After I sold my company a number of people offered great post-sale advice from their personal experiences. One piece of advice that has stuck with me is that new angel investors should ease into writing checks. A successful entrepreneur shared with me that he sold his company and within the next 12 months invested $3mm into startups as an angel investor, only to lose every penny of every investment — not a single one made it and returned money.
Here are a few reasons why it’s good for new angel investors to ease into writing checks:
- Angel investments, being extremely risky, are likely to fail, so it’s better to make a number of tiny investments when getting started, rather than a smaller number of larger investments
- Angel investing, like anything, takes time to get good at, and the process can’t be accelerated by writing a bunch of checks quickly
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