My Strategy For Angel Investing

– Angel investing. How do I decide and what makes it work? You know I’ve always found
this word angel investing such a funny word, it’s
almost like a religious being. By all means, I’m no
different than a banker when it comes down to investing
other people’s companies. Or parting ways with my money. But there’s three things that I figure I’d shoot a quick video on. To explain to people what
are those three criteria that I use for myself. Hopefully it’d inspire
other angel investors to get involved in really
amazing entrepreneurs. Now I don’t know if you know my story, but I grew up in a pretty
challenging environment. I got in a lot of trouble as a kid, and I met people
throughout my teenage years that really showed me the way. That set me on a different path. That really kinda believed in me. And those people, I
wouldn’t even be in business if it wasn’t for them. Most people would’ve
thought I’d either end up dead in a ditch, locked up in
jail for the rest of my life, or found in the loony bin. So, you know I really
feel blessed and amazed with all the success I’ve had in business. I’ve started five companies, even though the first two
are complete failures. I’ve gone on to raise money twice now. I’ve built and sold three companies. And I say that not to brag, but really just to let you know that no matter where you’re at, if you’re just starting as an investor or you’re trying to raise
money as an entrepreneur, I’ve been there. I’ve had those self-doubt feelings and I kind of surrounded
myself with amazing people that helped me get through it. So the three things that I look for to invest in an entrepreneur. Number one. Would I want to spend time with them? Do I like them? Would I want to go and
sit down and have a drink? I can’t tell you how many
times I meet entrepreneurs and they’re super aggressive
in their approach. Or they come off as a
bit little too cocky. And hey look, I totally get cocky. I mean come on, let’s be honest here. But it’s just they don’t realize that it’s first about building
a relationship with somebody. Getting to know somebody, not about getting right into the pitch. I mean just ask me a question, talk to me about my experience. I don’t know, I just feel like it’s you know one time I heard it’s all about know, like, trust, buy. And to me investing is no different. I need to know, like, and trust you first before I’m even gonna consider
parting with my money. So that’s number one. Do I like you? Do you inspire me? Have you taught me things? Because for me investing is very personal. I don’t do it for the financial rewards, even though I’ve been fortunate to have some success in investing. I really do it because I look at it as a way for me to learn. To be around people that inspire me, so that’s number one. Do I like them. The second criteria is do I feel like I could
be of value to them? Right? It’s not about just investing, it’s can I create value for
them outside of the money? Is their industry something
that I know how to do? Is there people or contacts that I feel if I made introductions would
be super valuable for them? That’s really important to me. Can I create value for that entrepreneur? Can I be helpful over an
extended period of time? Is it something I know about? And the third, and for me, honestly one of the most important things is am I a customer? Do I understand the problem? Have I felt this problem? Because for me if I’ve
never felt the problem, then I’m not emotionally
connected to the solution. I’m not emotionally
connected to the startup. So if you come to me with a biomedical or some financial algorithm or whatnot, there’s a high likelihood that I wouldn’t even be able to help. Because I don’t understand it. I wouldn’t be a customer of the product. And it’s no knock in the opportunity and the amazingness of your team, it’s just me and who I am as an investor. I really need to feel like it’s something where I could be a customer,
I’ve felt the problem. I mean that’s the way I invest. I go on AngelList and TechCrunch. Anytime I have a problem, maybe it’s I’m working
on a marketing thing and I feel like there should
be a tool that exists. I’ll go Google it, I’ll go search it. I’ll go on AngelList and search and see if there’s a company trying
to solve this problem. And it’s actually through that process that I discover a lot of opportunities. Recently I was talking to a friend and he was cold emailing investors. Like reaching out directly. And I thought that’s kinda
the most ridiculous… It’s not the way I raise money. I did a webinar recently
on fundraising like a pro. And in it I say that investors
don’t want to meet you, they want to be introduced to you. Now if you dissect that sentence, it’s don’t cold email somebody, but actually try to find somebody
they know, like, and trust and get that introduction. For me, I suggest that people
go after the entrepreneurs. Anyways, this is really about
my criteria angel invest, I wanted to put that
out there to the world so that if anybody’s thinking
of reaching out to me they understand the
context of what I like. And if they’re thinking of investing, maybe they might find value in
those beliefs and principles. And use those as filters
to find great investments. Again, it comes down to people that I would
want to spend time with, they inspire me, they teach me things. I feel like I would be a
customer of the product. That I felt the problem
and I love the solution. And third, I can be helpful to them in moving and growing their
business going forward. So, I want to challenge you to stack your business for growth. And live an extraordinary life. Have an amazing day.

