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Here’s everything I’ve learned about angel investing in the past 8 years since I made my first one. I’ve invested in Cruise, Ginkgo Bioworks, Razorpay, Bird, and 100 more companies.
Only invest in founders, not ideas. It’s seductive to invest in pet ideas you want to see in the world. Sometimes you justify investing in a bad founder thinking the idea is so good it will carry them. This never works.
Turns out even good ideas still need to be executed!
Turns out even good ideas still need to be executed!
There are now tons of investors in tech. Everyone seems to have their own fund. As an investor there are three ways to differentiate from others: brand, analysis, hustle.
Brand is setting up a unique platform or positioning in the market that gets to differentiated deal flow. Best example is @ycombinator, which wasn’t even really positioned as an investor at first, but rather the Harvard Business School of Silicon Valley.
On the newer side I like @saastrfund, where @Jasonlk has set up an investor brand in a specific vertical (with a conference, online media etc) and positioned himself as the expert in this area. If you have a SaaS company you want to talk to him!
Analysis is “do you actually think about how the world will look in the future and do you make good investment decisions based on that view”. Weirdly this is pretty underrated in early stage tech investing.
Don’t think there’s any magic bullets here. You just need to do the work to do research on companies, call customers, figure out market size etc. Many early stage investors don’t do this.
Hustle is getting into deals. Many investors wait for founders to be raising and to come to them. This is lazy.
Instead investors should figure out what companies they want to invest in, and convince those founders to take money (whether it's during a fundraising cycle or not).
Instead investors should figure out what companies they want to invest in, and convince those founders to take money (whether it's during a fundraising cycle or not).
The best angels I know will just start being helpful and build a relationship with the founders, and then get allocation or even included in previous rounds.
Observation: most SV gains (probably including my own) are purely because we have been investing into massive bull market. Everyone who started angel investing 10 years ago looks like a genius (you would have looked the same just buying a basket of FAANG stocks). This will change
Lastly, always invest in your friends for FOMO protection. If you don't, the FOMO when they sell for $1b two years later might literally kill you :)
