There’s a famous Angel Investing joke that goes “How do you make US$1mm angel investing? Start with US$10mm.”
I’ve always been intrigued with early stage investing. It requires a slightly different skill set than public market investing but fundamentally, the investment process is the same. Not only do I enjoy hearing about exciting new companies that are trying to change the world, but I also like to hone my overall investing acumen and refine my evaluation process.
For most investors (myself included) the process of analyzing an investment is a constant tug of war between making money and not
There’s a famous Angel Investing joke that goes “How do you make US$1mm angel investing? Start with US$10mm.”
I’ve always been intrigued with early stage investing. It requires a slightly different skill set than public market investing but fundamentally, the investment process is the same. Not only do I enjoy hearing about exciting new companies that are trying to change the world, but I also like to hone my overall investing acumen and refine my evaluation process.
For most investors (myself included) the process of analyzing an investment is a constant tug of war between making money and not losing money. Allow me to explain.
All investments start off the same way, with a brilliant money making idea. When you hear about an idea be it through a pitch competition (like the one we attended above),a stock picking newsletter or a casual conversation with a friend at the bar, the first stage of every investment process begins with an idea.
After the seed gets planted, you begin the analysis process in your head. Each person is different but generally people fall into one of two camps at this point. The first camp are what I call moonshot dreamers. They believe every new idea is going to the moon and make them super wealthy and would much rather jump in to have “skin in the game” than miss out on the next Facebook.
In the second camp are the “value” investors who have never experienced FOMO in their entire lives. They would much rather not lose money than participate in the next up and coming unicorn funding round and on the extreme end these are the types of people that end up old and miserly with nothing to show for.
Now back to the investment process. It is during this analysis process where the astute investors (regardless of what camp they are in) develop a process to assess the opportunity in a systematic way, one that takes the emotions out of it and one that is based on numbers, data and an objective assessment of risk/reward. Investors love fads and human beings will always get emotional and overreact which is why we must develop these processes carefully and systematically and not rely purely on “gut feel” alone. (Every idea sounded awesome after a few beers on pitch night…) This is where the tug of war play out and this is also where it helps to have friends, partners and advisors to use as a sounding board and talk out an idea.
This is also where most people get it “wrong” in early stage investing. By virtue of the fact that you are looking at very immature companies, human beings are naturally biased to spend more time thinking about what could go right (the next unicorn?) versus what could go wrong (99% of startups). I learned this painful lesson many years ago as a young cocky wannabe angel investor and sadly many continue to do so be it in early stage investing, crypto/ICOs or even publicly traded markets such as equities.
There are only a few things that we as investors can control and one of those things is protecting our downside. Just remember, regardless of what shiney objects you find out there, never allow yourself to be at risk of losing a lot of money at any given time because quite frankly you don’t have to make money all the time -- you just need to make sure that when you do win, you win big and when you lose, you lose small.
Where do I start?
I’m a huge financial nerd, and have spent an embarrassing amount of time talking to people about their money habits.
Here are the biggest mistakes people are making and how to fix them:
Not having a separate high interest savings account
Having a separate account allows you to see the results of all your hard work and keep your money separate so you're less tempted to spend it.
Plus with rates above 5.00%, the interest you can earn compared to most banks really adds up.
Here is a list of the top savings accounts available today. Deposit $5 before moving on because this is one of th
Where do I start?
I’m a huge financial nerd, and have spent an embarrassing amount of time talking to people about their money habits.
Here are the biggest mistakes people are making and how to fix them:
Not having a separate high interest savings account
Having a separate account allows you to see the results of all your hard work and keep your money separate so you're less tempted to spend it.
Plus with rates above 5.00%, the interest you can earn compared to most banks really adds up.
Here is a list of the top savings accounts available today. Deposit $5 before moving on because this is one of the biggest mistakes and easiest ones to fix.
Overpaying on car insurance
You’ve heard it a million times before, but the average American family still overspends by $417/year on car insurance.
If you’ve been with the same insurer for years, chances are you are one of them.
Pull up Coverage.com, a free site that will compare prices for you, answer the questions on the page, and it will show you how much you could be saving.
That’s it. You’ll likely be saving a bunch of money. Here’s a link to give it a try.
Consistently being in debt
If you’ve got $10K+ in debt (credit cards…medical bills…anything really) you could use a debt relief program and potentially reduce by over 20%.
Here’s how to see if you qualify:
Head over to this Debt Relief comparison website here, then simply answer the questions to see if you qualify.
It’s as simple as that. You’ll likely end up paying less than you owed before and you could be debt free in as little as 2 years.
Missing out on free money to invest
It’s no secret that millionaires love investing, but for the rest of us, it can seem out of reach.
Times have changed. There are a number of investing platforms that will give you a bonus to open an account and get started. All you have to do is open the account and invest at least $25, and you could get up to $1000 in bonus.
Pretty sweet deal right? Here is a link to some of the best options.
Having bad credit
A low credit score can come back to bite you in so many ways in the future.
From that next rental application to getting approved for any type of loan or credit card, if you have a bad history with credit, the good news is you can fix it.
Head over to BankRate.com and answer a few questions to see if you qualify. It only takes a few minutes and could save you from a major upset down the line.
How to get started
Hope this helps! Here are the links to get started:
Have a separate savings account
Stop overpaying for car insurance
Finally get out of debt
Start investing with a free bonus
Fix your credit
I think the answers of my friend David S. Rose, as well as Zolie Zioli, Erik Fair, and Paul Cohn are all excellent overviews on the basic requirements. For a bit more on the skills and fundamentals of getting started, here’s an Angel 101 primer for new angels you can work through that will help you learn about issues like:
- The basics of building an angel portfolio
- What kind of return can you expect on your investment
- The theory and practice of asset allocation for angel investing
- What should your expectations be for the time it takes to get an exit
- Why it’s important to undertake due diligence befo
I think the answers of my friend David S. Rose, as well as Zolie Zioli, Erik Fair, and Paul Cohn are all excellent overviews on the basic requirements. For a bit more on the skills and fundamentals of getting started, here’s an Angel 101 primer for new angels you can work through that will help you learn about issues like:
- The basics of building an angel portfolio
- What kind of return can you expect on your investment
- The theory and practice of asset allocation for angel investing
- What should your expectations be for the time it takes to get an exit
- Why it’s important to undertake due diligence before investing
- What are the risks that are inherent in early stage companies
- The importance of investing both financial and human capital
- What are some less obvious pitfalls that need to be considered.
For the people with the time, patience and skills, angel investing is the one of the most fun and rewarding professional/business undertakings you are going to find!
To get started, make investments.
