How founders can get started as angel investors

Entrepreneurs understand the nuances of launching and running a company well, making them natural fits as angel investors.

At a recent virtual event, Elizabeth Yin, co-founder of Hustle Fund, and Immad Akhund, founder and CEO of Mercury, chatted about their experiences angel investing in hundreds of startups, including unicorns like Lyft, Airtable, and Clubhouse—all while running their own companies. The conversation was moderated by Brian Nichols, Venture Partner at Hustle Fund.

Watch the event video and read through our key takeaways.

Key takeaways:

How does being a founder help you as an investor?

As a founder, you can empathize with other entrepreneurs. You understand that time is limited, whch forces you to ask precisely what value you're adding as an investor—often, it's not just money.

Plus, founders can come up with unique frameworks with which to assess other founders when investing in them. For example, Immad looks for grit and determination—and he only speaks to people whose ideas already excite him. Similarly, Elizabeth looks for an excellent idea first. She explains that even amazing founders have been waylaid by bad ideas.

What advice do you have on angel investing while running a company?

Don’t have any other hobbies... just kidding. More seriously, make sure you have enough time to invest in both roles.

Some tips:

• Start by investing small checks—it takes up less time.
• Find a way to accumulate deal flow. You might attend events to build your network, join an accelerator as a mentor to increase your exposure to companies, and build a Twitter following to share your views and add value to your portfolio companies when you Tweet about them.
• Dedicate weekly time to talk to companies and research the space.
• Persevere. The first 20 investments will be hard—you don't know how to position yourself well yet. After 30 companies, you'll start getting referrals, and the benefits will compound.

I'm about to write my first check. What do I need?

You'll need three key things: money, a strategy, and commitment.

• Don’t just write one check. Approach your investments with a philosophy and a broader budget in mind. Set a minimum number of checks you'd like to write.
• When planning your budget, set a target annual spend over a set period of time that you can realistically commit to.
• Figure out what type of investor you want to be. Ask yourself: “What is my special power and how am I going to deliver on that?”

If you're just getting started as an angel investor, learn how to develop an investment thesis here. And once you've made a few investments, you can apply to join our Investor Database.

If you have ideas on events you'd like to see us host or just want to say hello, send us a message to [email protected]. We always love to chat.