The 4 Keys to a Successful Angel Investment Strategy

With the increasing popularity of angel investment sites such as AngelList and CircleUp more and more people are making investments. I love this trend and have a longer form blog coming on the subject – which I think is massive positive force in the startup ecosystem. But this post is much shorter and to the point.

I often get asked what my thoughts are on angel investing. Here are what I think are the 4 keys to a successful angel investment strategy:

1) Take a portfolio view of angel investing- put aside a pool of money and plan to make 10 or more investments. One-offs simply don’t make sense in this market (too much alpha)
2) Be willing to lose all your money (and assume you will) – mortality rate at the angel stage is extremely high
3) Be passionate about either the team, the idea or both. You should be in love. Angel investing is about emotion, not logic.
4) Don’t reserve/follow. Your job is to put in seed capital. The company’s job is to grow the business and find new capital. They either do this and are successful or don’t and you write it off. I don’t think it’s wise to play the pro-rata game at the angel level.

  • MrScrewupGuy

    Great post.

  • Guest

    HI Seth, I tried to fix the RSS feed to your blog—always end up getting http://feeds.feedburner.com/VC_Adventure and it’s Brad’s posts coming through (I’m using Digg Reader)

    • http://www.sethlevine.com sethlevine

      i’ll check on that… thanks!

  • Kelly Hwang

    Hi Seth, thanks for the post. Can you elaborate more on point #4 on why not to follow on when the company is doing well? Thanks.