The ins and outs of Angel investing – advice from those who have been in the game for a while.
Why be an Angel investor?
It’s a vibrant and exciting industry.
You’re inspired by the innovation and bravery of others.
You have spare savings and want to support great ideas (it’s almost another form of philanthropy).
You have a good appetite for risk.
You have experience in building businesses and want to help. The more you get involved, the more you learn.
You want to support the generosity of others and engage with other club members.
You should be prepared to:
Learn and understand mechanisms and language of early stage companies and investment here.
Seek the advice of an independent advisor to see if this fits with your risk profile
Win some, lose some – this is high risk investing
Develop a broad portfolio of Angel investments to increase your chances of a profitable exit. Scoring a great exit with only one investment is like winning lotto!
Expect further rounds of capital, probably another 2-5 rounds. Manage your total level of investment with this in mind
How to judge an investment:
Look for a solid leadership team who can garner trust and credibility. They should have realistic milestones that they meet, good communications, be authentic and take responsibility.
Founders should be investing, showing commitment and determination and take the blame
You believe in the idea and see the market opportunity
Rank pitches like Master Chef then sleep on it
You should be a confident judge of people, know how to read a business plan
Ask questions about the company valuation, companies shouldn’t be so special that they can’t put a dollar value on their idea
Don’t sweat the small stuff, look at the big picture instead
If you like the people but not the idea so much invest a small amount to be in the play. Good founders adapt the product to emerging knowledge so might hit in the right path (pivot successfully). By investing you also encourage good founders to do better
Customers are the best teachers/advisors. So push for early sales to test their product/offering.