I know it sounds dumb, but I don't think that you can truly understand angel investing until you've made a few investments.
It's like gambling--you can't learn how to gamble without playing for money. You may be able to win all the time when playing with your friends for chips, but you'll find yourself behaving completely differently when those chips represent real money.
I've lost money on some of my investments, and each of those losses taught me something that was burned deep into my brain.
Even now, I think it's taken me over 10 investments before I became ce
To get started, make investments.
I know it sounds dumb, but I don't think that you can truly understand angel investing until you've made a few investments.
It's like gambling--you can't learn how to gamble without playing for money. You may be able to win all the time when playing with your friends for chips, but you'll find yourself behaving completely differently when those chips represent real money.
I've lost money on some of my investments, and each of those losses taught me something that was burned deep into my brain.
Even now, I think it's taken me over 10 investments before I became certain of the elements of my personal investing style.
By all means, learn as much as you can from reading stuff like this, but at the end of the day, you've got to step up to the table and lay down your chips. That's the only way you'll ever learn the game.
(I originally wrote a longer answer, but my iPod ate it!)
As others have said, just start writing checks. I'm not saying do it indiscriminately but simply starting is the best way to learn.
It's true that from a pure ROI standpoint angels that write $25K+ checks (and even larger helps) and have a portfolio of 10+ investments do materially better. Simeon Simeonov has some good data on this.
But being an angel investor can yield benefits beyond just investment return... insight into other startups, gaining experience to do larger scale startup investing, opportunity to interact with great entrepreneurs, etc. For the average angel investor, the pure
As others have said, just start writing checks. I'm not saying do it indiscriminately but simply starting is the best way to learn.
It's true that from a pure ROI standpoint angels that write $25K+ checks (and even larger helps) and have a portfolio of 10+ investments do materially better. Simeon Simeonov has some good data on this.
But being an angel investor can yield benefits beyond just investment return... insight into other startups, gaining experience to do larger scale startup investing, opportunity to interact with great entrepreneurs, etc. For the average angel investor, the pure ROI is rarely attractive relative to other retail investment options. So either make sure you're either able to perform significantly above the mean or are getting some of these other non-financial benefits.
It's worth noting that many angels start by writing pretty small checks. I now make larger investments, but several years ago for my first angel deal I wrote a $15K check (ultimately lost all my money). For my second I did a $5K investment. There are often opportunities to participate in rounds with $5-10K sized checks so depending on your capital base that may be an easy way to start.
Lastly I'd say try to find other experienced angels that you respect and have some rapport with. Try to invest alongside them and ask them for advice. Much easier as an angel to have an informal network of other angel investors with whom you can collaborate.
In the last 30 days, I have earned $850. Was that a side hustle? Kind of, but also more than that. Wait for it, I'll let you know my secrets!
Here’s the thing — I’ve tried maaany ways to make money on the side. I did freelancing, tried teaching English, and made some pottery (I enjoyed it, but let’s face it, I’m not an artist 😂).
Then, completely by chance, I learned about Freecash. And here I am, a bit more than a month later, with $1,000+ cashed out in my PayPal account.
So, what’s Freecash?
No rocket science here. It’s a platform that pays you to test apps and games and complete surveys.
Why wo
In the last 30 days, I have earned $850. Was that a side hustle? Kind of, but also more than that. Wait for it, I'll let you know my secrets!
Here’s the thing — I’ve tried maaany ways to make money on the side. I did freelancing, tried teaching English, and made some pottery (I enjoyed it, but let’s face it, I’m not an artist 😂).
Then, completely by chance, I learned about Freecash. And here I am, a bit more than a month later, with $1,000+ cashed out in my PayPal account.
So, what’s Freecash?
No rocket science here. It’s a platform that pays you to test apps and games and complete surveys.
Why would they pay you, though? Take a guess. 1, 2, 3... Right, you got it: it’s to help developers improve their applications. You help them; they pay you — easy!
How does it work?
- After registering on the platform, you’ll see different offers. It can be anything from completing some type of task in a game, downloading an app, or filling out surveys.
- You are free to pick any offer/task you want. I was only playing games, but if you aren’t into gaming, you can try some other things Freecash offers. There are no obligatory tasks you must complete.
- Of course, you will logically want to go for the tasks that pay the most (some pay $700+). But here is the thing — if you don’t have too much time to spend on the platform, it might not be the best option for you. The general rule is — the higher the reward, the more time you’ll need to spend.
While some tasks offer insane rewards, I’d say it is relatively easy to earn between $30–50 per day. But if you want more, you can do that as well if you’re willing to put in lots of effort.
And while it won’t make you a millionaire, you can build up a steady extra income over time, especially if you make it a daily habit. As a student, I have lots of free time, so it wasn’t hard for me.
Why did I choose Freecash over the other things I’ve been trying?
First of all, it’s a HEAVEN for gamers. Look, I might be biased because I love gaming and play every day. But isn’t it amazing when someone pays you to do something you would have done for free?
And these are the other things I liked:
- It’s simple—really. You don’t need any special skills or experience — just follow the task description and set aside some free time for them. Personally, I got hooked on a game called Dice Dreams. My initial goal was to reach chapter 10 to earn $30, but… I found myself reaching chapter 15. In the end, I made around $300.
- There is a cheat code to boost your results. There are some in-app purchases you can make to progress faster. When I was at level 13, I spent $4.99 to buy 1,500 gems. I’ve then used them to get multiple rolls and speed up upgrades. As a result, I’ve got to level 15 in literally no time. Those 5 bucks paid off really fast.
- Rookies are welcome. I love this part. You don't need a degree or training. You're just helping developers, that's it (yeah, well, I wasn’t even thinking about it because I was way too engaged, playing like crazy, haha). But just follow the task, and believe me, it's super easy.
- Your grandpa's basement or subway in Tokyo is fine. I was earning money after putting my little nephew to sleep, while waiting for my coffee, and in between classes. You can earn from anywhere, which is pretty cool, right?
- Easy cashouts. I had my money in my PayPal account within just a few days. There are other methods, like crypto or gift cards, and I don't think they take longer.
Of course, we are talking about making money on the side, so maybe you don't have to go this far. Just keep in mind that it is actually possible. BUT it requires time.
Want to maximize your earnings even more?
Now, if you are all set, these are the cool ways I found to make more money with Freecash:
- Promo codes on socials: Just follow Freecash on social media, and you will get weekly promo codes for free coins. Later, you can exchange them for money.
- Daily bonuses from the platform: I told you before about the consistency, but there's more. If you want rewards and bonuses, just make sure to appear daily.
- Pick the best offers: Check New and Featured Offers to find the ones that pay the most.
