Genfinity recently met with angel investor and entrepreneur Adam Rossi on our podcast to explore his investment journey, insights, and investment strategies. From prioritizing companies with robust founding teams to navigating the complexities of angel investing, Rossi shared valuable lessons gleaned from his experiences.
Additionally, we uncover his perspectives on cryptocurrency investments, particularly his keen interest in Bitcoin as a hedge against inflation and a decentralized asset amidst geopolitical uncertainties. Continue reading below for further insights gleaned from our discussion with Adam!
Adam Rossi, Angel Investor
Adam Rossi started out as a structural engineer but forayed into software after founding a software company at age 26. His company initially focused on niche areas of codebreaking and cyber tools for national intelligence agencies. He grew the company to 250 employees globally before selling it to a large, publicly-traded defense contractor when he was 39.
After selling his company, Adam became an angel investor, investing in various tech startups, including in the crypto space. He has also invested in real estate development and owns a manufacturing company. His background in software, cybersecurity, and intelligence led him to successfully invest in related tech sectors over the years.
Traditional businesses → tech companies
Adam Rossi discussed his experience with angel investing in tech companies, highlighting the diversity within the sector. He cited an example of investing in a lawn care startup, Lawn Starter, that operates through an app, emphasizing that even seemingly traditional businesses can function as tech companies with various technological components.
One of his most notable investing wins was with Maxar Technologies, a geospatial imagery provider. Despite the stock being heavily discounted at one point, Adam saw the potential due to their unique product offering and customer base. He considered filing a 13D to take over more than 10% of the company’s shares but didn’t pursue it. Eventually, Maxar was acquired by a private equity firm for $60 a share, resulting in a significant return on investment. Adam’s success with Maxar was attributed to his belief in the company’s product and industry, despite facing stock volatility and skepticism along the way.
Adam finds angel investing rewarding yet challenging, noting that successful startups often attract larger venture capital investors, potentially diminishing the involvement of individual investors like himself. He asserted that companies in fields like cybersecurity, software, and cryptocurrency follow a similar trajectory, starting with founders pitching their ideas to friends and family before seeking investment from individuals like him. These teams then often progress to venture capital funding and an eventual growth or exit through public offering or acquisition.
Priorities in Adam’s investing strategy
In Adam’s investment strategy, prioritizing companies with robust founding teams is just a single facet of his evaluation criteria. He also looks for:
Strength of the founding team: Adam Rossi looks for crucial traits such as character, determination, and ability to navigate challenges, as success rates are higher when backing founders he believes in. Notably, value alignment and trustworthiness are essential considerations for his investment opportunities.
Founders having a strong public-facing role: A founder’s passion and dedication in sales are crucial for convincing investors and customers. He highlights that hiring sales representatives should not replace the authenticity and commitment of founders in conveying the company’s message.
Timing: This is also a critical factor in investment decisions, aligning with favorable market trends.
The challenges of angel investing
Adam’s biggest takeaways from being an angel investor include the realization that it’s a challenging endeavor. Like others before him, he has found that predicting winners and losers is difficult. Some investments he thought were sure successes failed, while others he didn’t pay much attention to turned out to be successful.
He cautions that angel investing can be illiquid, trapping investors until a liquidity event occurs, and may require more funds than anticipated due to subsequent funding rounds or unexpected financial needs from the startups. He advises potential angel investors to consider their willingness to work closely with early-stage founders, as this involvement is crucial. If not inclined to do so, he suggests becoming a limited partner in a professionally managed fund where much of the heavy lifting is done by the fund managers.
Exploring Adam’s Crypto Investment Strategy
Adam’s main interest lies in Bitcoin, driven by his desire to protect and diversify his assets amidst inflation. He compares Bitcoin to gold, noting their similar roles in asset preservation. Reflecting on his younger days, he focused on growing assets and creating value, contrasting with his current stage where asset protection is paramount.
Concerns about the SWIFT system’s control over transactions during geopolitical events further solidified his interest in Bitcoin as a decentralized asset. He expressed overall concern regarding government involvement in people’s lives and businesses and raised the red flag about losing control over assets. For this reason, he values the decentralization aspect of Bitcoin as a safeguard against potential interference from banks or other authorities.
Beyond Bitcoin, he acknowledges the broader viability of cost-effective platforms for moving significant sums of money, especially if he didn’t have access to private banking services. He spoke about the potential utility of such platforms in regions with banking or currency issues, citing the example of Yellow Card in Nigeria, which facilitates easy conversion from local currencies to Bitcoin. This platform is addressing the void left by traditional banking systems and enhancing remittance services. He acknowledged that in such markets, platforms like Yellow Card would be indispensable for daily financial transactions. Yet, he emphasized the importance of understanding legal contracts and terms and conditions when using these platforms for significant transactions.
Adam Rossi’s Investment Advice
Adam offered valuable advice for new investors, drawing from his own experiences of early losses and margin calls. He advocated for a cautious approach, stressing the significance of understanding the long-term horizon and diversifying investments. Moreover, he cautioned against emotional investing and recommended patience, resilience, and a balanced portfolio that included both speculative ventures and stable assets like index funds. Notably, he also advised against frequent trading and urged investors to learn from failures to develop a successful strategy over time.
Additionally, Adam underscored the importance of monitoring monetary and fiscal policies, only making minor adjustments to his portfolio in response. He estimated these adjustments to be around 10% and warned against succumbing to negative macroeconomic perspectives, encouraging investors to remain proactive rather than being immobilized by fear and uncertainty. He highlighted inflation as a major concern and suggested investing in real assets to hedge against it, emphasizing the need for a balanced approach. Finally, Rossi stressed the importance of articulating investment theses and regularly discussing them with others to strengthen conviction and maintain accountability in investment decisions.
Looking forward
Adam Rossi’s journey from structural engineering to angel investing offers a compelling narrative of adaptability and entrepreneurial spirit. Through his diverse portfolio of ventures and strategic investments, Rossi exemplifies the importance of understanding market trends, evaluating founding teams, and maintaining a balanced approach to investment decisions. His experiences underscore the challenges inherent in angel investing, yet also highlight the potential rewards for those willing to navigate the complexities of early-stage ventures.
As investors contemplate their own investment strategies, Rossi’s insights serve as a guiding light, whether navigating the evolving landscape of tech startups or exploring opportunities in cryptocurrency. In essence, Adam Rossi’s investment journey offers a roadmap for aspiring investors, blending astute market analysis with a deep understanding of industry dynamics.
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