Top 3 ways to Getting started with Angel investing in less than 30 minutes
A couple of years ago, my friend called and exclaimed that he had a great business idea and asked me if I would invest. I had heard the term ‘Angel investing’, but I knew nothing about it, but I liked the business idea, even when it was just on ‘paper’. I invested in my friend more than the business. In short, Angel investing is all about investing in very early stage companies, starting from those which have ideas still on ‘paper’ to those pre-IPO companies which raise ‘seed investments’ prior to bringing in any Venture Capital (VC) investments.
For some people, Angel investing is a full time job and it takes good time and effort to choose your investments carefully, especially if you are investing tens or hundreds of thousands of dollars. If you do it carefully, such investments would yield significant returns, even taking into account, the money you lose with some bad investments. If you do it well, you will be a millionaire soon. For an in depth analysis and steps to follow to be a good Angel investor, I recommend Jason Calcanus’s awesome book ‘Angel’.
If you were fascinated with Angel investing and would like to get started, you could get started with investing with a group of‘Angel syndicates’. Such syndicates pool smaller chunks of money from multiple investors, create a bigger pool and invest in early stage startups. Syndicates often have a better bargaining power, because the smaller chunks of money add up to significant investment sums. This gives them bargaining power to get better deals than any small-time individual investor could.
These Angel syndicates are often lead by seasoned Angel investors like Jason, who are well invested in the process, and have significant insights about the technologies and success prospects of startups. These syndicates usually charge a fee, usually a small percentage of the investment (collected at the time of investment), for the legal work involved in leading an operating the syndicate, and then a percentage of the profit, when the startup gets an exit or when a buyer interested in purchasing your startup stock, makes a private purchase.
You can become part of Jason’s syndicate by joining here
Apart from the syndicates lead by seasoned investors, there are three major platforms where investors could look at the startups with investment needs, and private pre-IPO companies alike, and choose to invest along with other investors into an investment fund typically lead by ‘Lead’ investors or the ‘platform’ itself. These are
- Angel.co : Sign up here
2. Micro Ventures : Sign up here Krishna Idol|440×310|https://cdn.shopify.com/s/files/1/1857/6931/products/B0qMD2E83v_1400x.jpg
3. Seed Invest : Sign up here
For whatever reasons AngelList (angle.co) lets regular accredited investors invest only in ‘Angel funds’, and you cannot pick individual investments on deal-by-deal basis. Such deals are reserved only for “Seasoned” investors only, which in my opinion, defeats the purpose of joining an ‘Angel Syndicate’ in the first place.
My favorite platforms are MicroVentures and SeedInvest.
MicroVentures, SeedInvest and Jason’s launch.co let you invest in the startup investment deals on deal-by-deal basis. Also, all the deals are thoroughly vetted by the experts, and all the investments are backed by proper legal documentation that these platforms provide. Also, you could track all your investments under one roof, in each of these platforms.
In summary, Angel syndicates let you make an entry into the field of Angel investing, get a feel of it, and see if it is for you. The advantages of this approach are multi-fold
- You can hedge your bets by investing in a diverse portfolio of companies, and make a good return on investment.
- You can study and learn from the process. The knowledge and experience you gain from investing through Angel syndicates would help you pick winners with significant return on investments, that more than compensate for the losses
- If you forge good relationships with the lead Angel investors, from the deals you invest in, and other fellow investors in the syndicates, you will get to know the insider deals for promising startup ventures that the outside world rarely hears about.
- You can make a difference to the world by encouraging and supporting entrepreneurs who shoot to the moon, and try to make the world a better place, not only with the products that they make, but also by creating new jobs, thus helping people and the economy.
- You can leverage the network that you built, when you go on to start your own company or want to be an early employee at an early stage startup.
- You can learn from the successes and failures of the startups you have invested in, and learn the best and worst practices alike. You could then use these lessons in your own corporate job or in your own company, when you start one.
- If you are not already motivated to be an Entrepreneur, may be watching these awesome startups go on to do great things could inspire you to be an Entrepreneur and change the world, who knows?
As of writing, I am relatively new to this, but as I learn more about this, I will update this post to better reflect my experiences.
So, what are you waiting for? Go for it, get started and help make the world a better place.
What are your opinions about Angel investing? Are you already an Angel investor? What are your favorite Angel investing platforms?
