Professional angel investing and the next big thing in tech: A conversation with Brian Cohen
June 28, 2017
“I’m a hugger,” says Brian Cohen, the ebullient chairman of the seed capital investor network New York Angels and founding partner of New York Venture Partners. “I want to get together with startup founders for breakfast, lunch and dinner. I want to see how they act in a restaurant. I want to see if they finish each other’s sentences. I want to know if they’re happy.”
It may sound unconventional, but it works. For more than 40 years, Cohen has practiced entrepreneurship in all its forms: as a practitioner, as a mentor, and as an angel investor. His New York Angels has been the lead seed investment organization in New York for more than a decade, with more than $100 million invested. He’s also written a book on angel investing entitled “What Every Angel Investor Wants You to Know: An Insider Reveals How to Get Smart Funding for Your Billion Dollar Idea (McGraw-Hill Education; 2013).” And Cohen was the first investor in Pinterest, a success he credits to luck, fate and the enthusiastic response to the idea by his daughter.
Cohen brought his unique brand of insight and enthusiasm to the CornellTech@Bloomberg Speaker Series on June 20, playing to a packed house at Bloomberg headquarters in Manhattan. And he advocated for a more professional approach to angel investing, which he says often comes from “friends, family and fools.”
“Most angel investors are just rich enough to make crazy investments,” says Cohen. “They have no schooling, they haven’t studied investing. They do it because it feels good.”
Though Cohen admits his approach to angel investing is exceedingly personal, he is quick to remind people that he is in it to make money. He listens to an average of 200 pitches a month. And he evaluates each with rigor and skepticism.
“I have four questions I need to answer about every startup: Do they understand their customers? Are they a good team? Does the idea scale? And what is their exit strategy?”
Angel investing is not for the faint of heart, however. Cohen says that, on average, returns are dismal, as angel investors make bad decisions, and even when they do strike oil, they often end up at the back of the line when a successful company starts generating returns. And with booming stock and real estate markets attracting personal capital, the deal flow for angel investors is slowing down, a phenomenon he refers to as “Angel Exhaustion.”
But Cohen says there are a few technology areas that are exciting to early-stage investors. While the artificial intelligence (AI) and Internet of Things (IoT) ships may have sailed, biomechanics and life-extension technology is showing tremendous promise. “We all want to replace body parts. We all want to live longer. This is not science fiction anymore. We’re actually doing this stuff.”
You can watch the entire discussion here.