Why should you become an angel investor? Hear from the AIS community!

Why should you become an angel investor? Hear from the AIS community!

A few weeks ago we published an article on What is Angel Investing?

However, before becoming an angel investor it is not only essential to know what an angel investor is but WHY you want to angel invest.

This is why we reached out to the AIS community and asked them why they angel invest. Here is what they said!

Craig Riviere

“Angel Investing for me is the chance to be a part of the future, to shape what my world and my family’s world could look like. Every company started out small and the initial efforts, energy, investment, belief and support is what made some companies so impactful that they became a part of our everyday life. There is a beauty in helping a founder take their idea from thought to manifestation, one of the greatest things we can each offer to the world as individuals is bringing our ideas to life and not letting them die with us.

In addition, the connections we make with the founders as Angel Investors vs just typical Stock / Index Fund Investing is special, to be allowed join the founders’ journey is a blessing worth paying for, telling people you helped on their journey, owning a piece of that company and just seeing your money go to something that lives beyond the initial “dopamine” we get from buying useless items, it definitely feels priceless.

Angel Investing is about putting your money behind something you believe will be impactful to not only a founder’s world but the world that surrounds us too.”

Katharina Wodenitscharow

“Angel investing is not just another asset class for me. It is an opportunity to be challenged every day, and learn from people who are shaping the future for the better and in a way it allows me to make a small contribution to this exciting future. Whether it is about learning how to market direct to consumer brands, how to acquire new customers or selecting the correct business model for B2B SaaS products, angel investing allows you to never stop learning. 

I have a tremendous amount of respect for founders who choose the road of entrepreneurship over certainty and comfort and I consider it to be a privilege as an angel investor to join these founders on their journey. Learning about an industry and what it takes to build a business is one part of this journey but what I enjoy the most is learning about by working with founders how to develop a winning mindset, learn from mistakes and keep going even if your back is against the wall. 

Angel investing also allows you to meet like-minded individuals. Many other angel investors share a similar passion and reason why they angel invest and as a result you meet many exciting and interesting people who shape how you think. I have also had the opportunity to meet many new friends through angel investing due to our shared passion.  

Of course I think it is important to assess startups based on future returns and potential growth, however, if money was the main motivation to be an angel investor then I believe there are less riskier ways to make a good return on an investment. Angel investing is much more than about returns. I believe it is about feeding your curiosity and collaborating with interesting people who want to build something great. 

If you are somebody who is a life-long learner, loves being challenged and is looking to join an ecosystem full of interesting people then this is the industry for you and if you are looking for individuals who share this passion then the Angel Investing School is for you.”

Nithin Bopanna

“Everyone’s personal approach to learning is different, but mine was always amplified by having skin in the game.

My early career was working within the sell-side of Investment Banks around product and technology. Despite being hugely enriching in terms of gaining a broad skilllset and being around some amazingly sharp minds solving complex problems, often I felt disconnected from the nuances of ‘real-world’ businesses and their broader value and risk.

There were outliers amongst my IB colleagues who left this environment and went on to found startups. Many times, these departing friends would come from underrepresented backgrounds and would (naturally) go on to build successfully diverse teams  – a huge difference from the uniform profiles I was familiar with seeing in an IB C-suite.

I became intrigued in this ecosystem, its breadth of opportunity and the ‘worldy’ type problems that motivated people were looking to solve.

The curiosity led to me joining a startup, finding jewels from Andy and ultimately Angel Investing School, where I gained a much clearer understanding of the ground rules for this brave new world with some great team mates on my cohort to support me into my first deals.

Investing has allowed me to feel greater connection and above all, agency. In building a portfolio, I get to learn from – and around – some incredible human being on a regular basis. Being familiar with new technology, business models and approaches all help to make greater sense of the world and its complexity.

The dynamics of this past year has really sharpened the motivation for me to continue to improve and be as diligent an Angel Investor as I can be. My recent strategy has been to narrow focus to founders who are tackling some of the most significant problems the world is facing . As this often involves high tech innovation in engineering, or significant scientific discovery; yes, the risk is multiplied, but I guess the learning is exponential!”

Finally, we wanted to hear from one of the co-founders themselves at the Angel Investing School and why they angel invest?

Andy Ayim MBE

“I am in the business of changing lives, for me purpose is when I can be a full expression of myself doing meaningful work in service of value-aligned people who care.

At a young age I learned about saving clubs that my parents and other Black British families were doing called Susu or Pardner saving schemes. Susu is a rotational savings practice where a group of family members or friends contribute an equal amount of money into a pot every month to saving together. 

When I was 20, I wanted to do something similar with my family and friends. So I rounded up 7 family and friends and we saved £250 a month together for a few years. Whilst saving I was immersing ourselves in property investing communities, listening to podcasts and learning from other investors. I took all that I learned and shared it with the group. Looking back that was like AIS 1.0. 

