Angel Investing Notes

For the past year or so, I’ve been putting small checks into various startups. A couple of friends simultaneously asked me recently for advice on what they should know about angel investing themselves, and I wrote up some notes for them. Decided to publish an edited version of those here in hopes it may be useful to others:

• Pick a check size and stick to it. This helps you minimise regret + avoid having FOMO. At a future point in your career, there will be companies you will wish you had put more money into, and companies that you wish you hadn’t invested in at all. For the former, double down on those whenever they raise again, and not the latter. But having a consistent initial check size will help you maintain a consistent investing strategy and outlook.
• If you’re asked to invest in a company and decide not to, say no quickly. It’s up to you whether or not / how to give feedback as to why you’re saying no. You won’t run into this when you start investing, but you will eventually run into it.
• When you’ve committed to investing in a round and receive the paperwork, sign it and wire the money ASAP. Founders should never have to chase you down for money after you’ve committed, especially for small checks.
• Remember, there is always the chance an investment can go to $0! Only invest what you’re comfortable with losing.
• Try to always respond to investor update emails. You’d be surprised how few investors do this! Even a quick word of encouragement can go a long way to the founders writing them (and keeps them writing them - investor updates are for founders as much as they are for you).
• From what I’ve seen, the number one thing that founders will need is help with recruiting. This includes mostly sourcing candidates, but could include helping interview them, or assessing resumes/portfolios. This is the kind of thing that’s considered “value-add” besides just putting in the check.
• As a technical / product person, you’ll also have a lot of value to add whenever founders ask you for early product feedback, or technical advice .
• You’ll be asked to give a lot of feedback, and a lot of questions that you may not have answers to. Be honest if you don’t know, or if you don’t have an opinion.
• Companies, at the earliest stage, can often completely change their product / direction from when you first invested in them.
• Even if you’re writing small checks, that’s still valuable, and still makes you an angel investor. Anyone who looks down on small checks is an asshole. 99% of other founders / investors respect small checks. There may be times, however, where small checks can’t get into the round, for a lot of different reasons. The later stage a company is, the less likely you will be able to put a small check in.
• It’s extremely gratifying to be able to invest in your friends’ startups - the whole reason I became interested in angel investing was because I kept seeing my friends making cool things, and wanting to be along for the ride.