🚀 Week 5 by the Numbers

🧑‍🤝‍🧑 Investor Members: 5 (+2)

🛩️ Boulder Angels in-person events planned for Summer: 2

🤝 Newsletter Subscribers: 231 (+20)

Announcements

1. The first Boulder Angels pitch session

I’m happy to share that our first Boulder Angels pitch session will be happening virtually on May 1st from 3:30-5pm MST.

We will have four fantastic ventures present from the CU Boulder and Colorado startup ecosystem. Before the session, we will also be sending out fresh, crisp deal memos for each opportunity to our members.

If you’re hearing about this for the first time, it means you’re both:

1. Reading this newsletter, and

2. Not a member

If this is you and you’re an angel investor alum… I’m coming for you. In the meantime, check out our beautiful new website.

2. Upcoming in-person events

I am also thrilled to be planning/co-planning two other events for Summer. They are all still half-baked, so I don’t know when or where they’ll be, or how I’ll pay for them (but I have one idea and it rhymes with Hay Pee Mormon Glonsorship).

The first is a happy hour and networking for the next generation of Colorado’s innovators (anyone between the ages of student and 30).

The second is for everyone, and will be a panel event with food, drink, and Colorado’s innovation celebrities. This one should be huge so stay tuned.

Now onto the entrée of this week’s newsletter.

Common Startup Investment Fallacies

Too many angel investors get caught up in investing based on single metrics, and on how excited they feel emotionally about a company or team. The best investors cut through the hype to analyze what actually drives real returns. Below are a few metrics early-stage investors over-emphasize.

Myth 1: Ownership Percentage Is Everything

Say you invest $100K for 5% of a startup at a $2M post-money valuation, imagining a $20M exit turns your stake into $1M. Awesome, what a great deal to get 5%!

Let’s assume the company still exits for $20M down the road, but that you were unaware of the terms given by the lead investor, and they had a 3x liquidation preference. To add to that, the company struggled to raise their next round and had to raise a bridge round to get to their seed round with a disappointing valuation.

Upon exit, you’re diluted more than expected, and after liquidation preferences, you wind up with nothing.

Now, while crying over your investment losses, you remember that you passed on several higher quality, but “more expensive” deals in years past because you couldn’t hit 5% ownership.

All of this to say… returns hinge on the company’s growth and how the cap table shifts—not just your starting equity. Focus on the startup’s trajectory, not initial the percentage you can lock in.

Myth 2: Multiples Are the Best Measure of Success

A 15x return—$100K in, $1.5M out—looks like the ultimate win. But here’s where people get tripped up: time matters as much as the multiple. Let’s compare two investments to see why a lower multiple in a shorter window can beat a bigger one stretched over a decade:

• Investment A: $100K invested, exits at $500K (5x multiple) in 4 years.

• Investment B: $100K invested, exits at $1.5M (15x multiple) in 10 years.

On paper, Investment B’s 10x seems superior. But when you factor in time using the Internal Rate of Return (IRR) the story flips:

• Investment A IRR: 50%

• Investment B IRR: 31%

Investment A’s 50% IRR beats Investment B’s 31%. Why? The faster return compounds your money sooner, and with this capital returned faster, it provides you the opportunity to reinvest into new ventures or other asset classes. Multiples grab headlines, but IRR reveals the real value for an investment.

That being said, both of these would be great investments, and many might prefer the second if deploying from a fund.

The Takeaway

Venture math isn’t about chasing one metric—it’s about balancing risk, time, and growth. The next time you evaluate a deal, look beyond ownership, multiples, and valuations in isolation.

I hope you enjoy this reading, but ultimately, I want you to invest how you please. I am not your investment advisor, and angel investing is for risk-takers anyways.

One of the upsides of joining Boulder Angels is that we provide you with this kind of information, but will do absolutely nothing to stop you from making the investment you please.

I’m just the network organizer who plans events to get you drink tickets and those bacon-wrapped dates that everyone seems to like. I also find some neat startups to invest in.

Make sure to check out our beautiful new website at boulderangels.org, and feel free to reach out anytime to [email protected].

Until next time,

-H