Notes on a Year of Angel Investing

I’ve spent the last 14 months working as an angel investor and advisor to a dozen companies across crypto, digital art, and gaming.

Recently, I’ve had several conversations where I’ve been asked questions like: What is angel investing, really? How did you start? How do you get deal flow? And in this short essay, I’m going to wrestle with those ideas (and related ones) in public.

My aim here is to write something helpful for folks who want to learn more about this slice of the venture industry, whether that is people who want to angel invest themselves, or those who are just curious about how it all works.

One disclaimer before we start: I still feel very new to this, so these reflections are just field notes on my personal experience. Take it or leave it.

What is angel investing?

Angel investing is simply the act of investing in early stage companies. This usually happens at the “pre-seed” or “seed” stage of a business, meaning before a product or service has been built, or early in its life cycle. Angel investing is high risk because most companies fail, but it also offers high upside in the event a company ends up succeeding. For example, how happy would you be if you owned a meaningful percentage of Apple shares today because you were an early investor?

How did you start angel investing?

My journey to this was incidental. Near the end of my time working at Tribute Labs in 2022, one of the DAOs I helped operate passed on investing in a company that I thought was interesting. The founder then reached out to me personally and asked if I would be open to participating in their seed round by writing a $5K cheque, which I then did.

After that first cheque, I decided I wanted to set aside some money to continue investing in startups on my own terms. I thought a) I could go to business school and pay X amount in tuition, or b) I could take a similar amount of money, use it to invest as an angel, and stay closer to the trenches. I went with the latter option so I could contribute to real companies, help them win, and learn from their successes, failures, and quirks.

How do people generally get deal flow?

There are two main ways angel investors get (quality) deal flow. Founders tend to want angels in their rounds that either have a meaningful personal brand or have domain expertise that is relevant.

The reason people with large personal brands or audiences do well as angels is because companies want them on their side for credibility and distribution. There is signal power in having trusted folks aligned with your business and they can spread the word about your product or service.

Let’s look at some examples. People tend to build a relevant personal brand through having a strong track record with founding or operating businesses (like Santiago Santos, formerly of ParaFi), or they make a name for themselves through social media by being thoughtful tastemakers over time (like Deeze with Twitter Spaces).

On the domain expertise point, founders like working with people who have niche knowledge that is relevant to their business, no matter how large or small the person’s social reach is. For example, if you’re building an infrastructure project on Solana, there is value in including people on your cap table who understand the tech and can be active advisors. This is usually why when you see fundraising rounds get announced, there are people listed there that no one has ever heard of. It’s because they have specialist knowledge.

What companies do you invest in and why?

The heuristic I’ve found most helpful for angel or venture investing is the idea of TTM: team, timing, and market. You basically ask three questions:

1. Who is building this product or service? i.e. is the team qualified?

2. Is now a good opportunity for this idea? i.e. are they too late, too early, or right on time?

3. Who is going to use this i.e. who is the target audience and will they actually care?

If all three questions have coherent answers, then the startup may be worth investing in. I tend to go one step further and only support companies where I feel I can be legitimately helpful. For example, I think the time I’ve spent with artists via running Accelerate Art over the years is helpful for artist-focused marketplaces like Ensemble or Prohibition, both of which are examples of teams I’ve backed.

How have you positioned yourself to be an angel investor?

I’ve done three things: pick a niche, create content, and network.

What is my niche? I focus on the intersection of crypto & culture, and I frame myself as someone who can offer teams practical help around topics like community design, branding, strategy, and storytelling based on experience from projects I’ve either founded or worked on across DeFi, DAOs, and NFTs.

On the content side, I try to ‘think in public’ by spending too much time on Twitter and putting out essays like this. Many opportunities have presented themselves just by people reaching out to me after they vibed with something I wrote or tweeted.

Finally, I am hyper social (to the extent that is possible for an introvert). I attend conferences, I spend an incredible amount of time in group chats on Telegram and Discord, I introduce people to one another when it’s appropriate, etc. This helps me build relationships, get to know trends, and be part of different subcultures.

Taken together, these activities have led to a meaningful increase in deal flow, where founders reach out and ask me to invest in their startups, or people I know loosely pass along opportunities that are relevant. My hope is to be the kind of person people want to reach out to when they’re founding something and raising money.

What does an angel investor actually do?

One way of thinking about this is angel investors (as well as venture funds) work with startups to offer them three things:

• capital (they invest money)

• connectivity (they facilitate connections)

• advice (they weigh in when it’s helpful)

Different people have different approaches to those activities from being passive investors who are only around if a founder needs something specific, to being very active investors who are almost like stand-in team members. I try to strike a healthy balance of being present but not annoying.

Practically speaking, this looks like doing calls with founders every few weeks to offer feedback and be a sounding board. I curate and send along articles, threads, and ideas as it relates to their niche. I introduce people to one another and help with business development. And the goal with all of this is on a daily or weekly basis I want to do everything I can to help the underlying team and founder(s) thrive.

Is angel investing in crypto different compared to other industries?

I have made exactly 1 investment outside of crypto, so take this with a grain of salt, but my sense is that, yes, crypto is different in meaningful ways compared to other industries.

First, the investment cycle moves faster in crypto than elsewhere. Deals close quickly, and the time to a liquidity event is shorter i.e. instead of doing an IPO like a traditional company, a promising crypto team could have a token launch or get acquired within a couple years of being founded.

Second, since crypto is still an emerging subcategory of tech, investing in the industry is reasonably meritocratic. People can build, write, think and otherwise work their way into credible positions in the industry just by outhustling others.

And this point that crypto has high social mobility is probably a good spot to end the essay because it’s invitational… if you want to do this sort of work, you probably have a better shot doing it “here” than in another industry where fancy backgrounds, credentials, or connections are prerequisites.

Thank you to Derek Edwards from Collab + Currency and Aaron Wright from Tribute Labs for shaping much of my general thinking around investing in crypto. And thank you to Emmy, Jordan, Liam, Lamboland, and Patrick for feedback & review of this essay.