We got to a stage where we saved up £40,000 then one by one each member of the group grew impatient and withdrew their money. I learned three vital lessons during that experience. 

  1. I lacked the leadership skills at the time to inspire everyone to trust the journey
  2. I love leveraging my network, skills and knowledge to teach others
  3. I love going on life-long journeys with incredible people where I can learn and add value

All three reasons are core to why I angel invest. Angel investing enables me to trust the journey and support entrepreneurs in unlocking their potential and scale their impact. It provides me with a platform to add value through introductions, supporting with my skills and coaching entrepreneurs from my personal experience as an investor and serial entrepreneur.

My one word of encouragement to anyone reading this is to start from where you are and realise from all these stories above that your primary motivation will be personal and meaningful to you. That’s ultimately what matters most. “

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    Angel Investor Breakdown: Ryan Reynolds

    Angel Investor Breakdown: Ryan Reynolds

    Angel investing is a way for people to make money by investing in small businesses that are just starting out. Celebrities like Ryan Reynolds are doing this too! Most celebrities choose not to be a part of the business world and keep their Hollywood career as their main source of income, but some love to get their hands in the business market and experience investing themselves. Even celebrities are embracing portfolio careers and the importance of multiple streams of income. Not all find success, but some make many smart and well-thought decisions leading to their successful businesses. One of them is Canadian actor Ryan Reynolds. You may have even seen his documentary on Amazon Prime showing his takeover of Wrexham FC in the UK.

    Reynolds has made a lot of money by investing in a budget telecoms firm called Mint Mobile. He owns 25% of the company, and when it was sold to T-Mobile for $1.35 billion, he made over $300 million! It is worth noting he is one of the highest-paid actors in the world so it is clear that money is not the only motivation to do this. Ryan Reynolds believes in making small investments and giving smaller companies a chance.



    The Deadpool actor has also sold a gin brand, Aviation Gin he co-owned for $610 million. He has also invested in startups such as 1 Password, WealthSimple and Maximum Effort. Even though he’s made a lot of money from these investments, he still acts in movies and makes a lot of money that way too. Other celebrities like Ashton Kutcher and Snoop Dogg also invest in businesses that are not related to their acting careers.

    So, if you want to make money like Ryan Reynolds, you can invest in small businesses too!

    Join our Foundation or Membership to learn how you can get started too.

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      Frequently Asked Questions (FAQs)


      What are some of the results that students have achieved from participating in your courses?

      Check out the recommendations/testimonials at the bottom of Andy Ayim’s Linkedin profile.

      We have graduates such as:

      • Vera Baker got onto the Atomico Angel programme and has invested in over 7 startups since completing the course and also became a General Partner at Unconventional Ventures
      • Irene Maffini has completed over 4 investments in climate change startups 
      • Nithin Bopana has invested in 3 deals alongside Andy Ayim, Subtly, Whering and Uome. He has also invested as a Limited Partner in a Climate Change fund
      • Jia Hong Shaw has become “the pedalling investor” after cycling across Europe, launching his own syndicate and investing in over 5 startups
      • After training over 100 members of Google’s Black Network, they launched the Black Angel Group and have invested over $1.5M into startups in 12 months.

      Below is an illustration of our impact in our first two years, training just over 300 new angels.

      What is an angel investor?

      An angel investor, sometimes referred to as a business angel, is an individual that invests in privately owned small businesses (startups). The investors can choose to leverage their experience, expertise and network to add value and support the company through growth. They receive equity in exchange for this investment in the hope of sharing in the returns if the company experiences a liquidation event such as an IPO (initial public offering) on the stock exchange or acquisition from another company (trade sale).

      You can read more about it on our blog.


      How do you angel invest?

      There are three main ways individuals can invest in startups:

      1. Direct investment into a startup raising, usually with a Convertible Note, SAFE Note, Advanced Subscription Agreement or Equity-priced round (all terms you can check out in our AIS Dictionary)
      2. Investing as part of a group of angel investors also known as an angel syndicate group. Some of these groups also utilise fund structuring platforms such as Bunch, Odin and Vauban
      3. Investing through an equity-crowdfunding platform such as Seedrs, Crowdcube and Republic


      Who is the  Angel Investing School (AIS) created for?

      AIS is designed for individuals who want to take control of their financial future, make smarter decisions with their money and create wealth whilst having an impact.

      During the last financial crash from 2008 to 2012, companies such as Whatsapp, Instagram, Uber, AirBnB and Slack were all created. Dozens of angel investors invested early in these companies and benefited from the vast wealth generated. 

      We believe that the post-covid financial downturn of 2023 presents another window of opportunity for well-equipped, educated and empowered investors.

      We are here to serve individuals who want to have an impact, support entrepreneurs and take part in this incredible value-creation opportunity.


      How is Angel Investing School different from others?

      Angel Investing School has been described as a movement and not just a course. This is because people come for the course and stay for the community. 

      We take a very personable approach to angel investing to connect with founders on a values level and ensure there is chemistry when making investment decisions. 