- Buy items to complete tasks 3x faster: As I’ve mentioned before, sometimes, spending a bit to reach your goals faster is SO worth it, simply because you can save hours of time and get much more money back.
So, if you’re looking for some truly legit ways to earn some money on the side, this is your way to go. Sign up on Freecash and enjoy the perks!
During past five years I made a huge trip from a startup team member to the global angel VC fund investment associate. Passing this road was inspiring journey that brings me new contact, experience and failures.
Here is exactly what you need to do:
1) Invest in new markets, not in just bright ideas
2) Small amount investment size
3) Smart money preferred
4) Educate team every week
5) Help with a business development
6) Work only with teams that you want to hire
(Build a journey, not just a destination):
During past five years I made a huge trip from a startup team member to the global angel VC fund investment associate. Passing this road was inspiring journey that brings me new contact, experience and failures.
Here is exactly what you need to do:
1) Invest in new markets, not in just bright ideas
2) Small amount investment size
3) Smart money preferred
4) Educate team every week
5) Help with a business development
6) Work only with teams that you want to hire
(Build a journey, not just a destination):
Join an angel investment group. You can Google for local groups, look into alumni groups, and Gust lists several hundred of them and it’s free.
Joining a group will keep you risk to a reasonable minimum (the group I joined in 2009 had a buy-in minimum of US$5K) and give you a chance to learn by doing, with help from other more experienced group members. Decisions and due diligence are shared through the group.
I’m really glad I found a group to join when I started angel investing.
Compared to the money you’ll be putting at risk, books are really really cheap. If you want to get informed, go get A
Join an angel investment group. You can Google for local groups, look into alumni groups, and Gust lists several hundred of them and it’s free.
Joining a group will keep you risk to a reasonable minimum (the group I joined in 2009 had a buy-in minimum of US$5K) and give you a chance to learn by doing, with help from other more experienced group members. Decisions and due diligence are shared through the group.
I’m really glad I found a group to join when I started angel investing.
Compared to the money you’ll be putting at risk, books are really really cheap. If you want to get informed, go get Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups eBook by David S. Rose, the dean of angel investors in New York and an active Quora writer.
a2a
1. Overlook how much you can save when shopping online
Many people overpay when shopping online simply because price-checking across sites is time-consuming. Here is a free browser extension that can help you save money by automatically finding the better deals.
- Auto-apply coupon codes – This friendly browser add-on instantly applies any available valid coupon codes at checkout, helping you find better discounts without searching for codes.
- Compare prices across stores – If a better deal is found, it alerts you before you spend more than necessary.
Capital One Shopping users saved over $800 millio
1. Overlook how much you can save when shopping online
Many people overpay when shopping online simply because price-checking across sites is time-consuming. Here is a free browser extension that can help you save money by automatically finding the better deals.
- Auto-apply coupon codes – This friendly browser add-on instantly applies any available valid coupon codes at checkout, helping you find better discounts without searching for codes.
- Compare prices across stores – If a better deal is found, it alerts you before you spend more than necessary.
Capital One Shopping users saved over $800 million in the past year, check out here if you are interested.
Disclosure: Capital One Shopping compensates us when you get the browser extension through our links.
2. Overpaying on Auto Insurance
Most people are overpaying for car insurance—by an average of $400/year .
I thought I had a good rate until I checked and found a much cheaper option in less than a minute.
Just answer a few quick questions, and you’ll instantly see quotes from top providers. Might be worth checking.
3. Not Investing in Real Estate (Starting at Just $20)
With innovative platforms like Ark7, you can invest in rental properties for as little as $20 per share.
- Hassle-free management – Ark7 handles everything from property management to rent collection for you.
- Award-winning app – Enjoy a smooth user experience, easier and more efficient investment
- Monthly profits deposited – Your share of the rental income is automatically deposited into your account each month.
4. Wasting Time on Unproductive Habits
I usually use this site. You basically just get paid to give your opinions on different products/services, etc. Perfect for multitasking while watching TV!
- Earn $100+ monthly – Complete just three surveys a day to reach $100 per month, or four or more to boost your earnings to $130.
- Millions Paid Out – Survey Junkie members earn over $55,000 daily, with total payouts exceeding $76 million.
- Join 20M+ Members – Be part of a thriving community of over 20 million people earning extra cash through surveys.
5. Overspending on Mortgages
Overpaying on your mortgage can cost you, but securing the best rate is easy with this Mortgage Comparison Tool.
- Compare Competitive Rates – Access top mortgage offers from trusted lenders.
- Personalized results – Get tailored recommendations based on your financial profile.
- Expert resources – Use calculators to estimate monthly payments and long-term savings.
6. Missing Out on Smart Investing
With countless options available, navigating investments can feel overwhelming. This tool curates top-rated opportunities to help you grow your wealth with confidence.
- Compare investments – Explore stocks, ETFs, bonds, and more to build a diversified portfolio.
- Tailored insights – Get tailored advice to match your financial goals and risk tolerance.
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7. Ignoring Home Equity
Bankrate’s Best Home Equity Options helps you find the right loan for renovations, debt consolidation, or unexpected expenses.
- Discover top home equity loans and HELOCs – Access competitive rates and terms tailored to your needs.
- Expert tools – Use calculators to estimate equity and project monthly payments.
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Luckily, there’s a book about that! (And I should know, because I wrote it :-)
Luckily, there’s a book about that! (And I should know, because I wrote it :-)
In addition to Erik Fair's and Stevie Morrow's suggestions, which are great, I'd add a few points to address your question.
Investment Requirement
If you go solo, there’s no minimum investment requirement (unless requested by the company). You can invest as much as you want or as little as you want. As a point of reference:
- In 2008, Angel Capital Association found that an independent angel invested between US$10,000 and US$200,000 in a single company.
- In his book, Fool’s Gold?: The Truth Behind Angel Investing in America, Scott Shane finds that the typical (median) angel investment is US$10,000, w
In addition to Erik Fair's and Stevie Morrow's suggestions, which are great, I'd add a few points to address your question.
Investment Requirement
If you go solo, there’s no minimum investment requirement (unless requested by the company). You can invest as much as you want or as little as you want. As a point of reference:
- In 2008, Angel Capital Association found that an independent angel invested between US$10,000 and US$200,000 in a single company.
- In his book, Fool’s Gold?: The Truth Behind Angel Investing in America, Scott Shane finds that the typical (median) angel investment is US$10,000, whereas the average investment is US$77,000.
- It appears that noted angel investors are investing at a minimum of US$25,000 (plus follow-on reserves) per company.
If you join an angel network, it might require you to invest a minimum amount per year to stay active. But not all angel networks have such requirement.
