As investors, we want our entrepreneurs to have what is known as skin in the game; that is, an amount of their own capital serious enough for them to pay close attention to,…but not so much that they will be distracted by having to worry about where their next meal is coming from.

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

As you can see, VCs and angels have a lot in common. So how exactly do they differ? The chief difference, of course, is that angel investors are investing their own money, while venture capitalists are professional investment managers who invest other people's money.

In the parlance of the business, the first round would be a Friends and Family round, the second a Seed or Angel round, and the third a Series A round. The Series terminology comes from the way successive tranches of preferred stock are labeled, because each round has specific defined rights and priorities relative to the other rounds.

The baseline expectation is that an angel investor will at least do things that anyone (employee, friend, parent, founder, or anyone else involved in the startup) could do: refer potential customers, tweet out company news, suggest ideas, check out competitive sites, point out relevant news articles, provide moral support, and so on. The best angel

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.

Companies always need more money. It doesn't matter what the founders' projections are, or how fast they believe they will turn profitable. They will need more money. Although there is the rare case where the company becomes an overnight smash hit and needs more capital than expected to meet overwhelming customer demand, that is true in perhaps 1 o

Taking as your goal a portfolio of at least 20-25 companies (minimum), that means you will make at least five investments every year.

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.”