Dan and I have an angel fund called Deciens Capital. It is very small, with just a few hundred thousand dollars to invest. We raised the fund from friends and family a little over a year ago with the explicit understanding that we would make investments part-time.
The idea of starting a fund was inspired by our interest in some of our friends' startups. We were already helping out informally — with general advice about their businesses and startup ideas. Some folks had also asked us for introductions to investors we knew. That's when we thought that maybe we should do some investing ourselves, in the companies we liked and in those run by friends of ours.
While Dan and I were mulling that over, we came to realize that all of the businesses we liked were businesses that had some strong offline component or connection. They were marketplaces or in financial technology, education, government, eldercare, etc. They shared the core idea of improving the efficiency of some "real-world" process. Software eating the world indeed.
But that cliché doesn't do the future justice. In a comment on HN, PG noted that the massive fortunes of the future will be made by "startups in industries that didn't previously have them." That encapsulates the idea much better: that's agriculture (Sourcery), payments (WePay, Stripe, Balanced, Square), lending (LendUp, Lending Club, Capital Access Network), startup investing (Anglelist, WeFunder), insurance (Oscar), laundry (Prim), house cleaning (Exec, Homejoy), accounting (Indinero), etc. And let’s not forget banking (Standard Treasury). Many if not most industries can be improved with an injection of technology and the introduction of the startup ethos (disruption, growth, efficiency, data, etc.).
In part, of course, we invest in these companies because we think there are fortunes to be made in them. Most of the economy is still untouched by the methods used by Silicon Valley's engineering-first companies. One advantage here, though, over some online-only businesses — such as social networks, photo sharing apps, etc. — is that you know the markets exist. Health insurance is out there waiting to be disrupted. But it's a schlep. Those businesses which figure out how to bring technological innovation to existing industries seem to be closer to having known, demonstrable value. Part of what I mean is that their having positive outcomes seems more likely/predictable. So, they seem like a better bet. But their value can also be more defined. It is more concrete because the need is evident.
This leads to the second reason we invest through this lens — we don't know if we have any comparable advantage in understanding technological innovations that are internet-only. In the winter 2013 YC batch there were approximately five big data companies. We have no idea which one is better. Put another way, we sometimes feel too stupid or too ignorant to judge whether this responsive-first web design tool is better than that other responsive-first web design tool, or this big spreadsheet is better than that big SQL table manipulator. We just don't know which one will get more traction. That's our own limitation. But when it comes to complex real-world systems and figuring out who has the best plan to jigger innovation into them... well, there we can shine. We have done it in the past and are trying to do it now. That's something we understand. We grok it. We're good at it, too.
Dan and I have invested in eight companies so far: Fuze Network,Tendertree, SponsorHub, [Keychain Logistics] (https://www.keychainlogistics.com), True Link Financial, wevorce, 7 Cups of Tea, and Simple Legal. In the near future, I'm going to write a blog post on each company and why we invested in them. The list is pretty clear to us though: credit card for the elderly, pushing money on to your credit card, eldercare, truck shipping, divorce, emotional support, and legal billing. I can even use those very short phrases to describe those businesses to the technophobic. Dan and I like being able to do that, and we hope to keep finding great companies like these.
 I adopted this paragraph from a comment I made on HN, which inspired this post.  This list of industries (and the companies listed in each industry) is non-exhaustive.