I once met an individual investor. This person was highly interested in joining Tundra Angels to invest in high growth startups. Let's call him Greg.

Greg is what I'd describe as someone that was a terrific candidate to join Tundra Angels. CEO over a strong business, very dialed in, and also well respected in the area. 

After a series of conversations, Greg contacted me and said, "I decided this is not my space. So I’m not going to join Tundra Angels"

In that conversation, Greg told me that he is less fluent in the high growth space and was uncomfortable with his ability to decide which companies to invest in.

I was disappointed as this person would have been be very additive to the Tundra Angels network, but I respect decisions like that. (As an aside, here is my article on What Every Angel Investor Must Know where I give thoughts on how individual investors should think about allocation)

Due to his comments above, I assumed that Greg decided that the venture capital asset class wasn't for him. And I get that. 

Yet some time later, I discovered something through the grapevine.

I discovered where Greg's money went. He hadn't left venture capital at all. Greg had put his capital into a venture fund anchored by names that people in Wisconsin would recognize. 

This was puzzling to me. 

If venture was truly "not his space," Greg wouldn't have written a check into a venture fund. Venture capital was very much his space, just Tundra Angels... wasn't the conduit nor context. 

What gives?

I reflected back on this for a while. I still occassionally think about it. 

The reasoning of "It's not my space... I feel uncomfortable deciding which companies to invest in" didn't jive. 

After all, part of the value of Tundra Angels is being part of a broader community of experts who are CEOs and Presidents in different industries that can provide deal intelligence to each deal that we see.

The network is there to de-risk the invest decisions that we make. 

See, here is the truth. By investing in this venture fund, Greg was signing up for something. Actually, he was making a very large statement on his interest in the space.

He was signing up to allocate $250,000 to $500,000 of funds for the fund manager to allocate over the next few years. 

"It's not my space" had turned into "I'm going to put $500,000 into this space." 

So what was this decision to not join Tundra Angels about? 

My hypothesis was that he didn’t want any decision-making control. 

See, in a venture fund, the individual investors gives up control to make the investment decisions and abdicates their decision-making ability to a fund manager. In a venture fund, individuals commit their capital up front and a manager decides which startups it goes into.

A venture fund decides for you which ones you will invest in. Investors, LPs, get their statements and portfolio updates and it's something passive that happens in the background. 

For some, telling people that you invested in a reputable venture fund seems to feel impressive at dinner parties or on the boat catching up with an old friend.

I believe that that’s a large motivation behind Greg’s decision.

But this “convenience” has tradeoffs.

In practice, investing a venture fund is like a mutual fund in the stock market. You don't control which stocks are in it, someone does that work. You just get your quarterly statements. 

This brings me to a misconception I find myself clearing up on almost every first individual investor conversation that I have.

Tundra Angels is not a venture fund. 

People assume that when I contact them or talk with them about Tundra Angels, I am trying to convince them to sign on the dotted line to commit to deploying $250,000 or $500,000 over the next couple of years, like Greg. I think they picture me saying, "Trust me," as I slide a paper across the table and asking them to sign the dotted line for half a million dollars that I will allocate over the next number of years. 

That's not how Tundra Angels works at all.

No, Tundra Angels is a much, much smaller ask to get into venture capital investing.  

Here is the part people don't realize. Members pay an annual fee, $3,000 for an individual, and that fee gets you access to the network. The pitch meetings, the deal flow, the diligence discussions, the other members and their expertise. Then you commit capital along the way, deal by deal, as the deals come up. If a company pitches and it isn't for you, you pass. Nobody calls your capital anyway. There is no committed capital to call.

You're not signing away $250,000 or $500,000 in a single shot as in the case of a venture fund. 

In Tundra Angels, you're paying for a seat at the pitch meeting to allocate capital along the way. 

That distinction sounds small, but it is the whole ballgame.

I want to close with a thought - do you like getting quarterly statements, or do you enjoy being part of what feels like a live episode of Shark Tank on a quarterly basis via our quarterly pitch meeting? 

Individual investors that choose a venture fund or Tundra Angels are choosing two different experiences.

Through the venture fund path, investors can say, "I invested in a venture fund that invested in a unicorn XYZ startup, and now the company is worth $X." 

The investors that join Tundra Angels are not looking for a mutual fund where someone does all the work and just gives them their quarterly statements. 

Investors join Tundra Angels to be able to later say, "Several years ago, I invested in XYZ startup through Tundra Angels. I still remember meeting the two co-founders and hearing them pitch in 2024 in Green Bay. In that room, we could just feel that something special was going to happen. I remember how the former IP litigator talked about the IP. I remember how I was able to review the due diligence from the lead investor. I was one of 13 investors that invested in the company. Now, the company is valued at $X and I've had a front row seat ever since. I knew them 'when.'"

Every day, and with every Tundra Angels investment, we are writing narratives that aim to sound like this down the road. 

Did the fund invest, or did you invest? 

Through Tundra Angels, yes, investors make their own individual decisions. That shouldn't be scary though. 

Our network of experts exists to help de-risk the investment decisions on each company. So you get the insights from the Carbliss C-suite on a CPG deal, the insights from the Marine Travelift C-suite on a disruptive pontoon boat deal, etc.

But because it is you decision, it feels personal. A, "I invested in this company, I did this," sort of feel. 

Greg abdicated his decision-making ability, so he cannot say this. 

But you? You met the founding team. You chose to invest. You knew that company "when." 

After all, it is your decision. 

See you next Wednesday.

-Matthew

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