David Heinemeier Hansson

June 1, 2022

I ain't no angel but I have made some startup investments

I'm not saying the only reason I've categorically refused to invest in tech startups in the past was my instinctual aversion to the term "angel investor", but it surely did play a part! There's just something so ridiculously self-serving about this angelic charade that turned me off for the longest time. So too did the fact that every tech angel investor I'd ever met seemed exclusively interested in unicorn hunting. Hard pass, not for me!

I mean, just visualize that image: A winged hustler chasing mythical creatures with a dull trident, blind-folded. Occasionally nailing the throw, usually out of luck, connections, or happy timing, then heralding themselves as visionaries, demanding a parade.

Okay, maybe your visualization is not as grim as mine. But just setting the stage here for my personal picture. This was the caricature I had in my head for a long time, and, frankly, still do to some extent.

But. I've also softened a little over the years. A LITTLE! Mostly in the sense that while we bootstrapped Basecamp to the moon, not everyone has the capacity to build the thrusters needed in a shed behind an existing business. There are tech entrepreneurs out there who have the tenacity, adjacent skills, and drive to make something substantial happen, but need some investment money to pull it off.

Here too, though, I've sat with a caricature of The Idea Guy for a long time. Someone skilled at selling dreams while desperately short on sleep and skills to actually make it happen. Put in contrast to the archetypical builder – the programmer, the designer – I was too often exposed to the fluffy, flailing huckster with an idea in cold-open emails hitting my imbox, and that just reinforced a sense of a character with the bozo bit flipped.

But, again, there are other skills valuable to early stage startups beyond building. Like superlative product management or superior sales chops. People who can steer what's being build with excellent specificity to create novel, compelling products, and people who can really sell those creations in the early days when the business is without a brand or any other credibility. I've developed more respect for these types in recent years.

Just as the world is full of bozo business types who think they're owed millions because they can dazzle a powerpoint with all the right keywords, it's also full of talented builder types who couldn't come up with a compelling product or find a way to sell it if their life depended on it.

So there are some startups, perhaps run by non-builders, who need some money to get going out there. And what I've come to realize is that our song of bootstrapping austerity just can't help these folks. At least not all the way or right away. That the wheels need to get moving a little before they can jump on our bandwagon and ride it off into a sunset of profitability and autonomy.

But if the only source of funding that's available to these entrepreneurs come from angels who are hoping to float the business down the stream to venture capitalists, we're never going to see whether this class of businesses might prosper outside that playpen. And that feels like a bit of a travesty.

We desperately need more tech companies that aren't solely focused on unicorn stardom, the big exit, or any of the other bullshit markers of success in that world. The straight bootstrapping route gives us some, but we need more, and to get that, we need money.

Enter my tentative exploration into the world of startup investment! I've so far put money into a couple of Danish companies – Workfeed and JumpStory – and been talking to a handful more about helping out. All software businesses (invest in what you know!), all solidly grounded in Denmark (invest in your local community!), and all receptible to a unicorn-free plan for the future.

Most of these companies I've either put money into, is about to put money into, or at least have spoken with, had the venture capital route as the default plan when we started talking. But all of them also had that nagging suspicion that maybe this route wasn't right for them. All I had to do was tickle that hesitation and reservation... and of course offer an alternative (albeit significantly smaller) bag of money.

And pinch me if it hasn't actually been a good time so far! To help fellow Danes direct their gaze away from dreams of pale unicorns towards the dazzling stripes of actual zebras. To give give a little back to the country that made me. To try some new things.

Of course it's always easy to have a good time when you're popping champagne, taking glamour shots, crowing to journalists, and sending wire transfers, so I keep that top of mind. Even if you're aiming to breed zebras, most businesses fail. Only invest what you're willing to lose. Ensure you're backing a crew you'd enjoy see succeed as much as you'd be willing to tolerate them fail.

Just don't call me an angel.

About David Heinemeier Hansson

Made Basecamp and HEY for the underdogs as co-owner and CTO of 37signals. Created Ruby on Rails. Wrote REWORK, It Doesn't Have to Be Crazy at Work, and REMOTE. Won at Le Mans as a racing driver. Fought the big tech monopolies as an antitrust advocate. Invested in Danish startups.