An Easy Framework for Becoming an Angel Investor

In my last post, I talked about why I think everyone who can, should be angel investing.

Today, I’ll share an easy framework to get started.

In the last two years, I’ve participated in 1 angel summit and made 1 direct angel investment.

I say that only to qualify my experience — I am by no means an expert.

But along the way I have done lots of different stuff to try and get better by:

• Reading through NACO’s ‘Practical Guide to Angel Investing’ to understand the basics
• Listening to the ‘My First Million’ podcast to identify the qualities of a successful founder
• Speaking to other angel investors to understand how they evaluate deals
• Tuning into Stonks Demo Days to hear pitches from top trending startups

All of this has been super helpful.

But if I was starting today, this is the simple framework I’d follow to get started:

Step 1: Look for Tax Credits.

Depending on where you’re located, you may be eligible for angel investor tax credits which can de-risk your investment.

Step 2: Participate in an Angel Investor Summit.

An angel summit is an opportunity for you to invest alongside a group of more seasoned angel investors. It’s not just an investment in a company, it’s also an investment in your education.

Step 3: Get connected with your local incubator/accelerator.

Almost every city has a tech incubator or accelerator that is trying to grow its network of angel investors. Get connected, participate in events, and meet founders you can potentially invest in one day.

Step 4: Know your limit, play within it.

Determine ahead of time how much of your portfolio you want to allocate to angel investing. Setting a limit will force you to be more discerning when you’re evaluating new deals.

If you want to become an angel investor, this is all that matters.