Mental Models For Angel Investing

As a starting angel investor, I wanted to share a few key mental models and questions I use to evaluate potential investments. I’ve listed some of the key things I think about in order of importance below. My plan is to write about new angel investments using the framework below. Hope this will help keep me honest and that it’s useful for founders who are raising angel rounds!

1 Founder-Market Fit

To assess founder-market fit, ask the question: Is this founder or founding team a great fit for this particular market? Founder market fit can manifest itself in 3 areas: 1) domain expertise, 2) a mission-driven mindset, and 3) technical skills. In a dream scenario, a founder or founding team has all three or the ability to develop all three relatively quickly. I’m somewhat biased towards founders who are mission driven, as founders who care deeply about a problem will often demonstrate more resiliency in the future (and resiliency is probably one of the key factors that determines entrepreneurial success). Furthermore, technical skills can be a necessary condition to be successful in some markets that require very technical solutions. Finally, the most nuanced one is domain expertise as it can be very helpful to break into certain markets, but too much domain expertise can sometimes hinder innovation.