Welcome back to Neil Patel’s Private Deal Flow.
One of our biggest goals at the Network is to equip you with the knowledge necessary to make wiser investment decisions on your own.
That’s why we were so excited when we heard that Republic, one of the most well-known crowdfunding investment platforms, was hosting an angel investing Master Class last week.
Now, we’re not affiliated with Republic in any way… but there’s no denying they’re industry leaders in the crowdfunding space. So we decided to attend – and we picked up some pretty cool insights for you. (You can also find many more need-to-knows on the Angel Investor’s Bootcamp series online.)
The Master Class went over all of the important things you should keep in mind when making those first angel investments… and there’s a lot to cover.
Here are our top three takeaways:
An investment thesis is critical for success
When you were in school, did your teachers ever talk to you about thesis statements?
Ours did too. Little did we know that it would become one of the most useful investing skills in the toolbox.
The first paragraph of any paper usually has a pattern. Generally speaking, you start with something broad, and narrow down your point until you hit your specific thesis statement, or the central idea of your piece.
Angel investing actually works somewhat similarly.
The idea is that you want to come up with a specific reason why you believe – or why you don’t believe – in a company’s success.
To figure this out, you have to put a little bit of work in and do your research.
Start by researching the broader industry. Then, figure out how that startup fits into those trends.
Is the industry poised for growth? How big is the market? And what makes this company capable of succeeding in this market?
Ultimately, you want to figure out if there is a clear demand for that product.
If there’s not… well, maybe it’s not the company for your hard-earned dollars.
Every angel investor is different
Angel investing is an art form… but not every artist is the same.
Your angel investing strategy may differ a whole lot from those around you, but that’s okay. You’ll develop your own strategies and ways of playing the game.
When you’re getting started, though, you need to ask yourself, “What kind of angel investor do I want to be?”
And the answers to this question will vary, depending on your personal strategy.
For example, what kind of risk are you willing to take on? You could choose to invest into more established markets, like SaaS (Software as a Service) technology, or you could choose to invest into more risky emerging technologies.
Ask yourself what you’re most excited about. Only put your money into companies that you truly believe in and that you can envision being excited about for the long haul.
Every decision that you make should align with your investing thesis. If it doesn’t, chances are you may not believe in that idea.
Ideas change… people don’t
When you’re investing in a company, you’re not investing in the product or idea… you’re investing in that company’s founder.
Because ideas are fluid. They change all the time. An idea that you put your money into one year may have completely evolved by the next year… and that’s normal.
What shouldn’t change, however, is your belief in the founders of that company. You’re looking for a good team that you’re sure is destined to succeed.
You want to make sure you’re investing in a founding team with good chemistry that’s passionate about their product. We’re talking chemistry with each other, and chemistry with you.
A team that doesn’t work well together or with their investor is less likely to be successful in the long run. And it’s a huge red flag if they’re not passionate about their product.
The most successful founding teams will be ones with good track records who convince you that you should get excited and stay excited about their product… no matter how that idea evolves.
Republic runs classes like this one periodically, so if you like what you see here, you should consider checking out their upcoming events calendar. And it’s not just Republic – nearly all of the popular crowdfunding portals host podcasts, webinars, and other educational sessions on a regular basis.
Want even more information to help you become a better angel investor? Check out the Angel Investor’s Bootcamp in the Media Room – and once you’re done there, you can learn more by reading up on the Network’s special reports.
We also hope you got the chance to review your brand-new deal online… and that you’re excited for another action-packed month on the Network.
We’ll talk soon.
The Neil Patel’s Private Deal Flow Research Team