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Investor-Backed Team Play Part - 4

Deadcat followed up with an excellent observation and a question:

When DD and others were talking about investing in shooters, much of the talk centered around "qualifying" the shooter and his potential Player EV.

 

(This was usually a stumbling point because finding acceptable ways to qualify and quantify a skill to a statistical certainty would take so much table time that most shooters don't find it worth the bother.)

My next question turns this around: How do you "qualify" or screen potential investors? Must they know the game?

Certainly knowing the game would shape their expectations. Given that swings in variance are a fact of life, I'd want any potential investor to take drawdowns in stride but how can an acceptable swing be quantified?

Does the investor bet with team bankroll? I would be concerned about this because in the back of his mind he might think it's his money after all and he might be tempted to "go off the reservation" and bet out of plan.

I look at it like this:

-If a potential investor approaches me; then he's already pre-qualified my shooting.

-If he wants further validation; then he is probably a 'reluctant' investor in that he has money to invest, but he's looking for nice 'safe' returns and is likely VERY afraid of even minor drawdowns.

That's the kind of investor you would definitely want to stay away from. Tell him to go invest in a nice safe banking sector stock if he's looking for a high level of assurance that he won't lose anything ;).

-For investors who understand the game and fully expect fairly wild bankroll swings, you still have to pre-qualify them in terms of their 'real' bankroll as we talked about in a prior post in this thread.

-The size of an investor's gaming bankroll is very important because it will dictate geared-to-advantage bet-sizing.

If he's willing to back you but his bankroll is relatively small and you can't reasonably play at the less-crowded $25 and $50 tables; then your hourly earn-rate will be severely impacted by the wait-time between hands...and the rate of return for both of you may not be worth the bother.

-On the flip side of that coin, you want to be sure that the investor understands how volatile even the best shooters performance can be on a hand-to-hand or session-to-session basis.

It does no good if an investor has a $1-million gaming bankroll but only has the stomach for no more than a couple of $1k or $2k drawdowns when someone else is shooting the dice. A good indicator of investor tolerance is their general demeanor and attitude.

If they are brash and swaggering ego-maniacs, chances are they are tolerant of their own losses but highly intolerant of losses incurred by others.

 

I find that the louder and more obnoxious their false bravado is in general; the less secure they are with themselves and their money...and they make for poor investing partners.

If an investor is looking for statistical certainty as a pre-condition to backing you; then he's likely going to want to micro-manage everything you and your shooting-partners do in nearly every facet of your time together.

 

There are a few exceptions to that rule of course, where an savvy investor is willing to say,

"Here's $100,000, go out and try to double it in the next month or so...check in with me once in a while and let me know how you are doing, but don't feel compelled to call me everyday...just go and do what you do best, and let's see if we can make some money together"; but those types of investors are few and far between (but once you find one, you'll never look back :D).

Until then,

Good Luck and Good Skill at the Tables…and in Life.

The Mad Professor
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This page contains a single entry from the blog posted on October 21, 2008 3:34 PM.

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