Accreditation
Accreditation isn’t required. In fact, according to Scott Shane’s findings, 79% angel investments are made by individuals that don’t meet U.S. Securities and Exchange Commission (SEC) requirements for accredited investors.
However, the burden is on the startup. The securities laws are there to protect investors, especially non-accredited investors. Therefore, if the company wants to raise money from non-accredited investors, it must make very detailed disclosures even if only 1 non-accredited investor is involved.
It doesn’t matter whether the non-accredited investor is a stranger or a friend or family member. Under the securities laws they’re all the same. If they’re unaccredited then the company must comply with the law in order to raise money from them.
Specifically, the company must prepare a Private Placement Memorandum (PPM), a disclosure document that details the risks, terms, and other aspects of the investment opportunity.
This adds substantial compliance responsibilities and drives up the time and legal costs required to do the transaction – a big slap to companies that raise small rounds.
You might suspect that many startups aren’t complying with the securities laws when raising friends and family round. It’s true, but any qualified startup lawyer would have pointed this out to their clients.
Companies that aren’t in compliance might face severe monetary penalties or be held criminally liable. If the company flopped and the friendship turned sour, the founder’s ex-buddy might sue and the company might have to return the money, plus interests, and might be accused of fraud.
Raising money from accredited investors is much simpler. Therefore, lawyers always recommended their startup clients to take money from friends and family members who are accredited. But as long as the company abides by the rules, it can raise money from non-accredited investors.
1. Decide If Angel Investing Is Right For You
Angels invest at the early stages of a startup – providing the first “outside” capital to the company. Prior to the angel funding phase, initial or “inside” capital is typically from the founder(s) and/or raised from “friends and family”. Startups in this early “pre-seed” or “seed” stage have the biggest upside and highest risk.
Angel investing for those without a relationship with the founder is regulated by the SEC and individual states – and must come from individual accredited investors – or funds that comply with state and federal regulations.
2.
1. Decide If Angel Investing Is Right For You
Angels invest at the early stages of a startup – providing the first “outside” capital to the company. Prior to the angel funding phase, initial or “inside” capital is typically from the founder(s) and/or raised from “friends and family”. Startups in this early “pre-seed” or “seed” stage have the biggest upside and highest risk.
Angel investing for those without a relationship with the founder is regulated by the SEC and individual states – and must come from individual accredited investors – or funds that comply with state and federal regulations.
2. Legal Rules, Regulations & Stuff…
Angel investing is regulated by federal and state agencies to protect the unsophisticated. To invest in companies where you have no personal relationship with the founder(s), the investor must meet the “accredited investor” standard:
Have a net worth of $1 million or more – outside of their primary residence
Have an income of $200,000+ (or $300,000+ as a couple) for the last two consecutive years
Are a general partner, director or executive for the issuer of the securities funding the startup
There is no board or agency that certifies this standard. Investors and those raising capital are responsible to maintain the standards themselves.
There are Security Exchange Commission (SEC) programs that permit non-accredited investors to buy stock in private start-up companies. It’s called “equity crowdfunding” and was part of the 2012 “Jobs Act”. This program was put in place to broaden the opportunity to invest — and to allow startups to solicit investments from a larger population.
However, the SEC regulations for crowdfunding are cumbersome and compliance is expensive for startups, though some web offerings (like wefunder and startengine) have simplified it in recent years. Proceed with caution in equity crowdfunding opportunities in angel investing and note the differences between buying a product through crowdfunding versus buying equity (stock or a percentage ownership) through crowdfunding.
A great way to get your feet wet as an angel is to start off by investing alongside other angels who have experience investing in the space in which you're interested. Since much angel investing is still local, I'd suggest you begin by finding a local group of angels who welcome new investors (most do). There are over 300 such groups in the US, with at least one in every state (and some states have dozens).
An easy way to find one is through the search engine at Gust, (the software platform for the Angel Capital Association, as well as all of the world's other national angel investor federation
A great way to get your feet wet as an angel is to start off by investing alongside other angels who have experience investing in the space in which you're interested. Since much angel investing is still local, I'd suggest you begin by finding a local group of angels who welcome new investors (most do). There are over 300 such groups in the US, with at least one in every state (and some states have dozens).
An easy way to find one is through the search engine at Gust, (the software platform for the Angel Capital Association, as well as all of the world's other national angel investor federations: https://gust.com/find-investors) which should bring up the groups closest to you. Click on an entry to display information about the group, and then if it sounds like the kind of organization you want to join, click on the "Ask to join as investor" button.
For a good basic introduction to angel investing, you might want to check out the New York Times bestseller, angelinvesting.com. I hear it's pretty useful [he says modestly...]
Luckily, there happens to be a book on exactly that topic that will tell you everything you need to get started and do it correctly. I should know, because I wrote it :-).
angelinvesting.com
Luckily, there happens to be a book on exactly that topic that will tell you everything you need to get started and do it correctly. I should know, because I wrote it :-).
angelinvesting.com
Luckily for you, I’ve written a book directly on that subject, based on thousands of my Quora answers!
https://www.amazon.com/gp/product/1118858255PRAISE FOR ANGEL INVESTING
“The world of entrepreneurial startups is where the most exciting and creative action is happening in today’s business world, which is why I was a strong supporter of the JOBS Act of 2012. No wonder millions of people are wondering how they can get involved as investors. There’s no better place to start than by reading David S. Rose’s Angel Investing.”
—U.S. SENATOR CHARLES E. SCHUMER, Senate Finance Committee
“From the best methods f
Luckily for you, I’ve written a book directly on that subject, based on thousands of my Quora answers!
https://www.amazon.com/gp/product/1118858255PRAISE FOR ANGEL INVESTING
“The world of entrepreneurial startups is where the most exciting and creative action is happening in today’s business world, which is why I was a strong supporter of the JOBS Act of 2012. No wonder millions of people are wondering how they can get involved as investors. There’s no better place to start than by reading David S. Rose’s Angel Investing.”
—U.S. SENATOR CHARLES E. SCHUMER, Senate Finance Committee
“From the best methods for finding and picking tomorrow’s big winners to proven techniques for adding value to any business you invest in, Angel Investing provides readers with everything they need to know to get started in this fascinating, fun—and lucrative—business arena.”
—DAVID BACH, #1 New York Times bestselling author of The Automatic Millionaire and Start Late Finish Rich, Angel Investor
“As an angel investor and a long-time fan of David S. Rose, I was delighted to hear he finally captured his wit and wisdom in the pages of a book. David’s witty stories and angel investing principles — as well as his unsurpassed knowledge of his field — are teaching me so much more about investing than I’ve learned over the years doing it!”
