Insights from a 20-Year Angel Investing Veteran
The latest episode of The Diligent Observer features insights from John Harbison, a 20-year angel investing veteran who has created data-driven tools used by hundreds of angel groups.
The episode explores three key ideas highlighted by Harbison:
The Zombie Portfolio Problem
John Harbison has developed a “Lost Cause Fund” solution that allows angels to harvest tax losses from underperforming companies—a strategy that remains under-discussed across angel networks.Expertise Over Crowds
Harbison’s analysis reveals a U-shaped return curve: while deals with significant investment typically perform well, some smaller deals driven by a handful of deep-industry experts also outperform. This challenges the idea of the “wisdom of the crowds.”The First Five Years Deceive
His data-driven perspective shows that early investment outcomes can be misleading—most shutdowns occur in the first five years, while major exits often emerge in years 5-15. This insight is critical for educating new angels and managing long-term expectations.
Harbison, who serves as Chairman Emeritus of TCA Venture Group and has played a leading role in the ACA’s data initiatives and the Angel Funders Report, brings both management consulting expertise and hands-on investing experience to the conversation.
During the discussion, Harbison also shares:
A practical approach to data collection that simplifies complex cap table analysis, focusing on the ratio of investment amount to return amount to make portfolio tracking feasible for any group size.
Detailed data analysis demonstrating that early negative outcomes do not predict long-term returns.
A forward-looking vision for how artificial intelligence could transform angel investing, from automating member expertise matching to guiding due diligence efforts.
Key Topics Covered
Introduction
Angel Funder Report and Data Insights Monthly
Analyzing Investment Outcomes
Understanding Investment Returns
Insights on Exits and Shutdowns
Learning from Data and Experience
Tools for Data Management
Available on Apple Podcasts, Spotify, YouTube, and other platforms.
Connect with John Harbison
LinkedIn: John Harbison
Blog: Truth About Apple
Connect with Andrew Kazlow
Newsletter: The Diligent Observer
X: @AKazlow
LinkedIn: Andrew Kazlow
Book: AngelOps
Website: PitchFact
Additional References
Seraf: seraf-investor.com
Alicia Doxon: LinkedIn
Ron Weissman: Podcast
Tech Coast Angels (TCA): tcaventuregroup.com
Central Texas Angel Network (CTAN): ctan.com
Launchpad Ventures: launchpadventuregroup.com
Google Notebook LM: notebooklm.google
ChatGPT: chatgpt.com
Gemini: gemini.google.com
SurveyMonkey: surveymonkey.com
Slack: slack.com
Angel Funders Report: angelcapitalassociation.org/angel-funders-report
All opinions expressed in the episode are personal and do not necessarily reflect the views of the speaker’s organization or The Diligent Observer. The information presented does not constitute investment advice.
#AngelInvesting #StartupInvesting #EarlyStageInvesting #AngelFundersReport #JohnHarbison #TechCoastVentureGroup #AngelCapitalAssociation #VentureCapital #StartupInsights #DataDrivenInvesting
