This is what I have told them:
1) Access
2) Influence
3) Diversification
The fundamental difference between public and private market investing is access. If you invest in NSE stocks, you have access to the same 500 stock as the Blackrock analyst does. If you are smarter than them about investing, you can outperform them.
Many angel investors overestimate their ability to influence the outcome. The HR head said he could introduce a founder to HR leaders in other companies. "I'll get them the first 5 Cr of revenue from my network alone".
Most new angel investors think like this: "Wow, new shiny thing! But also so risky! Let me dip my toes in and see what happens". So they decide they will make two investments in the first year, take a pause for a year and see how those first two work out.
- Can you put >1 Cr at risk over 4-5 years?
- Do you have time to meet >100 founders a year?
- Do you have some privileged access to good startups?
If not, hold on to your money.