      The thing that surprises people most is the diversity of our community and the open transparency from our facilitators. No one is here to sell you but rather to empower you to make the best decisions for your personal and professional circumstances.


      When will I be able to start investing? Will you provide a list of startups that have the potential for great returns?

      Personal Finance is personal, if you are in the UK and meet the Sophisticated Investor or High Networth Individual status you can start investing now. If you are based in the US, check out the SEC’s definition of an accredited investor.

      Nobody can guarantee high returns from startups however experienced the investor is. I don’t want to mislead you. Investing in startups is very high risk because 90% of new businesses fail within three years. Safer, lower-risk investments are things like UK Government Bonds. Property and Public Stocks and Shares Index Funds are also considered lower risk. Never invest more than you can afford to lose.


      On average when do you see a return (timeframes)?

      Startups that succeed in providing a return usually take seven or more years before providing a return. We will cover this in more depth during the classes as there are three primary ways an investor can make a return from an exit (also known as a liquidation event).


      What return on investment can I expect when it comes to angel investing with as little as £1,000?

      Expect that nine out of ten investments will fail and it is best to start from the basis of “can I afford to lose this money.” This is why “making a return on investment” is not a good primary motivator for becoming an angel investor. There are safer asset classes for making regular returns such as investing in Index Funds.

      Making a financial return could be one of your goals, but learning about new technologies, purpose and meeting fascinating people are worthy goals to consider also.


      What type of risks are involved when getting into angel investing?

      The main risk is actually the lack of education which leads to avoidable mistakes. Mistakes such as investing more than you can afford to lose. Or not conducting thorough due diligence because you underestimate the risk of failure.

      Check out this article to learn more about the common mistakes to avoid.



      Do I need to have any previous investment experience to join the course?

      No prior experience is required to take the course. We have designed an experience to take you from amateur to well-equipped, empowered and educated to make your first investments.


      Does the course only cover angel investing or other asset classes such as venture capital?

      This course is specifically designed for teaching angel investing, so we stick to our core competence and don’t deviate from it. For breaking into venture capital, we recommend the Newton Programme, Future VC or Included VC.

      There are several differences between investing in other asset classes like property investing or investing in crypto so we do not teach this in the course.


      What is a cohort-based course and how does it work?

      A cohort-based course (also known as a CBC) is an online curriculum of learning taken by a group of students together. Our CBC lasts eight weeks and covers the core curriculum we have assembled with world-class facilitators on angel investing. Check out the course outline here.


      What times and dates does the programme run?

      The course takes place every April and September with applications open all year round for students to secure their places. Applications usually close three weeks before the course start date as we usually have a welcome session ahead of the course getting started.

      The course usually starts on the first Wednesday of the month (April and September) and then runs for the next seven Wednesday evenings from 18.00 to 19.30 GMT.


      How much does the course cost?

      The course costs £495 + VAT.


      What are the benefits of taking this course?

      Along with learning how to get started with angel investing we provide other benefits such as:

      • Co-investment opportunities
      • Ongoing access to startups who are raising
      • In-person events (London only for now)
      • Partner benefits such as one-year free membership with UK Business Angel Association or discounts from Stripe and others
      • Opportunity to join angel syndicates within our network (some started by our alumni)


      How do I apply to the course?

      You can apply for the Foundations course here.


      Who teaches the course?

      We have a range of experienced angel investors, Venture Capitalists and Operators who teach the course.

      Some of our past facilitators include:

      • Deepali Nangia, Partner at Speedinvest, Cofounder of Alma Angels and UKBAA angel of the year in 2021
      • Matt Pennycard, General Partner at Ada Ventures
      • Marcus Exall, the experienced angel who invested in unicorns such as Improbable
      • Daniel Barrett-Nembhard, a lawyer at Orrick
      • Sarah Turner, cofounder of Angel Academe, an angel syndicate


      Is the course only for UK residents?

      We are based in the UK but our audience is global! 

      90% of what we teach is globally applicable but local jurisdictions have their own regulations. We cover both the US and UK angel legal processes.

      Our alumni span over 30 countries from Singapore and Nigeria to the USA and France. This opens up new ways of thinking, operating and opportunities to diversify your deal flow.


      What key topics does the Foundations course cover?

      The course outline for the Foundation course covers

      1. Overview of Angel Investing
      2. Developing Your Investment Thesis
      3. Sourcing & Assessing Deals
      4. Legal Processes & Tax Relief
      5. Transaction Economics & Valuations
      6. Adding Value Beyond Capital
      7. How To Structure Your Deals
      8. Building A Personal Brand

      You can learn more about each topic here.


      What is the time commitment necessary to complete the course?

      Attendees are expected to attend all eight weeks of the course 18.00-19.30 GMT. Please note that places are limited and highly sought after so we try to ensure everyone who gets on the course maximises the value.

      Outside of class, each week we share pre-read, watch and listen to content and some weeks also have worksheets that we will use during class but can be completed after the class ends.


