Jobs that require a suit upset me. They displease me much, as our world is rife with such superficial conformity.
The Power of Habit: Why We Do What We Do, and How to Change
Clarity: Clear Mind, Better Performance, Bigger Results
(Via Robert Wakeford)
What then are some of the things you should pay attention to if you are considering angel investing?
- Only invest money you can afford to lose. This is true not just on a per deal basis but also in the aggregate!
- Think of more deals as more risk (not as diversification). To get to diversification you would have to do a great many deals (dozens if not more) and not make systematic mistakes.
- Avoid uncapped convertible notes (if you don’t know what that means, make sure to read up on it before your first investment). They tend not to provide adequate reward for the risk you are taking.
- Don’t back someone who hasn’t quit their job yet. Your money is committed — they should be too.
- It’s OK to invest in friends. But back only friends who you think are entrepreneurs. If you have doubts be a real friend and say so.
- Don’t make entrepreneurs jump through hoops (leave that for the VCs — just kidding). As an angel you should ideally be able to give an entrepreneur an answer after a single meeting.
- Know what makes for a strong entrepreneur and (ideally) invest in areas you understand.
- Say “no” a lot more than you say “yes” — embedded in this is that you need to be seeing a lot of different startups.
I have written a number of posts about Angel Investing and the series that Mark Suster wrote on the topic was pretty thorough. I like Albert’s convenient list though. Ultimately it comes down to your tolerance for losing money and your personal motivation for investing. Doing these investments can be extremely nerve wracking and it is rare that angel investors make money. Even for the pros like VC’s and super angels that do this for a living, startup investing is hardly a sure bet or an easy route to wealth. If you do decide to invest in startups though, build up a network of folks knowledgeable in angel investing and learn as much as you can before you start signing term sheets and wiring funds.