bikes only to high end bicycle shops (which is understandable) but more importantly, control supply and competition by limiting relationships to one shop per X number of square miles (approx. 5 to 10 miles). This ensures less competition between local shops keeping prices at or very near suggested retail prices.
  • No reselling on the web is permitted by bike shops – only pick up in store. Therefore, these shops cannot act as a reseller on places like Amazon or eBay.
  • No delivery of bikes via mail permitted, meaning, customers cannot call a shop a few towns away and ask them to ship an order. Customers have to pick up in store each and every time.
  • Sale price limited to 20% of retail – Bike resellers are restricted by manufacturers in terms of sales price which they issue off the ticket price.
  • New bikes (in upcoming year) are not allowed to be sold at a discount. So for instance, although we are in August 2014, I purchased a 2015 version of the Trek 7.4 FX. The 2015 version is not allowed to be sold at a discount at any point likely during the next 6 months or more. This restriction is imposed by the manufacturer.

Again, I’m not suggesting any activity here is illegal, but highly creative to say the least.


Transitioning from Tumblr to WordPress and what this means

For the most part over the last 4 years, I’ve been a fairly active user of the Tumblr platform for blogging my thoughts. Yidvestor.com was fairly easy to set up, and there is nothing like Tumblr in terms of being plug-and-play and in overall ease-of-use. Over the past few weeks, I’ve become more and more disenchanted with Tumblr due to steps which make it less friendly to bloggers like myself, likely precipitated by its acquisition by Yahoo and their own internal considerations. I’ve written about one of those issues here, and as a result, have recently decided to move part of my web presence to Wordpress, given the level of control the platform provides. No, it may not be as easy to use or elegant as my Tumblr site, but in a few hours, I was able to put something together which is certainly respectable.

What does this mean for Yidvestor.com?

No, I will not be shutting that down. The site will be up and continue unabated. The focus of yidvestor will be on capturing my short thoughts and general links or videos which I find to be of interest. This new blog, natanel.net will take over as my outlet of choice for writing about long form issues which I think are important or for topics relating to my work with TechU Angels.

I will likely not be blogging every day or more than once or twice per week. For that reason, if you are interested in staying in the loop I recommend you sign up for email updates to the blog.

Thanks, and happy reading.