When becoming a new angel investor, everything you encounter, every founder you talk to, seems exciting and you might rush into making decisions at first. However, as an investor, you should be able to wait and make sure you understand everything before you act.
Of course, start-ups are exciting, but if you want to be an angel investor, you should take into account that you will have to deal with the uncertainty with every start-up you invest in. If the founders only have to worry about their own business and the issues that come with it, your case is a little different as you will have to struggle through the issues of every start-up you invest in.
To be able to solve all the issues of each start-up, you will have to be mindful of your decisions and ready to dive into every detail of the business and help the founders build it up.
Saying “YES” to the first start-up you like
If you want to be a successful angel investor, you will have to be careful about the choices you make.
When it’s time for you to invest in the first start-up, the most important thing is to look around and benchmark all the pitches against each other. It’s okay to like a particular pitch and get excited about it, but it is more important to be able to be patient until you see everything so you can make an informed and wise decision afterward.
Not asking many questions
Another important thing to remember is to ask as many questions as possible. When first hearing a pitch, don’t assume the founders are presenting every detail. Ask them questions to uncover the parts they are not showing to you. This is important because you won’t be just investing your money but also your time and energy into helping them build their business.
If you haven’t yet done it, go see the team in action, look around and understand how things work. Don’t just listen to the founder or someone else saying that this project is going to change the world. Understand the specifics of the start-up and see if you believe in what they are trying to do, or if you believe that you and the team together can make it work.
Not investing in the team
Let’s say you’ve heard the pitch, and you are delighted with the idea. Everything seems to be at its place, and the business sounds promising. Now you are more than excited to invest in the start-up. But have you thought about the team itself?
Do you think the founder is just doing this for fun or if he is really serious about it? Make sure to invest in people who are there for the long haul and who won’t be leaving as soon as they face the first big issue.
These are only a few of the mistakes that you should be careful not to make. No matter what kind of advice you get or whatever you read, you are going to make your own mistakes and learn from those. All you have to do is to make sure that every decision you make is based on logic, analysis, and not your emotions.