The #1 Question Angel Investors Should Ask Themselves

316,600 angel investors put more than $24bb in early-stage funding (often first-money) into 73,400 ventures last year.

If you’re an angel investor, that means you have a lot of competition out there for the best possible deals.

If your investment strategy is the same as the super-angels out there, who often invest in post-traction startups that are putting out clear data about sales, markets and product I’d like to ask you to ask yourself this question:

Why is the startup taking my money?

(and not David S. Rose’s, Gary Vaynerchuk’s, Gil Penchina’s or Jason Calacanis’, among others)

I’m not anyone notable in the startup landscape and I can get a warm intro to any of these guys. It’s not hard. AT ALL. If I can do it you can do it you can MOST CERTAINLY do it.

So why are they taking your money when these super-angels — who have enormous connections, SV street cred and social capital — could be in the mix?

There are two reasons:

  1. the startups that you see in your deal flow aren’t as good as the startups these guys look at. There’s so much negative selection out there…
  2. your deal flow is way earlier then the startups that the super-angels look to invest in. You can get in because it’s *still* below their radar (a good thing)

There’s a third reason that’s not really in play yet but I believe it will be and that is speed. Raising money is extremely inefficient so the investor who can get it done faster will win, but more about this in a further post.

There’s no other reason really (and if you disagree please leave a comment below). And when you see those amazing startups and you’re not a famous super angel this is what you might want to say:

Once the startup has a product, paying customers and some traction they’re off to the races and all you can do is wave bye bye. Yeah, I know.

So if you’re not a super-angel, if you’re in the 99% of the angel investors out there you need to start going earlier. Way earlier. You need to start looking at signals way before product-market fit, killer features and revenue. If you don’t, those startups that have bootstrapped to those metrics will go to the super-angels and the seed funds and the micro VCs and the crowdfunding platforms and so on and so forth…

If you’d like to know what signals I look for before product-market fit, traction and sales reach out and I’m more than happy to tell you what I look at.


CONTROVERSY BELOW:

As angels, we run around and repeat Team! Team! Team! and then invest in sub-optimal teams showing initial traction and product-market fit… because the best startups go to the super angels.

If you want to get good deal flow as an angel in the near future start asking yourself why they’re picking you. And screen > decide > vet > and invest in days, not weeks/months.


I’m building aicredible — an extremely powerful front-end startup analytics, screening and due diligence search engine for early-stage investing (in development) and rendering DD services for early-stage investor.

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