—BARBARA CORCORAN, Real Estate Mogul, Shark Tank star, Angel Investor
“This is the most comprehensive and readable guide to angel investing ever written. The chapter on valuation and expectations lays out a clear framework for understanding one of the least well-known pitfalls in the angel world. And its emphasis on creating a win-win relationship with the entrepreneur is at the heart of being a long-term successful angel—and continuing to see the best deal flow. I recommend this book to anyone even thinking about making or receiving angel investments.”
—HOWARD L. MORGAN, Founding Partner, First Round Capital
“Angel Investing is an engaging, easy read, full of real stories and hard numbers, actual cases and a whole lot of good advice. David S. Rose brings tons of real-world knowledge to the subject that makes this required reading for every new angel.”
—TIM BERRY, Author of Business Plan Pro, Entrepreneur, Angel Investor
“Anyone with a checkbook can be an angel investor, but it takes insight to do it well. David S. Rose has written a terrific new book that will help would-be angels make money, rather than lose it. From explaining the value of diversification, to tips on evaluating deals, to offering up plans to attract good deals, Angel Investing will help you move from a money-losing amateur to a money-making professional angel. And if you’re an entrepreneur looking for angel money, you should read this book too. It will help you understand what knowledgeable angels are seeking and how they will evaluate you.”
—SCOTT SHANE, author of Fool’s Gold? The Truth Behind Angel Investing in America
The first requirement is that you have enough money that you won’t mind losing some.
I’d suggest learning more about angel investing and a good start would be to read a book by David S. Rose, a prolific Quora contributor.
My advice would be to start investing in a group format so you have support from more experienced angel investors. In order to invest in these groups you will need to be an Accredited Investor with a minimum net worth of $1 million or minimum income over the last couple years of $200,000
. You can invest as a non-Accredited Investor through the new crowd funding platforms but IFootnotes
The first requirement is that you have enough money that you won’t mind losing some.
I’d suggest learning more about angel investing and a good start would be to read a book by David S. Rose, a prolific Quora contributor.
My advice would be to start investing in a group format so you have support from more experienced angel investors. In order to invest in these groups you will need to be an Accredited Investor with a minimum net worth of $1 million or minimum income over the last couple years of $200,000
. You can invest as a non-Accredited Investor through the new crowd funding platforms but I wouldn’t recommend that you start there.Check out one of the many organized Angel Groups that pool their capital to invest together
. They can teach you about deal criteria, due diligence, structuring and governance. Get your education investing with others and then if you are comfortable investing on your own you will have a good foundation.But, first and foremost, only invest money that you won’t miss if it goes to zero. I’m not saying that you can’t make money as an angel investor but assuming you will make a lot of money as an angel investor is not a good idea.
Footnotes
It's pretty easy to become one, as
Erik Fair [ https://www.quora.com/profile/Erik-Fair ]
suggests: just give someone some money! However, it's harder to find the right someone, with the right idea and actual ability to execute the idea.
Business angel networks are a good way to meet potential businesses and importantly other investors who are usually happy to share their experience and know-how.
If
It's pretty easy to become one, as
Erik Fair [ https://www.quora.com/profile/Erik-Fair ]
suggests: just give someone some money! However, it's harder to find the right someone, with the right idea and actual ability to execute the idea.
Business angel networks are a good way to meet potential businesses and importantly other investors who are usually happy to share their experience and know-how.
If you're based in
The United Kingdom [ https://www.quora.com/topic/The-United-Kingdom-1 ]
/
Europe [ https://www.quora.com/topic/Europe ]
check out these links:
* http://hban.org/
* http://www.eban.org/
* http://www.bbaa.org.uk/
Some of these networks offer funds and/or syndicates which can provide a lower risk way of investing.
The minimum investment is entirely dependant on the type of business and market you want to invest in, but there really is no minimum and certainly no maximum. Note: some angel networks may require you to self-certify that you are a High
Net Worth [ https://www.quora.com/topic/Net-Worth ]
Individual (for the purposes of the Financial Services and Markets Act 2000 in the UK).
Some other things to consider:
* Do your own Due Diligence [ https://www.quora.com/topic/Due-Diligence ] (other people's sure bets and founders claims are all well and good, but do your own research).
* Be wary of reluctance to share informati...
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Others have eloquently discussed on deal flow, etc. I'd like to focus on the (simple) math.
First, only invest using money that you can afford to lose. Make sure you have enough money that you can divide up evenly into 20 different startups/deals.
Have a coherent and simple (but not simplistic) philosophy and strategy that does not violate the math.
No matter how good you think your strategy or deal flow is, you should EXPECT to lose 90% of your deals. Thus, NEVER, NEVER, NEVER add money to losing investments. In reality you might have 30% break even or little but meaningless return. In any
Others have eloquently discussed on deal flow, etc. I'd like to focus on the (simple) math.
First, only invest using money that you can afford to lose. Make sure you have enough money that you can divide up evenly into 20 different startups/deals.
Have a coherent and simple (but not simplistic) philosophy and strategy that does not violate the math.
No matter how good you think your strategy or deal flow is, you should EXPECT to lose 90% of your deals. Thus, NEVER, NEVER, NEVER add money to losing investments. In reality you might have 30% break even or little but meaningless return. In any case, be prepared for 90% of total loss for each investment
If you have a choice, you should NOT get out before your winning deal gives you at least 15x - 20x return, otherwise the math will never work and your probability of ruin is very high.
That's it. That's the basic. Regardless of your experience, if you are open minded, judicious, and stick to the math, then you will be OK.
Best of luck.
You didn't provide much detail, but there are two main categories you can fall in: a) being an active or b) passive investor.
If you want to be active, find a project you'll be passionated enough, there will be great vibration between you and the founding team and you can offer them more than your money. If there is passion missing or you don't click with the team, don't invest. Your investment will hurt both sides.
If you just want to invest your money into startups, join a syndicate and follow people who will do the homework for you. You can find some for example here Syndicates - AngelList.
Investing in any business involves risks, but most investors know that an experienced team, a promising product, and initial traction diminish the risks.
If you’re new to investing and you happen to be in London, Angels Den Funding has developed a series of masterclasses. The topics covered include due diligence, tax relief, analyzing valuations and understanding the legal framework. If you’re not from London, I’m sure you can attend various events or classes that may help you.
There are a few aspects that angel investors consider when deciding to help startups raise funds:
1. The team
If investor
Investing in any business involves risks, but most investors know that an experienced team, a promising product, and initial traction diminish the risks.
If you’re new to investing and you happen to be in London, Angels Den Funding has developed a series of masterclasses. The topics covered include due diligence, tax relief, analyzing valuations and understanding the legal framework. If you’re not from London, I’m sure you can attend various events or classes that may help you.
