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Ashton Kutcher is Hollywood's most active Silicon Valley investor. Here's how he built a lucrative investing career, from making an early bet on Uber to turning a $30 million fund into $250 million.

Feb 6, 2020, 22:30 IST
Steve Jennings/Getty ImagesAshton Kutcher is a successful Silicon Valley investor.

Ashton Kutcher's resumé is extensive.

Actor is just one of the many bullets he'd list as part of a well-rounded career. Kutcher is also a producer, entrepreneur, and philanthropist, with various ventures in each of these fields. He also happens to be a very serious investor.

He's not the first celebrity to break into investing, but more than a decade in, Kutcher has made a name for himself in Silicon Valley. Bani Sapra for Business Insider called him the most active celebrity investor and, arguably, Hollywood's most experienced tech investor.

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With a goal to help connect the "little man" with new companies providing easy solutions to everyday problems, Kutcher began as an angel investor before co-founding two venture capital funds: A-Grade Investments and Sound Ventures.

From turning a $30 million fund into $250 million in six years to making early bets on Uber and Airbnb, here's how Kutcher built a successful and lucrative investing career.

Kutcher's money prowess started young. As a kid, he juggled multiple jobs, including lawn mowing, janitorial work, and dishwashing.

Kutcher told Grow (the blog of micro investing app Acorns, which he invested in) that he saved $1,400 for a snowmobile at age 13. "I worked after school and on weekends for one and a half years, and put every cent into a savings account," he said.

Raised in Iowa, Kutcher comes from blue-collar roots. His dad worked at a meat-packing plant and his mom was a school teacher, Jackie Lam reported for Business Insider. Kutcher was studying biochemical engineering at the University of Iowa when he was scouted as a model, which ultimately let to his break in the acting world.

Today, at age 41, Kutcher has invested more than $3 billion into startups and participated in 177 funding rounds over the past decade.

This makes Kutcher the most active "Hollywood angel" in Silicon Valley, reported Bani Sapra for Business Insider.

"Focusing on this simple goal of identifying and enabling amazing entrepreneurs to create a better tomorrow is the crux of my investment strategy," Kutcher wrote in a blog post for Atrium, a legal and tech start-up.

Kutcher said he began investing because he wanted to connect new companies building solutions to everyday problems with the people who needed them.

"I spend a lot of time thinking about new and simpler ways to do things, but don't have enough time to execute on all those ideas," he told Grow. "So I found people who were executing on them and invested in their success."

Kutcher told The Telegraph in 2013 that he was particularly drawn to consumer technologies. "The companies that will ultimately do well are the companies that chase happiness," he said. "If you find a way to help people find love, or health, or friendship, the dollar will chase that."

Kutcher's foray into angel investing kicked off when he founded production company Katalyst in 2000, which led to Silicon Valley connections.

Kutcher poached Katalyst's digital chief from TechCrunch, who introduced him to the big names in Silicon Valley, reported Zack O'Malley Greenburg for Forbes. "I spent 90% of my time just listening," Kutcher told him.

Kutcher soon became familiar with the tech scene. In 2009, at the request of billionaire Marc Andreessen, he invested $1 million into Skype — 18 months before Microsoft bought the company and quadrupled the value, according to O'Malley Greenburg.

But Kutcher said his investing career hit a new level after reaching out to Silicon Valley angel investor Ron Conway for mentorship.

"He is one of the godfathers of angel investing," he told his website, A Plus. "He completely opened up his investment portfolio to me and really started explaining to me how things worked and what his strategy was. He has probably been my biggest mentor."

In 2010, Kutcher co-founded venture capital firm A-Grade Investments with talent manager Guy Oseary and businessman Ron Burkle. Within six years, he turned a $30 million fund into $250 million.

Kutcher and Oseary poured $1 million each of their own money into the fund, while Burkle contributed $8 million. A-Grade also received backing from experienced tech executives like Salesforce CEO Marc Benioff and ex-Google CEO Eric Schmidt, as well as businessman Mark Cuban.

A-Grade focused on early-stage investments, according to TechCrunch. O'Malley Greenburg wrote that these start-ups had to have three defining characteristics: founders A-Grade wanted to work with; a problem-solving mission statement that would make the most of time; and a business model A-Grade could grow.

While there were a few failed investments along the way, such as BlackJet and Fab.com, A-Grade made many successful ones: $500,000 into Uber, $2.5 million into Airbnb, $3 million into Spotify, $300,000 into Warby Parker, and $1.5 million into Houzz, among many others. These are all multi-billion dollar companies today.

In 2015, Kutcher and Oseary took a more formal approach to venture investing, co-founding venture fund Sound Ventures with $100 million from Liberty Media.

