3 things I've learned about Angel Investing (which may surprise you)

I recently attended a panel discussion on angel investing @ LinkedIn London HQ, featuring inspiring women leaders and entrepreneurs, Ella Goldner (Levy) Elissa Corrigan , and Viktoria Tchoudakov . I've found their approach so refreshing and their insights invaluable for anyone who is starting their journey in angel investing. Here are a few key takeaways I've learned:

1. Connect and Conquer

Starting our journy as angel investors, deciding to invest some of our own money into early stage startups, is thrilling but also a bit scary. How can we get deal flow, undrstand the best areas to invest in, do our due diligence? The network gap- especially for women who make up only 14% of angel investors in the UK and often have fewer connections in the field (source: UK Business Angels Association) - does not serve us either. Our expert panelists recommended attending industry events, joining investment communities, and engaging with online platforms dedicated to angel investing. This can open doors to a wealth of opportunities and contacts. For instance, Alma Angels is a very welcoming community to first-time angel investors who want to invest in women founders. When joining, try identifying and connecting with a friendly, more established investor who is willing to offer guidance, share best practices, and inform you about opportunities.

Syndicates vs. Networks: Pick your crew

Angel syndicates and networks are great platforms to start building those connections, but they operate differently:

• Angel syndicates are groups of investors who pool their capital to invest in startups. They are typically led by a lead investor who handles deal sourcing, due diligence, and negotiations, and there's often a fee involved. This structure allows for a more organized investment process and can result in higher investment amounts and shared risk among members.
• Angel networks or communities are looser collectives where individual investors come together to share deal flow and investment opportunities but invest individually rather than as a collective entity.

Consider which suits your circumstances and take your pick (here is a list of several angel groups and communities).

2. Crafting your investment thesis: When passion meets portfolio

We do not necessarily need to be experts in the field that we invest in. Our investment thesis could merely align with our area of interest. Here are a few questions we can ask ourselves to inform our thesis and guide our investment decisions:

• What industries or technologies am I passionate about?
• Would I use this product or understand this industry?
• Can I add value beyond capital?

When it comes to early-stage startups, there is less need for an extensive strategy or financial modeling to make a decision. Yes, due diligence is essential, but investing is as much about the person as it is about the product or service (partcularly as the latter tends to evolve and pivot). Look at the founder’s appetite, drive, and commitment to succeed.

Trust your gut – it often knows best.

Beyond the wallet

Successful angel investors bring more than just capital. Offering domain experience (e.g. marketing, sales, product), mentorship, making introductions, or simply showing belief in the founders can significantly boost their confidence and help them thrive.

3. You don't have to be rich...

• Investing as an angel can also be done with smaller amounts. As Debbie Wosskow, co-founder of The AllBright Collective said: ‘You don’t need to be Warren Buffett to invest’. Determine how much capital you can and are willing to risk. Since angel investing is high risk, consider diversifying your portfolio by investing small in multiple startups. Returns may come only a few years down the line so better be prepared for the long haul!
• Tax schemes- Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS)- can offer angel investors tax breaks on the money they invest into certain British businesses, which help offset some of the risk. Understanding and utilizing these benefits can make a substantial difference in your investment strategy.
• Consider setting aside capital for a follow-on investment in the same startup.

What excites me about Angel investing is that it's not just about financial returns—it's also about driving value and growth to the ecosystem. By leveraging our unique strengths and passion, we can make a meaningful impact- helping new ideas to form and diverse founders to build solutions- while achieving our investment goals.

Big thanks to the brilliant moderator Reshma Babu and Jade Yorke for organizing!

#angelinvesting

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research or consult a professional before making any investment decisions.