There are a few aspects that angel investors consider when deciding to help startups raise funds:
1. The team
If investors feel that the team members work well together and can execute their ideas, then they will be more likely to invest.
2. High growth potential
To maximize the chances of receiving a return on their investment, most investors look for businesses in growth markets that have the potential to expand rapidly. It's important that the business model is smart and scalable.
3. Established business
Investors like to see that the business has moved beyond the idea stage and has some early customers or a viable product so that there is some evidence that it will work.
Although it happens to fall under the heading of “enlightened self-interest”, I would suggest that you start by reading my New York Times best-selling book, Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups. It grew out of my original Quora answers on the subject, was published by Wiley about four years ago, and has become the standard book on the subject. Most angel groups give a copy to each of their new members on joining, and it is just as useful to an individual angel not in a group. My goal was to make it accessible, so it's available in hardcover, digi
Although it happens to fall under the heading of “enlightened self-interest”, I would suggest that you start by reading my New York Times best-selling book, Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups. It grew out of my original Quora answers on the subject, was published by Wiley about four years ago, and has become the standard book on the subject. Most angel groups give a copy to each of their new members on joining, and it is just as useful to an individual angel not in a group. My goal was to make it accessible, so it's available in hardcover, digital or audiobook formats.
How to become an angel investor
Make sure you’re qualified
Usually, meeting the standards of being an accredited investor is a prerequisite for becoming an angel investor. This means that your earned income must be $200,000 or more for the past two years ($300,000 with a spouse) or your net worth, alone or with a spouse, must surpass $1 million in investable assets.
Why the restriction? Angel investments are considered high-risk, and accredited investors are likely better equipped financially to handle a loss should one arise. Many startups may secure funding only from accredited investors, but o
How to become an angel investor
Make sure you’re qualified
Usually, meeting the standards of being an accredited investor is a prerequisite for becoming an angel investor. This means that your earned income must be $200,000 or more for the past two years ($300,000 with a spouse) or your net worth, alone or with a spouse, must surpass $1 million in investable assets.
Why the restriction? Angel investments are considered high-risk, and accredited investors are likely better equipped financially to handle a loss should one arise. Many startups may secure funding only from accredited investors, but others may accept nonaccredited investors.
Know how to source deals
Many angel investors have an established network of startup founders and entrepreneurs within their industry of expertise. Since they interact with these connections frequently, they often hear about new startups and can source deals to consider.
When a seasoned angel investor decides to fund a venture, they can also put together and lead an angel syndicate, where a group of angel investors collectively fund a particular deal.
If you don’t have access to this type of network, you can reach out to a startup founder directly if you come across a company with an interesting new business concept that you’d like to explore and potentially invest in.
Another way to find deals is to participate in an angel group, which allows you to tap into a community of angel investors who assess and invest in startup ventures together. The Angel Capital Association’s member directory can help you locate a group to join, and its website shares information on how to start your own angel investing group as well. There are other organizations such as Funding Post, AngelList, Microventures and Angelsoft that showcase various angel investment opportunities.
Once you find a deal, you’ll need to do due diligence before negotiating the amount of your capital investment and corresponding share of company ownership.
Happy investing
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I'm considering turning into an Angel Investor specialist in several new companies. I comprehend the danger of going to zero is a considerable measure higher than really turning a benefit, yet this is cash that I'm OK 'losing'.
Beside giving over a check, what are a portion of the things I ought to be consulting in advance? Shouldn't something be said about contracts, and so on? Are legal counselors normally included at this stage? At the point when do Angel get paid out? What are Typical returns for an Angel Investment?
As should be obvious, I'm new to this and would welcome any guidance.
- Choose who to fund. Angel investors find investable startups through angel groups or networks. ...
- Support and mentor. Besides raising capital, angel investors help make business decisions for startups and provide them with networking connections. ...
- Collect their returns.
- kindly DM for more information
Ask friends that are starting interesting companies to let you invest a little bit.
Angel Investing isn't for you unless you're willing to take
serious
risks.
The only difference is the degree to which your risk is "calculated." Here's a nice infographic our angel investing group did on
Accredited Investor | Definition of an Accredited Investor (by SEC Rules) [ http://www.angelkings.com/accredited-investor/ ]
and
How to Invest in Startups - Investing in Top Startups [ http://ange
Angel Investing isn't for you unless you're willing to take
serious
risks.
The only difference is the degree to which your risk is "calculated." Here's a nice infographic our angel investing group did on
Accredited Investor | Definition of an Accredited Investor (by SEC Rules) [ http://www.angelkings.com/accredited-investor/ ]
and
How to Invest in Startups - Investing in Top Startups [ http://angelkings.com/invest-in-startups ]
However the risk/reward ratio can be greatly in your favor if you deploy capital in the best teams, product, execution and timing as outlined in my book on venture capital:
The Insider's Guide to Angel and VC Investing [ http://goo.gl/Ch5c6Q ]
#1 Rules to Angel Investing...
Do:
Deploy capital into smart business plans with executed, proven revenue, and a potential 5 to 10 yea...
You can email me, harj at ycombinator dot com to talk about becoming involved with Y Combinator startups. it's hard to think of anywhere else you can find the same concentration and flow of high quality startups in one place.
Join one that's past the main risk stage, yourself, and take a $30K pay cut. In exchange, "up" your equity stake. This would be a much safer bet than investing it, because this suggestion gets you to participate in a lower-risk stage of development. If you invest, you need either diversity or less risk exposure. At a non-repeatable $30K you have very little of either.
Just read this and save yourself time: Why I Stopped Angel Investing (And You Should Never Start)
Otherwise:
- Assume you will lose your money
- You don’t know what you’re doing so find others that do
- Make friends with the BEST angels who will talk to you. Invest in their deals
- They will allow you to invest if 1/ you make decisions fast, 2/ don’t ask questions
- If you want to get your own deals you will have to be crazy connected and work your butt off- to the extent most people just won’t fathom as being reasonable
- Unless you get access to the best deals you’re spinning tyres. The best companies are most
Just read this and save yourself time: Why I Stopped Angel Investing (And You Should Never Start)
Otherwise:
- Assume you will lose your money
- You don’t know what you’re doing so find others that do
- Make friends with the BEST angels who will talk to you. Invest in their deals
- They will allow you to invest if 1/ you make decisions fast, 2/ don’t ask questions
- If you want to get your own deals you will have to be crazy connected and work your butt off- to the extent most people just won’t fathom as being reasonable
- Unless you get access to the best deals you’re spinning tyres. The best companies are most likely found in SF (sorry they just are empirically). If you’re in Estonia, you’re wasting your time
There is a great report by Nesta called Siding with the Angels (Page on nesta.org.uk) which discusses angel returns and gives some insights into factors that have shown to lead to higher returns.
