being an angel is not all sweetness and rainbows
Richard Hadler here from Founders Capital. We scour Europe for the top 1% of Start-ups led by epic Founders, giving them access to our world-class investor & partner network to scale their ventures to heady heights.Becoming an angel investor isn’t just about cutting checks—it’s about diving headfirst into the crazy upside-down world of entrepreneurship. It’s rewarding, it’s exciting, and let’s be honest, it’s a one huge rollercoaster.
You get the inside track on entrepreneurs who are all-in, building companies that could shake up industries and maybe even change the world. When you invest, you’re not just another name on a cap table—you’re part of the journey, experiencing the highs and lows alongside them.
The angel investing scene in the U.K. and Europe has proven to be remarkably resilient, even through the chaos of Covid-19 and economic turbulence. We’re even seeing a fresh wave of younger, exited founders jumping into the angel game, which is fantastic news for startups hunting for early-stage cash.
If you’re thinking about joining the ranks of angel investors, here are my ten essential tips—plus a couple of bonus nuggets—from a decade in the trenches.
1. Don’t Dive in Headfirst. Unlike VCs, you’re not under pressure to deploy capital. Take your time. Get to know the ecosystem you’re stepping into and the companies vying for your attention. As a new angel, you need to sharpen your instincts to spot what a good deal really looks like. And make sure you’re backing credible teams and funds that align with your business values. Remember, it’s not all rainbows and unicorns—there are sharks in the water.
2. Bring More Than Just Money. Sure, anyone with extra cash can be an angel investor, but if you don’t offer anything beyond your money, you’re just ‘dumb money.’ And nobody wants that label. If you want to be a real asset to the ecosystem, start by offering support to founders even before you write that check. Build your reputation by being helpful and reliable—but don’t overstep and become a meddling force.
3. It’s All About the Team. A brilliant idea in an exciting market can be seductive, especially when pitched by a charismatic founder. But pause. Evaluate whether this is truly the right team to pull it off. The wrong team, no matter how good the idea or market, will sink the ship. The quality, grit, and attitude of the team are what really drive success.
4. Don’t Be Fooled by Fancy Resumés. One of the biggest traps is assuming that an impressive CV means a founder is ready to run a startup. The truth? Corporate and academic accolades often have little to do with the scrappy, relentless hustle required to build a business from the ground up. Dig deeper. Look for real-world achievements and assess character—sometimes it’s the street-smart, battle-hardened founder who’s got what it takes.
5. Do a Tech Reality Check. When it comes to technology, don’t just take the founder’s word for it—get your hands dirty. Play with the product, test the app, talk to the CTO, and check out reviews. Understand the real status of the technology and the culture of the engineering team. If you’re not tech-savvy, lean on other investors who are and learn from their due diligence.
6. Probe the Go-to-Market Strategy. One of the most common weak spots among tech founders is underestimating how hard it is to sell. A killer product means nothing if no one buys it. Drill down into the founders’ go-to-market strategy—make sure they’ve got the chops to build a sales machine that will drive growth.
7. Watch for Vested Interests. Vested interests can kill even the best business ideas. Founders often fail to spot them, especially if they lack deep domain expertise. Whether it’s entrenched industry players or existing relationships, these hidden barriers can block new entrants. This is particularly true in marketplace models—be cautious and realistic about the challenges ahead.
8. Understand Dilution—Really Understand It. Dilution is part of the game, but some companies will eat away at your ownership more than others. Be especially wary of businesses that need continuous capital injections without a corresponding rise in valuation. For example, brick-and-mortar businesses can be dilution traps—every new location might mean a new round of equity raising that slices your stake thinner.
9. Focus on the Exit. It’s easy to get caught up in the fun of being an investor—being part of the journey is exhilarating. But never forget, the endgame is to make money. Don’t invest in companies that don’t have the potential for a strong exit. Ask yourself: Is the market big enough? Is there a clear path to an IPO or acquisition?
10. Patience Isn’t Just a Virtue—It’s a Requirement. Angel investing is a long-term play. Some of your best returns might take a decade or more to materialize. If you’re looking for quick wins, this isn’t the game for you. Be ready for a rollercoaster ride with more downs before you hit the ups.
11. Diversify Your Bets. Don’t put all your eggs in one basket. Spread your investments across different sectors, stages, and even geographies. This not only increases your chances of hitting a big win but also balances the inevitable losses.
12. Network Like Your Returns Depend on It (Because They Do). The more plugged in you are, the better your deal flow and the stronger your portfolio. Attend events, join angel networks, and connect with other investors. Your network can be a treasure trove of insights, opportunities, and co-investors who can help you make smarter decisions.
Jumping into angel investing isn’t just about the potential financial returns—it’s about being part of something bigger. By following these tips, you’ll not only make better investments but also play a key role in the next wave of innovation and entrepreneurship.
Thanks all today folks!
Cheers,
Rich
