If there’s one piece of advice I want you to remember for life, it’s this:
Ride on the coattails of other successful investors.
By doing that and following along with their skills and years of expertise, you’re way more likely to pick winners.
But here’s the thing:
Every single independently wealthy person you’ll ever meet has also made a mistake.
That includes me. I’ve certainly made some less-than-favorable investments in my time… but I’ve used what I’ve learned in those situations to change up my strategy and create a better life than ever before.
Let’s talk about four of biggest mistakes to avoid in your own angel investing journey…
Investing in the very first deal you see
Most startups are like shiny new toys. They’re usually led by teams of ultra-passionate founders who’ll try to sell you hard on their big ideas.
It’s easy to take the bait and invest right away, especially when you’re first starting out.
I don’t blame you. Many of these ideas are extremely enticing, and their founders are super persuasive.
And sometimes, these companies are actually winners.
But anytime you have the urge to sign your name immediately, I want you to take a big step back and think about it.
90% of startups fail. What makes you think this one won’t?
And that leads me to my second point…
Not doing proper due diligence
Never hand over a penny without thoroughly researching a company on your own.
Sure, you can take plenty of sound advice from top investors and stakeholders… and this advice can be really helpful.
But only you know what companies fit best into your budget, your investing thesis, and your risk profile.
Of course, even the best due diligence can’t predict every single winner or every single loser. Which is why it’s important to take as many chances as possible…
Not investing in enough deals
The more investing chances you take, the more likely you are to score on some sweet returns.
If you don’t invest in enough deals, you’re less likely to have picked a winner.
It’s just a logical rule of thumb.
I recommend investing in at least 10 startups to maximize your chances. Figure out your annual investment budget and spread it out in smaller amounts.
And don’t forget to exit early and often…
Not exiting soon enough
There comes a point in most angel investor’s lives where they’ll have to decide whether or not to exit a company.
You can do this in a few different ways.
If the company goes public, you can sell your shares for cash.
If the company goes through a merger or an acquisition, you can choose to keep your shares or exchange them for cash.
Some companies will even let you privately sell your shares to another investor.
My advice? If you’ve made a solid return, do it. Take your money and hit the road.
If you don’t exit soon enough, you could be stuck if a company’s luck takes a turn for the worst. And that means waving goodbye to any profits you could have potentially seen.
When you’re first starting off, you’re going to make errors. We’re all human, and it’s just the way the game works.
But by following in the footsteps of crazy successful people, you can use their knowledge to your advantage and avoid making the same rookie mistakes they did years back.
That’s exactly what happened with my buddy Andrew Keene… one of the world’s most successful trading experts.
Over a decade ago, Andrew lost $500,000 in an investment that blew out his trading account.
But he didn’t quit. Instead, he changed his strategy.
And this strategy took him from down and out and wiring his last $100,000 into his account to $5 million richer in just two years.
When I first introduced you to Andrew last November, the response was insane.
It’s been almost a year since then, and Andrew’s trading community is now massive.
Neil Patel is a successful entrepreneur and investor who has been active in the startup scene for nearly two decades. Born in London, England, he moved with his family to Orange County, California when he was two years old, where he was surrounded by entrepreneurs and innovators from an early age. Neil is the founder of several companies, including Crazy Egg, Hello Bar, and Quicksprout – companies that established Neil as one of the world’s leading digital marketers. But Neil spends more time these days on the other side of the table – as an angel investor. He has made some unbelievable returns backing early-stage startups. Now, he’s here to teach you to do the same. Neil launched the Angels & Entrepreneurs Network to pull back the curtain on the world of “pre-IPO” investment, because he believes everyone should have access to the same playing field – not just society’s high and mighty.
Follow @angelsandentrepreneurs
Thanks for this. I can use all of the help I can get to avoid losing investments.