Key Factors I Evaluate as an Angel Investor

Over the past few years, I've had the privilege of investing in over 20 companies. As the CEO at Nexton, my position has allowed me to see the potential of Latin American talent and the opportunity to bring that to US companies. This vantage point, coupled with my cofounder Agustin's perspective, has solidified our interest and strategy in angel investing. However, our motivation transcends mere monetary gain. We invest in a future that's progressive, innovative, and serves a higher purpose.

In this post, I delve into some of the core factors that we consider when deciding to invest in a company.

Entrepreneur's Dedication and Passion

Much like a sturdy ship weathering a storm, the true strength of a company is revealed during tough times. The entrepreneurs' dedication and resilience are vital during these times, and that's what Agustin and I look for before investing. We invest in the journey and the individuals steering the ship, not just the business idea.

Potential for Impact

An investment's objective should not be restricted to monetary returns. We aspire to invest in companies that leave a positive imprint on society, disrupt the status quo, and essentially, drive societal progression.

Market Size: The Larger, The Better

Given the inherent challenges in building a company, the potential reward must justify the effort. That's why we prefer companies addressing large problems, reflected in their Total Addressable Market (TAM). A large market size equates to a larger potential return and a broader positive societal impact.

Leveraging My Expertise

We don’t view investing as a passive activity. We're inclined towards companies where we can offer our expertise and contribute to their growth. Whether that's assistance with go-to-market strategies, building strong technical teams, or providing introductions to potential investors or partners, we seek companies where our experience and network can amplify their success.

Financial Health: Critical for Mature Companies

For revenue-generating companies, we diligently examine unit economics and financials. Healthy unit economics suggest a viable business model, while robust financials point to a well-managed company with growth potential. It's vital that the unit economics are structured in a way that permits the company to start scaling in a healthy, sustainable manner.

As we conclude this exploration into our investment strategy, it's essential to acknowledge the inherent risk in angel investing. There are no guarantees of return; indeed, it's still to be seen whether our investments will generate any significant returns. Yet, this uncertainty doesn't dissuade us. We invest in companies we genuinely believe in, companies that align with our values and vision. Even if a company does not succeed financially, if it strives to make a difference, the effort will have been worth it.

In essence, our journey as angel investors is not solely about the financial reward. It's about fostering a brighter future, advancing innovation, and supporting people and ideas that resonate with us. It's about being part of something larger, something transformative. This philosophy forms the bedrock of our angel investing strategy.