How to get started in Angel Investing
Angel investing is alive and well, but we are living in a new world, a virtual angel investing world, so how do more investors get involved? How do more US residents fund more in-state startups? Where does one start in this fascinating world? My advice is the following:
Read the book “Angel” by Jason Calacanis to get a good overview of what to expect and how to get started. It’s my #1 recommendation for Jason’s 25? years of experience— summarized in 32 chapters.
Define a specific industry (like healthcare, education, fintech, etc) that you have expertise in already that you can focus on. You do NOT want to chase anything and everything that “has potential”—founder’s enthusiasm does not predict long term success. It’s important to have an understanding of what space a startup is focused on so you can add value, which is my next point.
Ask yourself, can you “add value” to this startup beyond just “writing a check”. This helps differentiate “dumb money” from legit value-add angel investors. Can you make introductions to other investors? Can you help negotiate partnerships? Can you introduce potential vendors? Can you recommend potential key executives? Can you assist the founders and provide guidance on critical decisions? Can you be helpful and “add value” without being pushy and without getting in the way?
Allocate a small portion of your portfolio to those type of high-risk speculative investments. Make small investments to start to get your feet wet, once some get traction, you can usually write bigger checks.
Understand you are going to suck at first, but joining with existing "investment syndications" can open doors to more investments via networking with other angel investors to get access to even more deal flow and over time, you will get better.
The process of meeting a few times in person, hearing the pitch and getting a yes or no decision weeks later has dramatically changed in the past several years and has never been easier.