      What are the main takeaways from the course?

      1. Understanding your primary motivation is linked to your investment thesis
      2. Evaluating why investing is a team sport (value of the community)
      3. Learning from the most common mistakes such as investing more than you can afford to lose


      What support can I expect post-course?

      Post-course, you will receive regular market insights, news and dealflow through both our Slack community platform and monthly newsletter. We regularly share co-investment opportunities for several members of the community to invest together. In addition to this, you will gain early access to our monthly in-person events.


      What happens if I miss a session of the course?

      If students miss one or two sessions, we share a recording available for 48 hours for them to recap the class. Absence from class should be communicated ahead of class at least 48 hours in advance.

      The biggest loss is the opportunity to ask facilitators your most pressing questions which is why attendance is so important. 



      The membership requires an ongoing subscription payment similar to a gym membership. You receive ongoing new pre-recorded masterclasses to learn at your convenience along with regular community Q&A sessions.

      The Foundation course differs from the Membership as it requires a one-time payment for a cohort-based course delivered live across Zoom each week.


      Do I need to have any previous investment experience to join the AIS membership?

      No prior experience is required to join the AIS membership. We have designed an experience where you can access a library of content, attend our community Q&A calls and get support via Slack from the AIS team.


      Does the membership only cover angel investing or other asset classes such as venture capital?

      AIS Membership goes beyond angel investing to share more context on subjects such as Venture Capital, journaling and understanding startups. In the future we will likely expand to cover buying small businesses, investing in other asset classes and building a diversified portfolio. 


      What is included in the AIS membership?

      • Fortnightly live community Q&A calls with Andy Ayim MBE on Zoom
      • Insights on market updates and regular startup pitch decks
      • Access to ALL pre-recorded courses (present and future) and templates on-demand covering subjects such as finding great entrepreneurs, understanding Venture Capital, Fundraising and much more
      • Early access to register for our limited availability monthly events days before the general public
      • Co-investment opportunities alongside Andy Ayim MBE and other angels in the community
      • Networking benefits through personal interactions online and offline with other community members. Build real relationships with others who will help you grow.
      • Ongoing practical accountability in relation to your angel investing goals
      • Ongoing motivation and inspiration from a truly unique and talented community of people


      How much does the course cost?

      There are two payment plans:

      1. £40 per month*
      2. £33.33 per month* (£400 charged annually – equivalent to just under £33 per month over 12 months. With annual pricing, you get 2 months free and only pay for the equivalent of 10 months. This saves you £80 annually.)

      You pay a monthly or annual fee until you choose to cancel your membership. No Direct Debits are necessary to be set up too! Cancel anytime.

      *Note that prices above exclude VAT (Value Added Tax) paid to the UK government. This will be added for UK citizens only.


      What benefits can I expect from the course?

      You will gain access to: 

      • The private Slack community
      • An AIS Monthly newsletter
      • Regular dealflow from startups 
      • Old and newly recorded content exclusive to the membership
      • Direct answers from Andy Ayim MBE


      Will I get access to all courses if I become a member?

      Yes. You will get immediate access to all existing courses (more than 20 at present) and can go through the courses at your own pace. Courses and masterclasses are video-based. Sometimes you will have access to templates and platforms that you can utilise from the course.


      What types of courses are offered in the Membership?

      Here is a screenshot of some of the courses which each have a number of classes within them.

      Are the courses self-paced?

      Yes. Whether you are a busy professional or a working parent, you can take the course at your convenience. To get results, we encourage you to time-block time in your diary at least twice a month to protect yourself from distractions. This discipline produces results.

      So you have made it this far

      You are clearly interested in what we offer so why don’t you join us and take either the Foundations course or join our Membership. 🙂

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        What is happening to Valuations and Funding Rounds in 2023?

        What is happening to Valuations and Funding Rounds in 2023?

        2021 was a year of astronomical growth and, simultaneously, the beginning of a tragic downfall for many startups. That year saw some of the largest funding rounds and highest valuations in history in the VC world, with Discord raising $500M, Databricks raising $1.6B, and Gorillas raising $1.3B.

        To illustrate this point, we looked at data published by Crunchbase about the state of the market, funding rounds, and valuations. Crunchbase analysed in this article the “U.S. funding from Series A through Series C between 2018 and the first half of 2022 to look at average and median check sizes to see how they have changed.”

        Despite valuations not falling in the first half of 2022, according to Crunchbase data, why do VCs feel like:

        Kirby Winfield, Founding General Partner, Ascend VC: “Gotta be like 80% no longer worth $1 billion if you’re using public market comps. I think maybe 5%-10% will fail in 2023, but maybe 40% by 2025.”

        Ba Minuzzi, Founder and General Partner, UMANA House of Funds: “We kicked off 2022 with five portfolio companies that had ‘unicorn status’ and two of those have already lost that status. I believe this data is indicative of the overall theme — that two out of every five unicorns will lose, or have lost, their $1 billion valuation. I do see this trend continuing in 2023.”

