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In Episode 78, we welcome angel investor, Alex Rubalcava. As Meb and Alex are friends, we start with Meb recalling the first time he met Alex over some egg tacos. Alex goes on to give us more about his background, which took him from pension funds, to dot.coms to VC investing.\nMeb asks for more information on Alex\u2019s group, Stage Venture Partners. Alex tells us that Stage is a classic seed venture fund. They invest in enterprise software companies that are about a year or two old. They look for companies that have a product in the market and are generating some early revenues. This dovetails into a broader discussion of how Alex landed on being a seed-stage investor, and the VC climate here in L.A. The guys talk about what Alex looks for, the size of the investment in a typical round for him, and where good ideas come from.\nIt's not long before Meb references our podcast with angel investor, Jason Calacanis. We received a great deal of feedback after that show from listeners eager to start angel-investing. But Meb juxtaposes that interest with William Bernstein\u2019s idea that most people shouldn\u2019t invest their own money. Meb asks Alex if seed investing is harder than the way it\u2019s presented.\nAlex responds with some interesting points about seeing the deal, understanding the deal, and winning the deal. In short, to see the right deals, you have to be in the right places, actively participating in the community. If not, you\u2019ll never see the next Uber. To understand the deal, you must recognize what you\u2019re seeing. Lots of people passed on Facebook, AirBnB, and Uber, because they didn\u2019t have the vision to see what it could be. And in terms of winning the deal, often, the really great startups are oversubscribed, meaning they might need $2M of funding, but have $20M worth of interest. So it can be a challenge to convey your value to a startup to win a seat at the table.\nThe guys then discuss how most of Alex\u2019s deal flow comes across his desk. They discuss incubators, accelerators, going to conferences, calling people, you name it. But at the end of the day, Alex tells us he\u2019ll look at about 1,000 start-ups this year, but will only make eight-to-ten investments.\nThis bleeds into a conversation about the attrition rate as startups move throughout the funding process. As you\u2019d guess, there\u2019s a huge failure rate. The guys discuss the drop-offs through the various rounds, as well as the major reasons for them. Meb also asks when to double down on your bets?\nAs part of this conversation, Alex tells us how attrition rates really vary by sectors. He discusses how investors in the consumer-based sector who didn\u2019t get in on the big dogs like Facebook, Twitter, and Snapchat didn\u2019t see anywhere near the returns that they would have otherwise. Meanwhile, other sectors have far more companies with successful exits (just not as monstrous as the Facebooks et al) \u2013 as Meb says, \u201cmore singles, doubles, and triples.\u201d\nA bit later, the guys discuss the idea of \u201cwhy now?\u201d When Alex is considering an investment, the founder must be able to effectively answer \u201cwhy now?\u201d Many times, the idea is there, but the timing isn\u2019t, perhaps due to cost, or the market simply isn\u2019t ready. This eventually morphs into a conversation about the three biggest risks that a founder faces when starting a company: building the product, hiring the right people, and getting the customer.\nThere\u2019s way more in this episode, including the little-known angel-investing tax benefit that can save you millions \u2013 literally\u2026 Where Artificial Intelligence and Machine Learning are likely headed\u2026 A mnemonic Alex uses to sort through the hype\u2026 And of course, Alex\u2019s most memorable trade. All of you would-be angel-investors will be feeling the FOMO (\u201cfear of missing out\u201d).\nWhat are the details? Find out in Episode 78.\nLearn more about your ad choices. Visit megaphone.fm/adchoices