Magic Johnson has shared what he considers when investing in founders.
Johnson is a former basketball athlete who played his entire NBA career with the Los Angeles Lakers and earned $39.3 million during his 14 years in the league, according to Spotrac. He retired twice from the league, but made his official exit in 1996, notes the NBA. However, he was already laying the groundwork for long-term financial success before doing so.
In 1981, he formed Magic Johnson Enterprises, which is “a global investment conglomerate with a mission to deliver high-quality products and services that focus primarily on ethnically diverse and underserved urban communities,” according to its website.
Johnson has a diverse portfolio that spans movie theaters, Starbucks franchises, sports teams, life insurance agencies, drone manufacturing, wearable technology, health and beauty, and clean energy, among other areas, per the organization’s website.
During an interview with a16z’s Chris Lyons, Johnson shared his criteria for investing in founders: considering if the product already has a market, asking if it will be relevant a decade from now, analyzing if it can generate consistent year-over-year growth, and identifying if there is a clear path to exit or sell. He mentioned that he also considers whether partners and founders have skin in the game and are experts in their field.
“Can we bring added value to the deal or to that founder and make that company grow or take off and fly,” Johnson explained on the podcast.
He later added, “Our rolodex is huge and long and powerful. So, we know how to grow businesses … That’s what we talk about when we say the added value. You want my check, but also too, you should want everything else that we bring to the table because I’m used to winning … I don’t just want to win in sports, which I have 18 championship rings. I also want to win in business. So I have a mindset of winning. And I’mma do everything I can to make sure that deal or that partnership wins.”
According to Forbes, Johnson’s estimated net worth is $1.6 billion (at the time of this writing).
As AFROTECH™ previously told you, the majority of Johnson’s wealth is from insurance company EquiTrust, whose assets under Johnson’s management have increased from $16 billion to $26 billion.
