Angel Investing

Theory #28 | A 5-year reflection & predictions on the practice of writing small checks into early-stage startups.

I started angel investing in 2019. The first check I wrote was a $10K check into a consumer health company. I was actively evaluating consumer health ideas to build, and my sister, a practicing physician, was a classmate of the founder.

Fast forward to today and I’ve done ~ 15-20 angel investments, which crosses some threshold for being “active.” I consider what I do, and what many others like me do, to be “freelance angel investing.” It’s not a hobby, not a full-time job, and there’s no institutional affiliation or long-term commitment.

Hence, I haven’t been focused on hitting investing quotas and the like. I’ve more so spent this time figuring out what being a good angel investor means and how I want to play this role in the ecosystem. And meanwhile, the number of angel investors, and maybe even the meaning of the phrase itself, has changed a lot.

I’ve had many thoughts of late about the topic of angel investing and how it is evolving, spurred on by the ever evolving startup ecosystem and of course broader market and technology tailwinds too. I want to unpack those thoughts here.

P.S. This essay’s more freeform, candid, and self-reflective than usual, and hence a subscriber-only post for now. This will probably be most interesting to early-stage angel investors, those considering getting into investing, and the generally investing-curious.

A few topics I’m going to cover:

• why I angel invest

• what my angel portfolio looks like

• reflections on my process, good & bad

• archetypes of modern angel investors

• how I think angel investing is evolving

• who I believe should angel invest now

Heads up: some of these sections have a lot of prose, so I wrote a quick summary at the start of each so you can more easily skip to what’s most interesting to you.

I. Why I angel invest

Tl;dr — I angel invest primarily to build strong connections with smart, like-minded people and expand my own tactical knowledge of spaces I care about.

My interest in angel investing started with my interest in making things. I started my first startup about a decade ago, and though it wasn’t successful on traditional metrics, I learned a lot about creating something from nothing, building a team, what aspects of entrepreneurship I liked and disliked, and many what-not-to-do’s.

Since then I’d always liked meeting other founders, learning about the ins and outs of their vision, teams, products, and progress. So as I thought about founding again, I naturally found myself around more founders — wanting to help those working on ideas that I gravitated towards yet didn’t see myself going all-in on.

So one appeal of angel investing was just being involved in the journeys of people I wanted to talk to and companies that I had a personal interest in. Another was the allure of “picking” — the game of making my own assessment of a team, product, market, and betting on it. Everyone likes to see if they’re “right.”

And perhaps third, I knew I would be playing in the startup ecosystem for the next chunk of my life, and I had an interest in multiple sides of it. For a minute I considered VC as a career, but I wasn’t all-in on it, so this was a way to keep that part of me — the one that gets to learn at the higher level, to understand markets, to see patterns, curate my own perspectives, and help other builders — alive.

The last reason is the possibility of a financial win. In part because I have invested my own money, I’ve been conservative with check size and number of investments. And hence, the potential financial outcome of any given investment still isn’t life changing and not on any immediate timeline either. Hence it was the least of the reasons, and it still is now (more on this later).

I don’t think the order of prioritization was clear to me at the start, but this is roughly how I’d rank the reasons I angel invest now:

• Get to know and support people that I respect and that have shared interests

• Better understand the lifecycle of products and markets that I care about

• Cultivate the generalist and analytical thinker in me

• Have fun playing a game

• Possibly make money

Side note: There was a window in 2021/2022 when many people floated the idea to raise a small proof-of-concept fund. I believe I had enough of a point of view, track record, and network, but I wasn’t so sure about managing other people’s money as a formal job. 

II. What my angel portfolio looks like

Tl;dr — 15-20 investments, mostly in consumer, median check size of ~ $5K.

Let me add a bit more color to my angel investing over the past few years.

• Done ~15-20 angel investments. Most were seed stage, some pre-seed, one in Series A (and 2 investments in small VC funds that focus in these stages).

• Majority of investments in the consumer space, focused on social, media, creators, community, and games (which I find tend to have a lot of overlap).

• Secondary spaces I’ve been interested in are tools for startups and the future of work broadly and in consumer health and wellness.