I quadrupled down on angel investing this past year.
I’ve invested $2M in 30 companies.
In the process, I’ve learned what feels like 5 years worth of lessons.
Here are my 15 biggest takeaways for anybody interested in angel investing 👇👇👇
I’ve invested $2M in 30 companies.
In the process, I’ve learned what feels like 5 years worth of lessons.
Here are my 15 biggest takeaways for anybody interested in angel investing 👇👇👇
Lesson 1: Ownership Reality > Ownership Mindset.
The earlier you think of yourself as an investor, the better.
Investing in startups is a cheat code to participating in the future with asymmetric upside.
Worst case, you lose 1x your money; best case you 1000x it.
The earlier you think of yourself as an investor, the better.
Investing in startups is a cheat code to participating in the future with asymmetric upside.
Worst case, you lose 1x your money; best case you 1000x it.
Lesson 2: Investing breaks down into 3 phases:
I. ACCESS: Did I see the company?
II. JUDGEMENT: Did I say yes?
II. VALUE: Did they say yes?
You need to be good at all 3 to get a deal done.
Figure out where you're weak / strong. Each requires a slightly different skill set.
I. ACCESS: Did I see the company?
II. JUDGEMENT: Did I say yes?
II. VALUE: Did they say yes?
You need to be good at all 3 to get a deal done.
Figure out where you're weak / strong. Each requires a slightly different skill set.
Side note: Here’s a graphic I made to better visualize this concept.
Breaking this down into its component parts and internalizing it has been one of the most valuable “process” lessons for me while angel investing.
Breaking this down into its component parts and internalizing it has been one of the most valuable “process” lessons for me while angel investing.
Lesson 3: You can diligence yourself out of every deal
It takes a lot for a startup to succeed.
If you just focus on “What can go wrong”, you will say no 100% of the time.
Instead ask yourself, “If this works, how big can it be?”
Flip the framing in your mind.
It takes a lot for a startup to succeed.
If you just focus on “What can go wrong”, you will say no 100% of the time.
Instead ask yourself, “If this works, how big can it be?”
Flip the framing in your mind.
Lesson 4: Self Awareness is Key
To reinforce Lesson 3, take stock of your bias.
When you know a space - you're more likely to ask what can go wrong
When you don't know a space - you're more likely to ask how big can it be
Try to approach every pitch from first principles.
To reinforce Lesson 3, take stock of your bias.
When you know a space - you're more likely to ask what can go wrong
When you don't know a space - you're more likely to ask how big can it be
Try to approach every pitch from first principles.
Lesson 5: Figure out your value add.
Cliche I know.
But it makes sense when you realize, this is the only asset class where the asset ALSO picks you.
You need a compelling answer to: "What do you bring to the table?"
The bar for the best deals is damn high.
Cliche I know.
But it makes sense when you realize, this is the only asset class where the asset ALSO picks you.
You need a compelling answer to: "What do you bring to the table?"
The bar for the best deals is damn high.
Lesson 6: Be a magnet
Your goal should be to be known in the ecosystem as someone that is trustworthy and super helpful as early as possible.
Once you cross this chasm, great deals start coming inbound to you.
This is a huge unlock.
1/10th the effort for 10x the outcome.
Your goal should be to be known in the ecosystem as someone that is trustworthy and super helpful as early as possible.
Once you cross this chasm, great deals start coming inbound to you.
This is a huge unlock.
1/10th the effort for 10x the outcome.
Lesson 7: Analysis paralysis is fatal
You have to be comfortable moving quickly and dealing with imperfect information or angel investing is impossible.
There were a couple awesome deals (in retrospect) where I could have invested, but fell into analysis paralysis and missed.
You have to be comfortable moving quickly and dealing with imperfect information or angel investing is impossible.
There were a couple awesome deals (in retrospect) where I could have invested, but fell into analysis paralysis and missed.
Lesson 8: Angel investing is not value investing
I've done deals where I wasn't as excited about the company, but I was excited about the price.
This is the EXACT opposite of what I should have done.
The best deal at a premium > mediocre deal with a discount.
I've done deals where I wasn't as excited about the company, but I was excited about the price.
This is the EXACT opposite of what I should have done.
The best deal at a premium > mediocre deal with a discount.
Lesson 9: Always play the long game
I have worked with Founders for MONTHS before getting to invest.