Angels that invest in groups, angels that invest in industries where they have a good amount of experience, and angels that spread their risk have tended to have slightly higher returns.
Joining an angel group might be a good idea or you can look online. angellist has been mentioned and if you live in the uk come check us out at http://www.syndicateroom.com and share your thoughts.
Harjeet answered the initial part of the question - Y Combinator is indeed one source of people who have formed into a team with an idea for something they want to build. AngelList is another.
There also needs to be some reason why a team would take _your_ money, rather than other offers - you need to demonstrate a track record in picking teams in some context: people with whom you have chosen to work in previous startups; companies which you bought or sold while working for a corporate investor or a bank; a history of introductions which turned into positive actions .. and if you can blog abo
Harjeet answered the initial part of the question - Y Combinator is indeed one source of people who have formed into a team with an idea for something they want to build. AngelList is another.
There also needs to be some reason why a team would take _your_ money, rather than other offers - you need to demonstrate a track record in picking teams in some context: people with whom you have chosen to work in previous startups; companies which you bought or sold while working for a corporate investor or a bank; a history of introductions which turned into positive actions .. and if you can blog about your activity, like msuster, bfeld, and fredwilson, so much the better.
There's a long 'how I did it' post from Tim Ferriss, with solid content, here http://www.fourhourworkweek.com/blog/2010/07/05/how-to-create-your-own-real-world-mba-part-ii/
Start by figuring out why you want to invest and how active you want to be with the startups. If you are planning to do it to get rich and not spend significant time with the companies, then you probably shouldn't.
I originally invested in companies to learn new things - both angel investing itself and other fields that I was interested in. After 2-3 startups ($20k) and spending a couple of hour with them a week I learnt a lot. Cheaper and more fun than an MBA I would guess. Then I realised that my goal was to help people I like in my community (=geo) to build good companies to ensure that the
Start by figuring out why you want to invest and how active you want to be with the startups. If you are planning to do it to get rich and not spend significant time with the companies, then you probably shouldn't.
I originally invested in companies to learn new things - both angel investing itself and other fields that I was interested in. After 2-3 startups ($20k) and spending a couple of hour with them a week I learnt a lot. Cheaper and more fun than an MBA I would guess. Then I realised that my goal was to help people I like in my community (=geo) to build good companies to ensure that there would be more interesting people, and honestly a reason for my kids in 15 years to stay. My second goal is to learn things and get to know interesting people.
My personal rules are:
1. Like the person
The founder(s) need to be people I empathise with and want to meet again. If you feel intimidated, ignored, bored, sad that probably is good sign you shouldn't. If you feel energized, inspired, or sometimes just have a really good time, then that is a good indication. You have been on dates, so you probably get it.
2. Like the idea
The world needs the idea, you at least feel so. I'm not talking about how much money the idea can make, but if it will be useful / make people happy / make a positive impact. You will hear about Social Networks for the 1%, Service for getting booze delivered to a party ("Uber for Alcohol") , and other things that would work great for a very small community of people who don't need more. Well, that is up to you to decide.
3. They have a sensible plan
Some founders have a great idea, but they are too crazy / visionary, too non-operational, or just lack the competences needed.
You will meet hundreds of "Uber for A", "Social network for B", and "Next Generation C Done Right", "D meets Artifical Intelligence", etc . And yes, someone (maybe) should do that, but sometimes it is a bad founder-product fit: if it is a tech heavy idea and the founders are two biz graduate without any tech knowledge or contacts, or even tech guys but who hasn't spend any time prototyping or validating that it can be done.
I like a good founder-product fit:
- the founders have some background with the problem, and will spend significant time on figuring it out what the problem actually is (and don't think they already know it).
- the founders (and first employees) have the right competence (and/or network) needed to solve it, at least the first year's iteration. They won't hire the ex-COO of X or CTO of Y before they raise their A-round (or later) if that person is not onboard already.
Also, the founders get how much work it is, the (fairly low) probability of success, and that they shouldn't do it for fortune or fame. This usually gets "evaluated" under #1 as that would rule them out if they were lazy, arrogant, or lifestylers.
4. I can learn things
I personally want to develop too, and often I look for how I can do that here. Sometimes it is just helping out and therefore having to learn, and sometimes it is getting insights into things I'm curious about (but frankly don't have to lie awake at night being worried about). From time to time I feel that this investment will expand my network and I'll get to know other angels or other people I'd like to meet.
Often this means that I will have to understand how I can contribute with more than money, and that I will have the time and will to do that. Otherwise, I won't learn or get to learn anything or anyone, but just transfer the funds and then wait for the rare update emails.
Process
If the amount are low (in my case <$50k) my due diligence is meeting them a couple of times, meeting the team, interviewing a customer/user/future user, hopefully playing with the prototype/looking at design sketches and asking a couple of people what they think about the founders, the idea, and the solution. If the amounts are higher, I syndicate with people I want to get to know more, both to split the cost, and if nothing else then at least then we get to know each other.
Outcomes
So far I have invested in 27 companies, and contributed to 3 funds/angels funds/pools, since 2009. Of these four are gone (and another four have to "fix it" within 6 months or has turned into zombies), five are developing well, and the others are working hard but still haven't gotten the stars aligned. None has done an exit, but I have been offered to sell my shares a couple of times with a reasonable multiple but never done. So 25% at least will just die, 15% or so will make it, and the rest will "stay alive".
Startups are like bands, most don't make it, but still keep playing, few make money or change the world, but all believe their music doesn't sound like anything else or that they can play better than the incumbents. But remember, Justin Beiber didn't make it just because he can sing and Lady Gaga because she has an interesting wardrobe.
For dealflow, check out Y Combinator and the other incubators that are popping up all over the world. Also check out AngelList (company).
For how-to, see Paul Graham's How to be an angel investor (http://www.paulgraham.com/angelinvesting.html), our follow-up How to be an angel investor, Part 2 (http://venturehacks.com/articles/angel), and the AngelConf videos (http://www.justin.tv/angelconf).
To meet other angels, check out AngelConf (roughly once a year), and introduce yourself to the angels on the AngelList Twitter List http://twitter.com/angellist/angels
To get started angel investing, find or create a community (not just to get deal flow, but to learn from other angels!)
i joined Angel Squad x Hustle Fund in July 2021 and got access to ~15 deals + learning, networking and mentoring opportunities in the 2nd half of the year. (I also landed a job with HF through the program!)