        We are also observing headlines such as this one. In October 2021, Gorillas raised a $1 BN, but less than a year later, TechCrunch posted another article about Gorillas planning to lay off 300 employees and struggling to stay afloat due to lack of funding. Gorillas shared that the reason why they are laying off 300 people is that “it seeks to shift from “hyper growth” (burning tons of cash to win new customers and expand its operations) to “a clear path to profitability.”

        So, what happened and how can a company that has raised $1 BN be near bankruptcy 8 months later? And why, despite all-time high funding rounds, do startups such as Gorillas seem to struggle with cash? Gorillas was eventually acquired by its competitor Getir at a valuation of $1B, a nightmare scenario for VCs.


        What are Valuations?

        To understand what is happening in markets with funding rounds and valuations, we need to go back a few steps and understand what a valuation is. How do VCs and founders decide what a startup is worth and, most importantly, how much it is worth?

        We reached out to Joe Kinvi, who specialises in the FinTech industry and is currently working at Paystack in Financial Partnerships, a Community Manager at HoaQ, and an angel investor. Previously, he used to be the Head of Finance at Touchtech Payments, which was acquired by Stripe and later joined Stripe to work in Growth.

        Joe shared with us why valuations matter:

        “Valuations dictate the potential return for an investor. 

        This means that the lower the valuation when you invest, the higher the upside when you exit. For example, when you invest $10K in a company at 1M and the company exits at $10M, then your return is $100K. However, if you invested the same amount at a $500K valuation, then your return would be $200K.” Please note that Joe is using a simplified example and he is not considering the impact of complex investment ideas such as dilution or deal structures.

        Joe continues: “The importance also matters depending on the stage of the company. Valuations can be broken down into art and science.

        Valuing startups at a pre-seed stage is an art. Art is subjective and appreciated depending on who’s looking at it. Pre-seed and seed valuations are often the same.

        Valuing a startup during a Series A and upwards is a science. Science is 1+1=2. Investors are able to use numbers and other relevant benchmark and market data to arrive at a pretty accurate valuation of a company. For example, a company making X amount in ARR, with Y multiple in their industry should be valued at Z.”


        How did this happen?

        “The market is resetting again from its early 2022 highs but this height was mostly driven by a lot of capital chasing many little deals. At the growth stage, you have founders with lots of term sheets, meaning that they can inflate their valuation and give the deal to the highest bidder. 

        It’s simple economics: the higher the demand, the higher the price when supply is limited. Valuations are readjusting because investors have more options to generate a return on their capital (fed increasing the interest rates to cool inflation) and many are quickly realizing that many companies will never grow into the valuations that they raised at. We’ve seen instances where some companies are worth less than what they raised and this has been a cause for concern (Bird is a great example and we will be discussing Bird in the next section of this article). While there is still lots of dry powder (some are calling it damp powder), investors are more cautious and are reverting to valuations fundamentals, after ignoring them for a couple of years. 

        Valuations will continue to decrease at the growth stage (post series A) while we see more growth investors move downstream to Series A and the seed stage. This is going to put more pressure on seed stage investors but could be good for angels who invested at a friends and family round or pre-seed stage. We haven’t seen much movement in pre-seed and seed-stage valuations due to the art vs science dilemma. With growth investors moving downstream, valuations at pre-seed and seed can quickly become inflated, making it more challenging for existing angel investors to follow up on their existing investments. If there are liquidity options for these investors, they can earn a decent multiple on their money and recycle that capital into other early-stage deals.”


        So what can we expect?

        Many startups, such as Gorilla and Bird, are suffering due to changing market dynamics. Bird, an e-scooter company, is facing potential bankruptcy, according to the Financial Times. Venture capital investors have poured more than $4bn into loss-making e-scooter rental companies over the past five years, creating a bubble that is now bursting.

        The Financial Times reports

        E-scooter rental pioneer Bird has warned it faces possible bankruptcy within the next 12 months unless it can raise more cash, in a sign of a dramatic change in fortunes for one of the hottest tech sectors of recent years. Bird became the fastest start-up to reach a $1bn “unicorn” valuation in 2018, but is now fighting for survival after warning investors it had overstated its historical revenues by tens of millions of dollars.

        Venture capital investors have poured more than $4bn into lossmaking e-scooter rental companies over the past five years, according to investment tracker Dealroom.co, fuelled by low interest rates and a wave of hype that small electric vehicles would reshape urban transportation.”

        As mentioned Gorillas and Bird is going to be one of many startups that will be facing similar fates. 


        Future market trends for valuations?

        The glory days are over.

        The FT reported European tech groups lose $400bn in value following funding crunch. No more peak valuations as VCs have been reporting write downs to their LPs across their portfolio. As a result many startups have been raising downrounds, bridge rounds or sadly closing down.

