I got exposed to angel investing ~2010 through Sameer Guglani when he launched Supermorpheus (used to be called The Morpheus Gang in those days), and I am happy that I got into it. This part of my career introduced me to some of the smartest people I know, and have led to massive learning – directly and indirectly.
The angel investing landscape has evolved tremendously over these last 10-12 years. It was “an entrepreneur supporting another entrepreneur”, but has morphed into an asset class, and have become a part of many wealth portfolios.
Few things that I strongly believe in:
1) It’s driven by heart, not by mind: You do angel investment to become part of something that you believe in, something that you want to see change in the world, and into a person you relate to. This is more of an art than a science.
2) Exit will happen when it happens: The angel check should be non-institutional. It is very difficult to predict an exit (even if the business is good) within 6-8 years, as the business raising an angel round is very young and does not even have a product-market-fit in those early days. It is still not at an inflexion point and there is no visibility of exponential growth curve.
3) Founder will seek the help they need: Do not preach the Founder. They are smart. They will seek your help if they need. Else leave them at peace.
4) Wealth building cannot be your #1 goal as an angel investor (shocked!): Just like entrepreneurship the fun is in the journey and not the destination. You may make a good multiple, or you may draw a blank. But the real takeaway is the learning, excitement, fun, relationships that you get on the way.
5) Most investments will be “crazy” when you make them: When I invested in Cropin, “Agritech” was not even a category. When I invested in BluSmart, so many people declared it as a stupid investment as according to them there was no space for a third taxi company after Uber and Ola. The game is about investing in sectors which will evolve in the next decade, and entrepreneurs who Are crazy to chase those dreams.
6) Investment thesis evolve: Angel investors’ thesis evolves and are heavily biased basis their experience and learning’s. This is the fun element of this whole exercise. And always be ready to be surprised and proven wrong.
Angel investing in my opinion is driven by “give back”, “be part of something exciting”, “hang out with interesting people”, etc. It does not have any certainty, and the variance in return are extreme. Can we really call it an asset class?
I am a little worried about the institutionalisation of angel investing. I think institutionalisation is good at Venture Capital (which IMHO is broken as well) level because most invest in post-PMF level. I have a feeling this will not end well. And I may be horribly wrong (I wish!)
What do you think?