👉🏽
I agree with many of the answers here, but would add that its best to not do this until you have enough capital to do at least 10 deals. Many studies have shown that below this level your chances of making money are low. So, even if you just do $ 25K deals (many people invest at this level), have $ 250K of investable capital before getting started.
People looking for investment are too many. So you have to do nothing extragevant. You have to just mention at right places you are an angel and proposals will start following In. First got to check on executive sumaary and if that interests you , you can look further on details of businss plan.
Getting people to get attracted you is really easy , but getting good busienss ideas is a challenge. That totally depends on your understanding of business and what you think could work viz what won't. Most angels are followers rather then understanding and investing in innovative ideas to play it safe.
People looking for investment are too many. So you have to do nothing extragevant. You have to just mention at right places you are an angel and proposals will start following In. First got to check on executive sumaary and if that interests you , you can look further on details of businss plan.
Getting people to get attracted you is really easy , but getting good busienss ideas is a challenge. That totally depends on your understanding of business and what you think could work viz what won't. Most angels are followers rather then understanding and investing in innovative ideas to play it safe.
Anyway , I could be first person to proposing you for angel funding. I am looking to build social mobile app , let me know when you ready to invest :p
As an investor or Seeking investment?
By Googling “Angel Investing” one will find potential groups that you may approach to find out the criteria they re...
As an investor or Seeking investment?
By Googling “Angel Investing” one will find potential groups that you may approach to find out the criteria they re...
Yes, you need to be an accredited investor. You can invest in denominations as low as $25k.
Beyond that, though, you need to offer value beyond just the 'dumb money'. Good entrepreneurs want 'smart money'.
And you need deal flow ...
Get a mentor (or several) that is already in the field.
Most of the time directly reaching out to leaders in this field to be your mentor will not work. Taking on someone to train will take a lot of time and energy and most are far to busy with their current work to do that.
A good way to get connected with the best in this field is to join investment groups or mastermind groups (be wary of those, not all are created equal). Being around them and seeing how they operate will teach you so much. Also it will open up the possibility of investing along side them.
At the base of the conversation, the Angel Investors want to invest in an investable company. So part of the path to Angel Investment is to have built the right foundation of the company.
There are two key questions that need to be addressed:
- What is the evidence that the Startup Team is able to execute on a business?
- What is the evidence that the Market cares that the Startup executes well?
Let’s break that down a bit:
- It assumes the existence of a team.
- It assumes the team has roles and that the roles are working well together.
- It assumes that you are measuring progress.
- It assumes you are engaging
At the base of the conversation, the Angel Investors want to invest in an investable company. So part of the path to Angel Investment is to have built the right foundation of the company.
There are two key questions that need to be addressed:
- What is the evidence that the Startup Team is able to execute on a business?
- What is the evidence that the Market cares that the Startup executes well?
Let’s break that down a bit:
- It assumes the existence of a team.
- It assumes the team has roles and that the roles are working well together.
- It assumes that you are measuring progress.
- It assumes you are engaging with customers.
In an age where you are one phone call away from 5.2B people. and you can reach 10,000 people overnight with the right social media, doing meaningful customer engagement early seems important to do.
So good evidence of the team executing is Traction in the form of revenue.
And good evidence that the market cares is that you have an exponential growth in your revenue.
So one of the Key Metrics you should be tracking is the week over week revenue growth.
If you steer to this, and you can show exponential growth in customer engagement, you will be getting serious attention from investors.
A 10X company would have a Week over Week growth of 5% or so.
If you have linear growth…. You probably don’t have an investable company.
The next key issue is to have specific milestones that you are trying to achieve, which change the value of the company. Take enough money to hit specific milestones. If you have a track record of setting and then achieving milestones, then people respond positively.
Finding Angels is relatively easy. There are over 100,000 of them in the US. However, 90+% of the Angel Investments are done within an hour of home.
So the last step is to get clear on the size of the business you are creating and understand who invests in that size business. Will you take just an Angel Round and be done? Or will you take 5 rounds of funding and break $100M in valuation?
Different investors look at different types of companies.
Read the book “Angel Investing” by David S. Rose and understand what box the Angel Investors are playing in. And notice that Angel Investors play in a different box than most Venture Capitalists.
Steps:
Find a good project to invest in
Find a good percentage for your participation
Fund the deal
Farm the deal
Repeat
This is how the successful funders start projects.
It starts with who you have access to.
Or, who you can gain access to.
Angel investment requires building your network and growing your contact list of investors who focus on your space.
Here is an answer I wrote for another question on how I raised money:
- Personal connections
- This is the chance to scour your own personal network to see who has involvement with startup funding. The first thing I did when we began to prove out our startup was reach out to personal and family friends who had a background in startups. The primary thing I was looking to get out of this was connections to angel investor
It starts with who you have access to.
Or, who you can gain access to.
Angel investment requires building your network and growing your contact list of investors who focus on your space.
Here is an answer I wrote for another question on how I raised money:
- Personal connections
- This is the chance to scour your own personal network to see who has involvement with startup funding. The first thing I did when we began to prove out our startup was reach out to personal and family friends who had a background in startups. The primary thing I was looking to get out of this was connections to angel investors. Yet, at the same time, this will help you secure early stage advisors to guide you through the fundraising process.
- Local networks
- In Atlanta, for example, there is a group called the Atlanta Tech Angels that is composed of different technology leaders around the city. Reaching out to a local network of investors is the quickest way to secure meetings and present your company to different investors.
- Industry Veterans
- I can’t stress enough how important it is to get involved with industry leaders that have insight into what your startup is doing. For our startup, I reached out to dozens of logistics CEOs and industry veterans who had succeeded in their line of work. These individuals can be advisors, offer introductions, and provide early stage investment.
- AngelList (and other online tools)
- Find startups at a similar stage to yours and go on AngelList or CrunchBase to see their investors. Use these tools to find what investors are interested in your industry or your stage of startup, and then reach out to them.
A big takeaway is that cold emails work very will even with experienced investors. I have many relationships with angels and VCs that were started by a cold email introduction. Just remember, it will likely take dozens (if not hundreds) of introductions and meetings before you secure an investor.
An “Angel Investor” is merely some private individual who has money and what to invest in a business like yours. It could be anyone you already know. It could anyone you’ve already heard of. You have to network to such people and have a good pitch/story.
As mentioned in other responses, a minimum investment capital to invest in 10-15 startups is a requirement. You learn by investing. But most importantly, one needs to learn to do consistent due diligence and educate your judgement.
You can start by joining an investment club or angel club, but you have to go out there, meet with entrepreneurs and investors. Focus on what you know when you initially start.