Here are some things I think about when I am considering an angel investment:
- I do not subscribe to the "it's all about the team" mentality when it comes to angel investing. Clearly the team is critically important, but some teams are more backable for certain opportunities than others. And I do care about the idea too (see more below). So while the team is a big part of the decision, it isn't the only thing for me, and probably isn't even more than half.
- As an angel I do care about the "idea." It is true that many startups do pivot, some radically, but for me to want to invest I have to be excited about the problem/need area that the entrepreneur wants to address, and I have to generally be interested about the proposed solution, though that is less critical (because I know it will often change).
- I am interested in understanding how the entrepreneur thinks he/she will eventually make money. It may be a long way off before there is revenue, and the eventual monetization execution may be very different, but I like to understand how the entrepreneur thinks about business models, and how their proposed business model (thinking at least) fits with the industry and their proposed product/service.
- I spend almost no time negotiating terms. If they are reasonable -- based on my historical benchmarks -- then I say yes, and if they are not, I say no.
- I prefer to invest in projects that have a chance of being capital efficient. I worry that projects that are going to raise a lot of capital will be successful, but not generate a good return for the first money in (which is usually me). If it is clear that a project will require a lot of capital ($50M or more) I will most likely pass.
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