Investing other people's money instead of their own allowed "them to make bigger investments, invest in later-stage startups, and put more money into investments that raise follow-on rounds," according to TechCrunch.

As of 2017, Sound Ventures was managing more than $100 million in investments, reported Cat Zakrzewski for The Wall Street Journal. By 2018, it had made over 50 investments and led six rounds of financing.

Its portfolio includes Neighborly, a municipal bond crowdfunding startup, and OpenGov, a financial tech company for local governments.

Kutcher and Oseary told O'Malley Greenburg they're taking a "typical carry" from Sound Ventures — likely 2% of cash invested and 20% of profits, plus performance bonuses.

The same year, Kutcher guest-judged on investment show Shark Tank after Mark Cuban convinced him to audition.

Kutcher was originally hesitant about going on, but felt it "might deliver the opportunity to bring an audience to the show that might not normally watch it," he told A Plus. "It really is about entrepreneurship and to me the American Dream: that you can go off and start something with very little and build something great."

He ended up splitting a $200,000 investment with Shark Tank judge Lori Greiner for 15% each of Beebo, a shoulder strap that holds a baby bottle for optimal bottle-feeding.

Greiner used her expertise to improve packaging and presentation, while Kutcher used his name recognition, massive social-media outreach, and role as a new dad to get Beebo the customers it needed, wrote Business Insider's Rich Feloni.

Kutcher has three rules when investing, all focused on what he sees in entrepreneurs.

The first rule is that entrepreneurs must intimately understand both their product and their industry, he told A-Plus. They must also have a personality that will allow them to withstand failure and setbacks, he said.

Kutcher continued: "You can have the best idea in the world and absolute domain expertise and know how to do everything right, but if you want to do something great in the world, there are going to be obstacles; and you have to be a person who has ingenuity and sheer willpower to get through those times."

The third rule, he added, is that the entrepreneur must get along well with him.

But the real key to piquing his interest has to do with how well an entrepreneur can spin a compelling narrative, he said at TechCrunch's Disrupt SF 2018.

"One of the critical tests that I try to run when I'm sitting across from a founder is: Can you sell me your idea?" Kutcher said at the conference.

For Kutcher, the ability to convey a company's mission determines whether or not they'll be able to snag the best talent in a competitive job market, Zoë Bernard reported for Business Insider. He sees telling the story of an early stage company as integral to its future growth.

"If you can't sell me, how are you going to sell your first hire, your second hire, your third hire?" Kutcher asked. "How are you going to create the capacity for the rest of your team to sell those next hires?"

Kutcher has doled out a lot of investing advice over the years, often recommending to invest in areas you have knowledge of.

On Chelsea Handler's Netflix talk show "Chelsea," Kutcher offered up his best investment advice:

"Invest in the things that you know. If you drink beer all the time — if you go to microbreweries and you try all kinds of them — you probably know which ones are the best, and my advice is always to invest in what you know."

He also emphasized this in his interview with Grow, where one of his top three tips for deciding on what to invest in was to invest in your own expertise.

But for what you don't know, he advises finding out everything you can about it.

"Know what you don't know," he wrote in the Atrium blog.

That involves asking stupid questions. Kutcher advised doing just that at a recent QuickBooks Connect conference. He said that when he was first introduced to key players in the tech world, he would ask every question he could think of.

Learning also requires paying attention. "If you're a stock boy in a grocery store and you see something flying off the shelf, find out who made it," he told Grow. "Find out why it's flying off the shelf. Do the investigation necessary to know whether or not it's something that is going to have ultimate value."

Kutcher said you should invest in what you want to bring to life, but approach your vision carefully.

Kutcher told Grow you should invest in what you want to see become reality. "Worst-case scenario, you lose money — but at least you will get the life you want," he said.

When it comes to implementing that reality, Kutcher has said that while having a vision is important, making a plan is better. At the QuickBooks Connect conference, he advised starting with what you've done to work towards your vision or goal, then looking at what you can do next to finally achieve your vision. In other words, nail out the nitty-gritty details that get you from point A to B.

Of all his investments, Kutcher said he considers his relationships the best investment he's made.

"Taking the time to get to know [people], what motivates them, what their challenges are," he told Grow. "These things are often overlooked. Investors get so wrapped up in returns and numbers that they forget that the true privilege of their position is to share a journey with exceptional people."

His philosophy on investing — and life in general — all goes back to his Midwestern roots. He said he wants to give back to those who need a helping hand.

"I'm very appreciative of the things I have," Kutcher said at QuickBooks. "I'm always fighting for the little guy, no matter what, because I always feel like I am the little guy. If you're lucky enough to be doing well, it's incumbent upon you to help folks who are struggling to grab that first rung on the ladder to start their climb."

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