David Weisburd here – investor in 23andMe, DraftKings, Headspace, Palantir, Robinhood, and Wish.
I’ve been an angel investor for 12 years now, and a venture capitalist (VC) for more than five. Over the course of my professional journey, I’ve learned that angels and VCs use different tools and strategies to make their decisions – which leads to very different outcomes.
Venture capitalists in particular have access to a suite of resources and institutional knowledge that the typical angel investor does not. But as far as I’m concerned, it’s time to bridge the gap and share those insider tips and tricks – the ones VCs don’t want you to know.
Let’s discuss the three that I think are most important.
While the exact entry valuation doesn’t make a big difference, the round of investing makes a huge one. In the above example, the seed round may be priced at a $10-$15 million valuation, whereas a Series A for a hot company could be at a $100MM valuation. That would lower your return from 1,000X to 100x, or from $10 million to $1 million on a $10,000 investment.
Conversely, B or C execution in a high-growth market has unbound upside potential (think of Amazon, Airbnb, or Uber).
Remember, you are backing the team in the given business, not the team throughout its entire career, so the industry that the team is currently pursuing is of prime importance.
Some investors will bet on a pivot. They invest in the team hoping that team will alter course and steer for a more favorable market. But betting on a pivot is dangerous and increases the risk by at least 3X-10X on an investment. In other words, you should assess the investment at a 3X-10X higher valuation in order to compensate for the additional risk.
The effect of this is that the true market size or industry size and are rarely known or available for truly disruptive startups until they’ve successfully created the market.
For example, there was no on-demand taxi service until Uber came along, just as there was no streaming movies and TV until Netflix was started.
*returns are approximate and do not take into effect potential dilutive effects.
Keeping these three tips in mind has made me a better angel investor over the years – and it’s even allowed me to teach my family and friends how to invest like the top 1%.
There’s so much insider knowledge you can only learn by earning your stripes in the upper echelons of Silicon Valley. My ultimate goal is to ensure that those “secrets” end up exactly where they belong: in the hands of angel investors who are ready to learn.
I can’t wait to keep sharing them with you. Stay tuned – I’ll be back with more later this week.
Very best,

David Weisburd
I’ve been an angel investor for 12 years now, and a venture capitalist (VC) for more than five. Over the course of my professional journey, I’ve learned that angels and VCs use different tools and strategies to make their decisions – which leads to very different outcomes.
Venture capitalists in particular have access to a suite of resources and institutional knowledge that the typical angel investor does not. But as far as I’m concerned, it’s time to bridge the gap and share those insider tips and tricks – the ones VCs don’t want you to know.
Let’s discuss the three that I think are most important.
#3) Valuation is important – but it’s not the primary consideration.
As I’ve mentioned before, investing is a game of power-laws – which means that the companies that win, win very big. If a company goes public for $10 billion, it doesn’t (really) matter if you invested at a $10 million valuation (a 1,000X return) or a $15 million valuation (a 666X return). Either way, you end up with a multimillion-dollar payday.*While the exact entry valuation doesn’t make a big difference, the round of investing makes a huge one. In the above example, the seed round may be priced at a $10-$15 million valuation, whereas a Series A for a hot company could be at a $100MM valuation. That would lower your return from 1,000X to 100x, or from $10 million to $1 million on a $10,000 investment.
#2) The founding team is important, but not as important as the market.
When you press a venture capitalist on what is more important – team vs. market – they’ll tell you that the market is most important (in private, never in public). That is because perfect execution in a B- or C-rated market will always have a limit to how much it can return.Conversely, B or C execution in a high-growth market has unbound upside potential (think of Amazon, Airbnb, or Uber).
Remember, you are backing the team in the given business, not the team throughout its entire career, so the industry that the team is currently pursuing is of prime importance.
Some investors will bet on a pivot. They invest in the team hoping that team will alter course and steer for a more favorable market. But betting on a pivot is dangerous and increases the risk by at least 3X-10X on an investment. In other words, you should assess the investment at a 3X-10X higher valuation in order to compensate for the additional risk.
#1) The best opportunities may not have an industry report.
It can’t be emphasized enough how much venture capital is driven by power laws. One of the effects of this power law dynamic is that the best companies end up creating new markets vs. competing in existing markets.The effect of this is that the true market size or industry size and are rarely known or available for truly disruptive startups until they’ve successfully created the market.
For example, there was no on-demand taxi service until Uber came along, just as there was no streaming movies and TV until Netflix was started.
*returns are approximate and do not take into effect potential dilutive effects.
Keeping these three tips in mind has made me a better angel investor over the years – and it’s even allowed me to teach my family and friends how to invest like the top 1%.
There’s so much insider knowledge you can only learn by earning your stripes in the upper echelons of Silicon Valley. My ultimate goal is to ensure that those “secrets” end up exactly where they belong: in the hands of angel investors who are ready to learn.
I can’t wait to keep sharing them with you. Stay tuned – I’ll be back with more later this week.
Very best,

David Weisburd
Very good and important information; especially, new markets. I must admit all of these hints will allow me to invest much better. Because I have more information to consider before I make the decision to commit to the startups. THANKS
Thank you Sam!
Hey David, Thanks for the insider info. I find # 2 really interesting, as you do mostly hear its all about the team. However, your point makes a ton fo sense, and its a perspective you never hear. Clearly, you’ve done well and I’m fond of some of the investment you made as well as headspace from a long time users’ point of view. Cheers!
Great article I’m a beginner Angel investor hoping to hit just one big one to get me really started
Im a beginner angel investor wanting to learn
I like your revelations.
Thank you for sharing this invaluable information. Awesome tips to keep in mind.
A gain will be the beginning of the last financial terror I have been out through by trusting a large corporation to honor its truths unlike Dillard’s did to me and that was to throw me into the streets in severe spinal cord pains and surgeries to let me lose all I had worked for. A great but small investment to get me started with only $109. In my pocket which is all I have and I have invested in a startup and pray I’ve done my due diligence to have a fresh start in the world that would free me to having start my best life. I pray I’ve done a good thing. . Angels and entrepreneurs have introduced me to the good life. I pray
Hi David, my name is Racheal Clay. I found your secret very much interested. I’ll tune in next week to see & learn more.
Thank you Racheal!
Hi David my name is Racheal Clay. I think that the secret was very much something that I would be interested in learning more about. So I’ll be back in tune with you next week. Stay Cool!!
Thank you for sharing some of the factors that go into your decision making process. I look forward to hearing more from you.
Thank you Jimmy!
I will admit that I didn’t know the formula for what valuation meant and how you calculated it. I now see how you can predict returns based on this post. Thank you!!!
Thanks for sharing these important tips when considering angel investing. I can’t wait to use what I’m learning here as a member of Angels & Entrepreneurs to make that first huge return on my investment. Thanks again, David.
totally agree with the point about execution in the right market. It’s obvious in the crypto and marijuana market from 2018 to 2019, but at least sentiment is definitely getting better for cryptos now
Thank for info it was very helpful !
Just try to soak up all this great knowledge.
Hi Debra here I’m a beginner too and I really like the article keep them coming
I can’t figure out how to invest, I have called and Bill talked so fast. I couldn’t find what he said to clip on. I am 78 and need help.
Hi Nancy,
Thanks for reaching out! Our team is working to get you set up with the Startup Investor emails again.
If you’re a member of Angels & Entrepreneurs, you can head straight to your Deal Flow Tracker to invest. Here’s the link! https://angelsandentrepreneurs.com/deals/
If you’re not a member and would like to join, try this link! https://pro.angelsandentrepreneursinfo.com/m/1587507
Thanks so much,
Sarah
Excellent