Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups

While there will always be cases where early-stage investors cold-call cool companies whose sites they have happened across, and thereby discover the great success story of the next decade, such instances of serendipity are rare. Many investors will tell you that the majority of their investments are sourced from personal networks they have cultiva

And “ready to pitch” means having a product in the market (or at least a prototype done), a team assembled (or at least the key people), a well-crafted financial plan, and a clear and detailed investor pitch refined and rehearsed, with all the necessary backup materials in one place (such as a company profile on Gust).

It takes time to learn to recognize the traits that distinguish a winning entrepreneur from a likely loser. That is another reason why finding ways to generate a flow of potential deals is so important: the more experience you have in meeting, talking with, and evaluating company founders, the better you will become at spotting potential champions.

Angel investing is when individual people (as opposed to professionally-managed investment funds, corporations, governments, or other institutions) invest their personal capital in an early-stage company—often known as a startup. Angel investors are individuals who invest their own money, typically in small amounts, and typically very early in the

As an angel investor you will do the same thing, but you must be even more ruthless than the Ivy-est of the Ivies. For every investment I make this year, there had better be 40 serious, passionate entrepreneurs sitting on my doorstep, of whom I will only invest in one. That means I need to be three times pickier than Yale, Harvard, and Stanford whe

While I've never laughed outright during a pitch, I've had quite a few occasions where I had to work hard not to wince. But assuming that everything is going along smoothly, now is the time to put on your objective analysis hat, set aside for the moment how sexy and wonderful the opportunity sounds (they all do!), and look closely at the fundamenta

Truth 1: Most Startups Fail It's a message that most angels or venture investors could deliver to would-be entrepreneurs dozens of times a month—and that they would deliver were it not for the fact that they don't want to burn their bridges or ruin their reputations for being nice guys.

Angel investing (like venture capital) follows the classic J-curve. Because unsuccessful companies tend to fail early, and big exits from the successful ones tend to take a long time to develop, when you graph it on a timeline the overall value of an angel portfolio makes a shape like the letter “J.”

The company soon needs cash to fund its development and growth, so it turns to investors, such as angels, who purchase a part ownership of the company by paying cash for stock. But the stock we purchase is not the same common stock that the founders have—and that the employees have options on. Instead, the company creates and issues a different kin

So VCs and angels often focus on different categories of companies, at different stages in their life-cycle. Nevertheless, there is enough overlap that it would not be surprising for you, as an angel, to find yourself considering an opportunity to invest in a business that is simultaneously being scrutinized by one or more VC funds.