        As valuations reset, deals will become less competitive, giving GPs more time for due diligence and getting to know the founders. In all honesty, after cases such as FTX along with falling valuations, LPs will be putting pressure on GPs for results. Additionally, we can expect to see more bridging rounds for startups, so they can avoid running out of cash and make it to the next round. This will help them achieve sustainable growth and avoid bankruptcy. Don’t be surprised to see startups raising enough cash to survive for the next 24 months + to avoid fundraising in this unfavourable climate.

        GPs will also be forced to be more selective in their investments, as well as more strategic in their approach. Companies will need to make sure they have a sound business plan and the right capital structure to survive the changing macro environment. Moreover, entrepreneurs should be aware of the need to be flexible and adjust their growth strategies accordingly to remain competitive. 

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          The 3 biggest mistakes angel investors make when investing in startups

          The 3 biggest mistakes angel investors make when investing in startups

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            What does success look like for an angel investor?

            Is it investing in a unicorn like Uber? Or maybe investing in entrepreneurs from your community. Is it directing more funding to female founders? or maybe successfully raising a VC fund off the back of your track record?

            To be honest any of the above could be true for you. It all comes down to your motivations.

            Let’s take a look at what Harry Stebbings, General Partner at 20VC thinks

            Andy Ayim, founder of The Angel Investing School replied:

            In Harry’s post, we can see as a Venture Capitalist his motivation is about making a return from his portfolio of startups. So his advice to angels is really motivated by his VC experience. 

            However, Andy rightly pointed out that Harry’s post represents just one motive, which may or may not be yours.

            Angel investing is personal finance. Big emphasis on the word personal. Your personal motivations drive what success looks like for you. 

            Nevertheless, despite the many different motivations and visions of success, all angel investors are vulnerable to making the same mistakes.

            Throughout this article, we will walkthrough the 3 biggest mistakes. 

            One of the biggest mistakes we see beginner angel investors make time and time again at the Angel Investing School is the misallocation of capital. New angels are often so passionate and keen to invest in their first startup that they forgo some of the most crucial fundamentals of investing.

            We see lots of excited angels who set off on their journey and either invest their money too quickly, invest money they don’t have or have no money to follow on their successful startups. 

            Do not panic though. Capital allocation is the most challenging aspect of angel investing and we want you to get it right! Below are the 3 most common mistakes angel investors face when allocating their capital and how to avoid them.

            1) You invest your money too quickly 

            Becoming an angel investor is a very exciting time. There are so many different types of founders, startups and ideas in industries you have probably not even thought about. It is easy to fall into the trap of wanting to invest in every founder who shares with your their revolutionising startup idea. We get it! Staying rational and disciplined is the hardest thing for a beginner angel investor. However, what happens if you spend all your money at the beginning of your angel investing journey there won’t be any left. 

            Imagine you saved up £30,000 of your hard earned cash and started angel investing, you meet an inspiring founder that leaves you excited, curious and with a fear you will miss out if you don’t move quick. You decide to invest £15,000 (half your saved pot for investing) because you REALLY believe this will be the next big thing.

            This is a rookie mistake, but a common one that is so easy to make. We don’t want that to happen to you!

            How to avoid this mistake:

            This is probably the hardest mistake to avoid but it’s important to be disciplined with your capital. Take your time before writing your first check. Join a few due diligence calls to get a feel for some of the key questions that more experienced angels ask before making a decision to invest. Speak to a variety of founders to get a feel for the types of different founders that exist. Speak to a variety of angels to understand their perspectives and learn from how they think and make decisions.

            As you get more experience you will naturally become more disciplined with your money so do not rush your angel investing journey. We also recommend, do not set yourself targets when you want to invest. You will know when the time is right. Most importantly don’t force it and don’t let FOMO (fear of missing out) dictate your investment strategy. This rarely ends well for investors. 

            You will miss out on great deals, but don’t forget every year is filled with new opportunities to invest.

            2) You invest money that you don’t have

            Another golden rule we remind our community members at AIS is never to invest money they don’t have. What we mean by that is that don’t invest your life savings into a startup that you think is going to give you a 100x return and a few months later that startup goes bust. Thinking back to the statistics on how likely a start-up is to succeed (1 in 10), as an angel investor, you should never invest money that you don’t have. Even if the startup you invested in is successful, remember that your investment is going to be tied up for years and you are unlikely to see your money in the near future.

            How to avoid this mistake:

            Make sure that all your bills, necessary expenses such as your mortgage or rent, bills and living costs are paid for before spending any surplus money on your angel investments. Only invest from your disposable income. For example, you saved some money to buy a nice expensive jacket? Instead of buying this jacket, consider using this money to invest in these amazing founders that you have just met. They have determination, strong product-market fit and operate in a growing market (always do your due diligence!). That sounds like a great trade-off! The key to remember is, NEVER invest money that you cannot afford to lose. We want angel investing to be a source of joy for you and not stress.