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28 thoughts on “My Strategy For Angel Investing

  1. Morning Dan! I'm not a serial entrepreneur (yet) but I can attest to your criteria. Finished my seed round last December and on-boarded 4 angels in August. All four of them fit your criteria, off-course one more then the other.

    Personally I would weigh the "Relation" and "Being of Value" slightly higher then the "Solution" criteria but that's just because I love learning new stuff. 🙂

  2. One of my favourite videos so far… Dan you're drawing me deeper into your fan club.. I just loved the angel dating tips for startupers of hey before we "do it"… "ask me a question, talk to me about my experience"

  3. Dan – great criteria!  Very succinct and to the point.

    Proof in point: I was at a "high roller" event the other night (one guest arrived by helicopter), introduced to a gentleman by the event organizer (after he heard a bit about what I'm up to).  My fiancee was with me and the gentleman and his girlfriend invited us to dinner with the organizer (his friend, apparently).

    We had a great evening – at one point I was asked a bit about what I do, which I described briefly… but all in all, we enjoyed a nice steak dinner and great conversation together.  At the end of the evening, the gentleman asked me for my card and we're having a drink after work to talk more about what I'm up to – he said he may or may not be interested in participating himself, but he might "know people" who may want to hear more.  I later discovered that he was the chair of the largest Angel Investing network here in town… this whole experience belongs in a movie, I never saw that coming.

    The entire evening and my meeting him (through a trusted friend) and the subsequent invite by him followed the exact path you described (all in one night).  You hit the nail on the head with how to raise funds… I've raised series A & B for a past company, so I know what you're talking about – just thought I was a bit rusty (after sitting in front of a computer for 5 years building this next prototype).  The funny thing is, I love doing the "show and tell" – once the proof-in-concept is ready for demo – I'm so much better at selling the steak than the sizzle!

    Thanks again for your advice – it's bang on.

  4. Hey dan, I am starting an angel investment team(me and my brother make games for our initial start up money), and I was wondering if you could give me any tips for earning massive profit

  5. Hi Dan, i am a noob entrepreneur and i am seeking some knowledge. What are the basic conditions what an angel investor basically have in terms of return on what they have invested on my business. Would it be like a loan from a bank, if i can't pay off within a certain amount of time, i would be jailed or something. need some advise. thanks

  6. Dan, this is a great video, very helpful tips. Gives us a glimpse into the mind of the investor and how it should be a feeling of investors are someone I would like to work with not just someone who I just need money from. Thanks for sharing.

  7. Hi Dan, I love your story.I am an 11 year old entrepreneur, and I have a project for my class and I wanted to let you know that this video really helped me out.

  8. Hi Dan! I made my first startup investment at 25. I have taken courses of how to be a good investor. I'm about to take my second course on that. Currently I have 5 investments and I created a mini group where I interchange investing experiences, deal flow, etc.

    I will follow your channel! Greetings from Mexico City!

  9. I, I, I, I, I, Listening to you, I feel like I am your therapist. You have made this all about YOU. Yes, you are sooooo special. We got that. Now can you please give us the information??

  10. I sent you a tweet regarding my trading company. or check out our YouTube channel Flip2 Futures. Thanks!!

  11. I have an handheld electrical invention which can cure all sickness in seconds using Tesla technology and ancient Chinese acupuncture principles. Looking for investors. (832) 343-5425

  12. awesome video. i hope to sort of reverse engineer your advice to attract investors to my volunteering project

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