Make an intro, give advice on GTM, help with a storyline, be a therapist/coach, you name it.
If you add value, the Founder wants you in.
I have worked with Founders for MONTHS before getting to invest.
Make an intro, give advice on GTM, help with a storyline, be a therapist/coach, you name it.
If you add value, the Founder wants you in.
Lesson 10: There are no rules
If you want in AND the Founder wants you in, there is always a way.
Founder: I can't take money right now
[Most likely] Translation: You are not valuable or interesting enough for me to take the effort to get creative.
Harsh, but true.
If you want in AND the Founder wants you in, there is always a way.
Founder: I can't take money right now
[Most likely] Translation: You are not valuable or interesting enough for me to take the effort to get creative.
Harsh, but true.
Lesson 11: Invest in founders that are better than you
When you’re floored by a founder, work with them.
If you're with the right people it will either:
A. Work Out - You make $
B. Work Out - You learn, develop relationships and get in on the next one
When you’re floored by a founder, work with them.
If you're with the right people it will either:
A. Work Out - You make $
B. Work Out - You learn, develop relationships and get in on the next one
Lesson 12: Surround yourself with people that are world class
@arjunsethi has been an amazing friend throughout my angel investing journey.
I've recalibrated by spending time with him.
The best outcome early in the journey isn't money.
It's developing a repeatable system.
@arjunsethi has been an amazing friend throughout my angel investing journey.
I've recalibrated by spending time with him.
The best outcome early in the journey isn't money.
It's developing a repeatable system.
Lesson 13: Do the work.
There's no substitute for reps.
Get the deck and research the space in advance.
You get better at pattern matching with time, but 0 prep work leads to bad assumptions and bias.
Implication: you'll make a suboptimal decision.
There's no substitute for reps.
Get the deck and research the space in advance.
You get better at pattern matching with time, but 0 prep work leads to bad assumptions and bias.
Implication: you'll make a suboptimal decision.
Lesson 14: Deal flow quality compounds
An experienced VC once told me to "Look at 20 deals before investing in anything."
I don't fully agree, but his advice is directionally correct:
⬆️time =⬆️surface area
⬆️surface area =⬆️good deals
⬆️good deals =⬆️likelihood of $
An experienced VC once told me to "Look at 20 deals before investing in anything."
I don't fully agree, but his advice is directionally correct:
⬆️time =⬆️surface area
⬆️surface area =⬆️good deals
⬆️good deals =⬆️likelihood of $
Lesson 15: Reputation is your currency
Nothing is worth compromising integrity.
If you're in the game long enough, you're smart and people like you, you'll hit strong outcomes.
I've seen enough people make life changing $ because of a combo of those 3 vectors.
Nothing is worth compromising integrity.
If you're in the game long enough, you're smart and people like you, you'll hit strong outcomes.
I've seen enough people make life changing $ because of a combo of those 3 vectors.
This is an incredibly exciting time for tech.
There’s a lot of noise about how there’s too much capital sloshing around.
I think there isn't enough capital moving around.
To believe the ecosystem is overcapitalized is to believe that human creativity is fully tapped.
There’s a lot of noise about how there’s too much capital sloshing around.
I think there isn't enough capital moving around.
To believe the ecosystem is overcapitalized is to believe that human creativity is fully tapped.
These lessons came with the pain of some early losses, but also the joy of some mega rocketship investments.
If you enjoyed this, give me a follow at @romeensheth.
I tweet about lessons building a $50M+ bootstrapped business and angel investing in founders way better than me.
If you enjoyed this, give me a follow at @romeensheth.
I tweet about lessons building a $50M+ bootstrapped business and angel investing in founders way better than me.
Thanks for giving me a front row seat on the 🚀
@Career_Karma - @rubenharris
Laskie - @ChrisJBakke
@italic - @jjeremycai
@getmati - @getFilip
@bolt - @ryantakesoff
@joinrepublic - @KendrickEsq
@ShiprocketIndia - @saahilbigfoot
@GetCabal - @murr
+ many many more!
@Career_Karma - @rubenharris
Laskie - @ChrisJBakke
@italic - @jjeremycai
@getmati - @getFilip
@bolt - @ryantakesoff
@joinrepublic - @KendrickEsq
@ShiprocketIndia - @saahilbigfoot
@GetCabal - @murr
+ many many more!
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