            3) You have no money to follow on your successful investments

            There are a number of strategies that you can implement as an angel investor when it comes to structuring your investment portfolio. There is the “spray and pray” strategy for example, where you invest capital in as many startups as possible and hope that a few will succeed. However, a more common strategy that is seen amongst angel investors is diversification and saving some money as a follow-on to avoid being diluted down the line by larger investors such as Venture Capitalists and Private Equity houses. This is because follow-on investment is necessary to avoid having your shares diluted and long-term returns eroded. This is why avoiding mistake #1 is key because if you spend all your money at the beginning of your angel investing journey, you have no money as a follow-on to your successful investments. 

            How to avoid this mistake:

            Avoid spending all your angel investing money at once. Make sure you keep some money aside to invest in your successful startups when they are raising again. Having follow-on capital is important because it allows you to maintain your equity stake, not get diluted and hopefully eventually make some healthy returns. As a rule of thumb, use the 50/50 rule. 50% of your angel investing pot will go to initial angel investments and 50% will go to your follow-on investments.

            Jason Calacanis was able to turn $100,000 into $100 million through angel investing. If he did it, why can’t you right? wrong.

            Remember, angel investing is a risky business, so even if you avoid the 3 most common mistakes we listed above, it doesn’t guarantee you will make a return. This is why we put so much emphasis on having the right motivations upfront in order to manage your expectations. Making a return is your best case scenario, but please don’t forget what the worst case could be. Get comfortable with taking the risk and investing if the worst case scenario plays out. Just make sure that the worst case doesn’t involve you allocating too much capital, investing what you can’t afford to lose or not saving enough capital to follow on with your winners.

            I hope this article helped you to rethink your capital allocation strategy and you have learnt a thing or 2! Interested in learning more about effective capital allocation for angel investors? 

            Check out our community, programs and membership here. Most importantly if you join our community, you will never be alone on your angel investing journey.

            Ready to level up your angel investing game? Join 1000+ angels in our newsletter.

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              E-book: Analysing Startups the Marc Andreessen Way - The Onion Theory of Risk

              Learn these 11 key risk frameworks from a legendary VC

              Marc Andreessen has grown Andreessen Horowitz (a16z) from a $300 million fund to over $25 billion in just 10 years.

              ✅ Enhance your due diligence questions and decision-making when speaking to founders.

              ✅ Understand the key risks faced by founders and how you can help to reduce them.

              ✅ Ask founders better questions before making an investment.

                E-book: Analysing Startups the Marc Andreessen Way - The Onion Theory of Risk

                Angel Investing 101: What is angel investing?

                Angel Investing 101: New to the world of angel investing? Start here

                There is a wide range of assets you could invest in today, a few include:

                • Cryptocurrencies like Bitcoin
                • Stocks and shares in publicly listed companies like Apple
                • Real estate like a house you purchase to rent on Airbnb
                • Classic cars like a vintage Aston Martin
                • Prestige watches that hold their value such as a Rolex
                • Art masterpieces such as a Bansky painting
                • and the list goes on…….

                With any investment you make, there is a risk you could lose your money or potentially you could make a return on the money you have invested.

                Let’s walk through a simple example:

                If you invest £1,000 and after a period of time you receive a 2x return, that means you would receive £2,000 as a return i.e. you have doubled your investment. In this scenario, you made back your initial investment of £1,000 with a profit of £1,000 on top. Not bad! This is of course a simplified example not including things such as transaction fees but this is the basics of what it means to make a return on your investment.

                An angel investor sometimes referred to as a business angel is an individual that invests in privately owned small businesses (startups). The investors can choose to leverage their experience, expertise and network to add value and support the company through growth. They receive equity in exchange for this investment with the hope to share in the returns if the company experiences a liquidation event such as an IPO (initial public offering on the stock exchange) or acquisition from another company (trade sale).

                Many initially disqualify themselves from investing in startups because they believe they can’t afford to. With the advancements of modern technology, you could invest a few hundred pounds in startups on Equity Crowdfunding platforms such as Seedrs, Republic and Crowdcube. Check out how VC investor, Henrik from Playfair Capital got started initially through investing on Equity Crowdfunding platforms.

                Contrary to popular belief angel investors can invest as little as a few hundred pounds in startups to be considered an angel investor. Another key characteristic is that angel investors invest their own money compared to for example Venture Capitalists and Private Equity houses who manage and invest money they raised from their Limited Partners

                Angel investors usually invest their own money into a start-up in exchange for an ownership stake in the company, also called equity. Equity is defined in simple terms is defined as ownership of a company. If you get 20% of equity that means you own 20% of a company. This is the most common type of monetary exchange between founders and angel investors. There are different types of funding structures that investors can offer to founders, however, such as convertible notes (promise for future equity at the next priced funding round).

