June 30, 2022

The Angel Investor Starter Kit

Shifa Maqba

The startup ecosystem is currently fraught with uncertainty and peculiar challenges. However, there’s no denying that it still remains one of the most exciting and profitable spaces if the right bets are made, as at the end of the day, investments in startups are nothing but long-term, strategically placed bets. 

There’s a plethora of investment opportunities, the dynamism of angel investing being the most lucrative of them all. But it is this wealth of information that may throw newbies for a loop. To combat this, we have curated a list of essential resources that will positively aid newcomers kick-start their angel investing journey.

Everything About Angel Investors:

1. How to be an Angel Investor - Paul Graham

This digestible article, penned by Paul Graham and derived from a talk at the 2009 Angel Conf., is an introductory course in itself. Covering the A to Z of angel investing, this should be your go-to article if you’re looking to gain a broad perspective on the subject.


2. Angel Investor: The Key Details & 5 Best Networks - Jay Fuchs

Through this article, Jay Fuchs provides a brief glimpse into how angel investors work, the pros and cons of angel investing and the Top 5 angel networks.


3. Become an Angel Investor | Demystifying Angel Investing - The Money Mile 

Watch Himanshu Verma, the co-founder of Shift Alt Cap, explain the barriers to angel investing, namely ‘loss aversion’ and ‘lonely investor syndrome’.


Investment Thesis Essentials:

1. How to Create Your Investment Thesis - Earnest Sweat, Medium

This is the perfect guide to constructing a kick-ass investment thesis summed up in one article. (Bonus: Check out Earnest Sweat’s ‘Notes on a Thesis’ on Medium for his deeply analytical articles on the development, creation and findings of his investment theses in EdTech, FinTech and Real Estate Tech.)


2. Angel Investing: Creating Your Thesis, Building Conviction, and Investing in the Future of Work with Stella Garber - The Vitalize Podcast

With this podcast episode, Stella Garber, the Head of Marketing at Trello, takes you on her personal angel investing journey and lays emphasis on the value of creating and believing in your own investment thesis.


Deal Sourcing & Startup Evaluation:

1. A Guide to Sourcing Deals and Investment Opportunities - PitchBook

Even though not strictly limited to startups, PitchBook’s downloadable guide is handy for those who wish to start with a general overview of deal sourcing (baby steps!) Not to forget, the data collected from nearly 3 million private companies will enable readers to create a list of the most promising investment opportunities.


2. How to Source Deals Like a Pro - Erin Lowry, The Helm

“Five proven methods to get that pipeline flowing,” the sub-heading says it all.


3. Kevin Hale - How to Evaluate Startup Ideas - Y Combinator 

Startup evaluation is more than just numbers and financials. It’s the idea that should appeal to an angel investor prima facie. Learn how to assess the viability and sustainability of startup ideas from Kevin Hale, a prominent investor, former partner of Y Combinator and co-founder of Wufoo.


The Financial Nitty-Gritty:

1. Startup Valuations: Definition, Valuations Methods, Pre-Money Valuation & Post-Money Valuations - Backstage With Millionaires 

Don’t be fooled by the brevity of the video. This informative installment in Backstage With Millionaire’s Startup 101 Series covers the basics of various valuation methods in a beginner-friendly way. (P.S. You wouldn’t want to skip reading the description for this one!) 


2. Startup Funding Stages You Should Know About - Arsalan Sajid 

Pretty self-explanatory, Arsalan Sajid walks readers through each stage of a startup’s life, from Seed to IPO, to help budding angel investors like you ensure that your expectations are in line with the financial and non-financial requirements of each stage.


3. The Financial Instruments of Angel Investing - Mallun Yen, Operator Collective 

Let’s get into the financial technicalities. Depending on your risk appetite, investment time horizon, cash available on hand and several other factors, a variety of financial instruments ranging from Convertible Equity to SAFEs can help investors finance a deal.


4. A VC Reveals the Metrics They Use to Evaluate Startups - The Startup Tapes #031 - Scale Venture Partners

Even if VCs and angel investors work differently, the metrics talked about here are key to understanding what investors, whether individual or institutional, should expect to gain from their investments. Startups are a risky business for VCs and angel investors alike. Hence, it’s always best to structure the outcome of your deal using relevant parameters.


Legal, Taxation & Do’s and Don’ts 

1. The Legal Process of Angel Investing in India - DM Agency

Angel investing is dynamic and complicated. Added to the fact is that there are no ubiquitous, one-size-fits-all laws for the same. The legal process of angel investing has evolved over time and differs geographically as well. Take a gander into the legal process of angel investing in India below:


2. Enjoy Tax Exemptions As An Angel Investor And While Enjoying Average ROI Of 22% - Tomorrow Makers

Angel investing is risky, sure, but the tax benefits and exemptions investors can avail are aplenty. India is just one of the numerous countries that provides lucrative exemptions, thereby facilitating the startup ecosystem to thrive. 


3. 12 Dos and Don'ts of Angel Investing - Fenwick 

Fenwick's quintessential 'Dos and Don'ts' list, presented by Ash Fontana of AngelList at RockHealth, may have been published in 2013 but it still holds up well today. These are a few general but pertinent guidelines that you, as an angel investor, must be cognizant of.


4. Jason Calacanis: Startups, Angel Investing, Capitalism and Friendship - Lex Fridman Podcast 

This incisive, anecdote-filled conversation pertaining to the startup ecosystem, capitalism and automation between two masters of their fields, Jason Calacanis and Lex Fridman, is bound to broaden your perspective through the comprehensive outlook on angel investing.


Personal Brand Building & Networking:

1. How to build a personal brand as an angel investor? - FiBAN

In a world where just about everything is commoditized, it is important to differentiate yourself as an angel investor. Both investors and startups employ their own screening processes to find the best match. Read this mini-guide which encapsulates opinions of prominent DanBAN members - Esben Gadsboell, Rolf Garde, and Christian Jantzen - on angel branding.


2. Episode 24 | Part One: The Angel Network - The BOSS Podcast with Gregory Shepard

Joined by Hall T. Martin, this episode spills the beans on the benefits of angel investor networks, major differences between incubators and accelerators, and which cities have become the next great tech hubs.


3. We don't want to be redundant, but you might want to check out Angel Investor: The Key Details & 5 Best Networks by Jay Fuchs to explore prominent angel networks. (See: Everything About Angel Investors).

The Quintessential Guide:

Angel Investing: The Gust Guide to Making Money & Having Fun Investing in Startups - David S. Rose

We cannot recommend this all-encompassing book enough. Covering the A to Z of angel-investing, if you want to glean practical  insights into the world of startups, the founder of Gust himself is here to help you.


Even though this starter-kit by no means is an exhaustive list of resources nascent angel investors can explore to make sound investment decisions, it is sufficiently comprehensive, and we're fairly certain that you'll never have to end your google searches with ELI5 hereafter.

Credits: Tarun Singh for illustrations