Angel by Jason Calacanis

The Big Idea: When done right, angel investing in technology is the best path to rapid wealth creation. It’s high risk, but high reward.

Jason invests in one startup for every one hundred he looks at.
To be a successful investor, you need some combination of money, time, network, and experience.
As an angel investor, you need to be in Silicon Valley.
Founders and angels prefer to sell too early. VCs prefer to swing for the fences.
For angels, secondary sales are a wise way to dollar cost average your returns.
Angel List syndicates are the easiest way to start.
Syndicate investing tips: syndicate is led by someone with at least one unicorn, syndicate is based in Silicon Valley, startup has at least two founders, startup already has product-market fit, startup has 6 months of continuous user growth or revenue growth, startup has notable investors, startup will have 18+ months runway after funding
Start by investing $2,500 in ten startups through Angel List syndicates.
Try to add more value (introductions, advice) to the startup than other angels.
Write a deal memo for every investment explaining why you’re investing, the risks, and the likely path to a successful outcome.
Only invest in startups if you would buy stock in the founders themselves.
Meet with the prospective founders.
The best deals are not on AngelList or in an incubator.
Create a spreadsheet of the hundreds of coinvestors in your syndicate deals.
Set up two meetings a day over the next thirty days to connect with other angels (see book for email templates.)
Meet with twenty-five founders seeking funding introduced to you by an angel investor.
(See book on a system for how to track these opportunities.)
Allocate three hours for each pitch meeting (one hour for prep, one hour for meeting, one hour for postmortem.)
Professionals use a pen and notebook (and an office conference room) for pitch meetings.
Never say yes or no during a pitch meeting.
You don’t pick billion-dollar companies. You pick billion-dollar founders.
Eliminate small ideas and weak founders. Double down on great founders and big ideas.
Four questions to answer during the meeting: Why has THIS founder choose THIS business? How committed is the founder? What are this founder’s chances for succeeding in this business and in life? What does winning look like in terms of revenue and return?
Start the pitch meeting with an ice-breaker question. Then dive into: What? Why? Why now? Unfair advantage?
(See book for five tactical questions to ask founders.) Also, ask some personal questions.
The number one reason a startup fails is that the founder gives up. Look for founders that are willing to do whatever it takes. Avoid founders that spend more time building their network than building a company.
If a founder doesn’t communicate with their investors, it’s almost universally a sign things aren’t going well.
There is no reason for an angel investor to invest in a startup pre-traction.
Valuations are important but they are not everything.
Take good notes in pitch meetings and always write up a deal memo.
Be honest but gentle when telling founders no. Tell them “not yet, but keep me updated.”
95% of incubators are for founders who couldn’t raise money on their own.
For early stage investors, the primary due diligence is to research the founders.
If you can, try to confirm actual revenue by asking clarifying questions.
Get a solid startup attorney to review the paperwork.
Founders should send investor updates at least once a month.
Angels should track (in a spreadsheet) how often founders send out monthly updates.
Double down on your startups (pro-rata) that managed to advance to a Series A.
Angels should be cheerleaders and supporters for their startup CEOs.
Some angel investing strategies: bet on the founder, solve a problem, bet on delight, bet on markets.
Recommended approach: invest $1,000 in ten syndicates, invest $25,000 in twenty startups, and invest another $100k in top five winners = just over $1mm.