The Crocodile Pit brings fun and education to the world of angel investment. Whether you are a seasoned investor or just getting started there is something for everyone in this game.
All you have to do is to register on the site, sign in and we will "give" you a bunch of free fantasy cash to invest in your favorite startups that you see pitch.
The aim of the Crocodile Pit is to encourage people to think about being an angel investor without them actually risking any of their own money. It's fun and educational for both the startups and the investors.
Angel investment is a "tricky" asset class. Angel investors invest at an early stage of a company's life-cycle. Normally angel rounds are between about $200k and $1.5m. Mostly these rounds are made up of multiple angels investing on the same or very similar terms. The companies will normally sell 10-30% of their equity for this investment.
Angel investments are highly risky. Up to 70% of angel investments will result in a "doughnut" (i.e. the company goes bust leaving nothing for the investors or founders). As well as being hugely risky, it is also hugely illiquid, with the money essentially "locked in" for a period of 5-10 years. The only way money can come out is through a large strategic investment, a trade sale, or an IPO.
However, for those angel investors who are talented enough (or often lucky enough) to invest in the next Atlassian, Xero, Uber, Redbubble etc, the rewards can be enormous. Plus it can be a lot of fun.
The Crocodile Pit is brought to you by Innovation Bay a group dedicated to helping technology startups succeed. Co-founded in 2002 by entrepreneurs Ian Gardiner and Phaedon Stough, the group now has over 2,000 members across Australia and San Francisco. They run quarterly Angel Dinners in every major Australian city.
One of the big issues they face is how to educate the new generation of Angel investors. If the Crocodile Pit helps towards this goal it will have achieved its aim.
Each signed in user (you) will be allocated say $1m or $500k of "money" to invest in the any or all of the companies pitching at the event. You have to invest all the money. So for example if you had $500k you could invest $200k in company A. And $300k in company B.
Each company pitching will be assigned a valuation by the judging panel before the event begins.
At a regular fixed time period (eg every second month or up to a year or more in the future), the judging panel once again sets the valuation on the businesses. Each user's investment in the business goes up or down according to how much the valuation has changed. The valuation panel will be able to update the valuations during the trading period, which would be reflected in each user's portfolio. So in the example above, company A moves down from a $4m valuation to a $2m valuation. This takes the user's investment value in this business from $200k to $100k. Company B moves from $1m to $5m valuation, moving the user's investment from $300k to $1.5m. So that user's total portfolio would have gone from $500k to $1.4m. At the end of the game we total the valuation of each user's portfolio and the winner is the one with the largest valuation.