Angel: How to Invest in Technology Startups—Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000

Everyone wants to be a founder, but they don’t understand exactly what that means. Being the leader sucks because you’re ultimately responsible not only for your performance but also for the performance of your entire team, the market, your investors, your competitors, and even your customers. Most people calling themselves founders today are just

There are personal questions you can ask founders to get a sense of what they’re about. The one I care about most is, “What did your parents do?” I used to ask, “Tell me about your mom and dad,” but that’s a bit of a biased question since some folks grow up with two moms or two dads or a single parent, so the best way to do this is to ask about the

While many angels and venture capitalists resisted the idea of letting founders cash out early, they quickly learned that allowing them to sell off $5 million or $10 million’s worth of their equity took a great deal of pressure off these broke, first-time management teams. A person with $10,000 in their bank account and a $10,000-a-month nut is in

Said another way, this question is asking, in just four words, “What makes you uniquely qualified to pursue this business? What secrets do you know that will help you beat both the incumbents and your fast followers?” Sometimes, founders will not have an answer for this question. And that’s okay. This is one you often end up answering while looking

Additionally, remember that 80 or 90 percent of our investments fail, and we have to suffer through shutdown after shutdown. It’s depressing for us, especially in years two, three, and four of angel investing (see chapters 28 and 29).

When you spend time in a role, whether it’s being a pilot, an EMT, or an investor, you’re going to develop strong habits. To be successful, it’s important that you develop good habits and be aware of the bad ones.

In another five to ten years, things will change again, and the only way to understand where the market is going will be to study not just the market winners but the market failures—along with doing a postmortem on your own forecasting and behavior. You don’t have to obsess over the losers, but I would certainly meditate on them and look for patter

Your job in these meetings is to play Columbo, the unassuming and always underestimated detective from the classic TV show that started in the ’70s and ran for more than three decades. Your job is not to show off or demonstrate how smart you are by explaining to the founder what they’re doing wrong or by bragging about your heroics as an investor o

Most of us don’t have three or four decades to build our fortunes. We want to do it in five to ten years, which I think is a reasonable window if you read this book and do what I tell you. If you compare businesses made from atoms (brick-and-mortar shops like Starbucks and McDonald’s) to businesses made from bits (software), there is no comparison.

As you go through your angel investing life, take some time to evaluate the person and their motivations. Ask yourself a simple question: “Would I buy stock in this person if I could?” If you wouldn’t buy stock in a founder, you shouldn’t buy stock in their company—because there is no difference between the founder and their company; they are one a