Path to Angel Investor
I will start this by saying I understand I am incredibly fortunate to be in this situation. I am a student at H/Y/P/S/W and have inherited a sum of money that allows me to never work. However I am very interested in business and want to pursue a career in angel investing. What would be the best preparation for me to become a successful investor in startups? I want to be on my own investing by age 30 so I am giving myself 8 years to learn as much as possible. Am I better off doing banking and then going into VC or should I start off in a GE role? I really appreciate any advice.
Also I want to live in NYC, not sure if that changes anything.
Seems like working in a private investing (PE/VC) or corporate development role might be most translatable of a skill set. The challenge is getting there right out of skill without going through IB, but if you’re at a top school, it might be possible. Especially if you’re going for middle to lower middle market shops, which is actually more relevant to angel investing than large cap PE.
Banking probably isn’t worth the pain if you have money to begin with, unless you have an innate desire to grind regardless of the money.
Also pursuing entrepreneurship might be worthwhile as being an angel investor is essentially supporting entrepreneurs with capital
Lol MM PE is applicable to angel investing? Angel investing is a hobby and requires zero skillset... go hang out on a beach somewhere and start writing checks dude
Sinner made some really good points and I will build on them as I interned in VC my sophomore summer.
Being entrepreneurial and getting your hands dirty maybe the easiest way to get into VC or just becoming an angel investor yourself. Having spoken with many founders, the one thing they appreciate is when investors can understand where they're coming from and care about their business rather than always asking about meeting certain KPIs or returning x amount of money. If you have the entrepreneurial mindset and now that you have this big pool of capital, this definitely can be a good way to then pivot into angel investing (assuming you don't want to keep running a business forever).
Like Sinner said, since you go to a top school, it shouldn't be difficult getting into a solid GE/VC/PE fund, however I will say, many times GE is more focused on sourcing (80-90%) for its juniors rather than due diligence or building investment pitches if that is the experience that you are looking for. (Sourcing is still a good skill you will need). I would definitely talk to more people in these industries though as that is a good way of learning the environment because I can assure you that the PE scene is completely different from GE/VC even though many well-known PE firms have funds for all of these (ie. Accel-KKR vs. KKR's flagship funds).
Edit: Completely missed your last sentence about wanting to live in NYC. Definitely can work, I would just say focus on NYC-based firms for VC/GE/PE. Obviously as a lot of tech companies are out west (SF) and biotech for places like the triangle (raleigh/durham, NC) but NYC still has some of the most competitive if not the best firms in this space.
Not sure where you are based now, but join a local angel group today and just start listening to deal pitches.if you are so inclined but there is generally no obligation to invest. They'll ask if you're an accredited investor, which it sounds like you are, and that's about it. You will also be able to listen to post-pitch commentary from the other angel investors. It's sort of a cluster F to manage as a founder, but angel groups see good deals, particularly in big markets. NY Angels and Sand Hill Angels led the seed round for my start-up, which I raN through Series C with Tier 1 VC investors. It was a lot of cat herding, but some of the investors were pretty helpful, and it's way easier than seed-stage VC, which is mostly a who you know game (varies a lot based on where you are located).
Do you know of any angel groups in NYC?
NY Angels is the biggest. I'm sure there are plenty of others. I'm in Colorado, and we have at least 5 angel groups active in just Denver, plus some others in Ft. Collins, CO Springs, etc.
Just a simple google search, but here is a list of some good ones:
https://www.cbinsights.com/research/top-angel-groups-mosaic/#:~:text=Th….
I’m in VC secondaries. Really cool opportunity would love to be in your shoes haha. I think the best thing you can do is join a venture / growth fund as soon as possible. You’ll see a lot of different opportunities in just the first year and learn what kind of startups you’re most interested in. Would help you build a personal thesis that might differ from your firm’s mandate. Having a few relevant investments under your belt will also help when talking to founders in the space you’re interested in. Don’t want to be the “dumb money” family office buying secondaries blind online.
First of all understand, it's a brutal asset class and I would argue not even designed to be a successful one. Most angel checks are being written by people who can afford to lose that money without a second thought. So the pricing process isn't truly a market process where a buyer's mind and a seller's mind come together. It's more like . . really rich guy realizes his Ferrari isn't cool enough to stand out at the next social function, and it would be cooler if he could talk about the latest startup he's "in".
But the good news is (i) you can learn a ton from being involved in it and (ii) there's a lot of ways to do that.
First thing you want to to do is look up angel networks in your area. For example when I lived in Texas, both HAN (Houston Angel Network) and CTAN (Central Texas Angel Network) were excellent groups. Investors like yourself get together, review startups in a Shark Tank like meeting, form diligence teams for the better ones, and do more meetings with those founders and eventually decide how much to invest.
It's a great way to learn from seasoned angels. Every major city has one or more of these groups. What I would emphasize here is, put quality ahead of quantity. Meaning spend your time going deeper on a few companies, rather than spending a little time on many. There's no reason why (after you and some of your fellow members have decided a company has promise) you shouldn't have that founder talking to you a couple of times a week throughout the diligence process and after funding them.
Another thing is seed funds. These invest at a similar stage as angel groups. You could work for one of those, while also doing the angel network thing.
Happy to answer more questions.
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