                In addition to providing a new business with capital, angel investors also support founders with other resources such as access to important contacts, mentoring and advice which can be valuable resources for startups. When first-time founders set off on their start-up journey, they often need support with critical business decisions. This is where angel investors can provide significant strategic value. For example, a founder is looking to hire a software engineer and as an angel investor, you can support your founder in this process by helping them during the recruitment process or referring a great engineer from your network. As mentioned, there are many different types of support angel investors can provide. This is also called the added value of an angel investor.

                Ready to level up your angel investing game? Join 1000+ angels in our newsletter.

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                  Press Release: Angel Investing School’s Andy Ayim MBE, named on Real Deals Future 40 Diversity and Inclusion Leaders list

                  Press Release: Angel Investing School creator Andy Ayim, has won a spot on Real Deals’ Future 40 Diversity and Inclusion Leaders list.

                  “We are delighted to announce that Ayim made this year’s list for being wholly dedicated to improving diversity and inclusion in the investment industry.  Unsettled by the inequalities that exist around funding that is given to black, female entrepreneurs, Ayim made it his mission to “democratise access to knowledge, networks and capital for diverse founders and investors”. Today, he runs The Angel Investing School that trains professionals from all backgrounds on investing in the next generation of diverse founders. Prior to this, Ayim was managing director of Backstage Capital, where the firm invested in 25 underrepresented founders. In 2017, Ayim published an open letter to leaders trying to improve diversity, with actionable steps for the industry. He started to consider privilege and oppression in 2015 when he was working in Silicon Valley and blogging about relatable role models he identified with such as entrepreneur Tristan Walker of Walker & Co and Nas from Queensbridge Venture Partners. Today, his writing activity has grown exponentially with his weekly newsletter covering minorities in tech (now at issue 222!) he’s become a fulcrum for this cause.  It is this continued dedication that won him an MBE for his contribution to D&I in tech this year.”

                  The Real Deals Future 40 Diversity and Inclusion Leaders list, in association with Private Equity Recruitment (PER), showcases key individuals in the asset class who have made or are making a notable impact on improving diversity and inclusion practices across their firm and the wider industry. 

                  In light of recent events across the globe and continued efforts to make the industry a more diverse and socially conscious industry, it’s certainly a very apt time to shine a light on this extremely important topic. This years’ list not only highlights key dealmakers, but also those working behind the scenes at private equity and venture capital firms to make a true difference to how we engage with gender, race, ethnicity, sexuality and disabilities and wider D&I policies.

                  Real Deals editor Talya Misiri said: “Private equity invests in all types of businesses across many different countries and societies, and yet, the people who invest, mainly share a similar race, sex or socio-economic background. Luckily, there is an increasing minority that are actively trying to change this. 

                  “In this years’ list, we celebrate those who are breaking down these pre-existing barriers. Those who are opening the doors of the asset class to all, to make it an industry where people from all walks of life are accepted, welcomed and have the opportunity to succeed.”

                  For more information visit: https://realdeals.eu.com/article/future-40-diversity-and-inclusion-leaders

                  OneTech Scholarships for The Angel Investing School

                  OneTech Partners With The Angel Investing School To Provide Scholarships To Underrepresented Professionals

                  The Angel Investing School (AIS) is a nationwide community focused on widening participation for professionals from all backgrounds to learn how to get started with investing in startups. Through their 6 week courses, they teach 30 emerging investors every April and September on a guided tour of angel investing. Their most recent cohort had 45% women and 65% people of colour with a wide range of professions represented by digital marketers to developers and management consultants.

                  OneTech is proud to work with a value-aligned partner dedicated to creating a more diverse and inclusive tech ecosystem in the UK. We are proud to have worked with the founder, Andy Ayim who was an Entrepreneur-in-Residence with us last year where he had his Ah-ha moment and went from idea to launching this mission-led business. 

                  After piloting a program in April, the two organisations joined together to launch a new AIS scholarship program that sets out to help level the playing field for underrepresented professionals keen to get started with investing in startups but lack the access to the knowledge and network.

                  So much of the focus in the work we do at One Tech is about nurturing diverse founders in the London ecosystem but we recognise that in the absence of friends and family round, many of our founders benefit from raising angel investment. Therefore, we believe that as AIS trains more diverse investors, the flywheel will lead to more diverse startups being invested in. This is all part of our long term goal of changing the face of startups. 

                  Julie Fedele graduated from AIS earlier this year and went on to invest in Ohne, the UK based direct-to-consumer subscription service providing bespoke deliveries of organic period products to customers, on a cycle to match theirs. In her own words, Julie mentions that,

                  “For a long time, I have wanted to start angel investing but didn’t have the confidence. Through AIS, I now have a sound understanding of the process, ‘investing’ language demystified and a laser focussed investment thesis.”

                  One Tech is excited to provide 5 scholarship places for the September cohort of The Angel Investing School. Our goal is to provide an opportunity to overlooked professionals who wouldn’t traditionally have access to the startup and investing ecosystem. Andy, the creator of AIS shared, “I am excited about this opportunity to create pathways for anyone from teachers to nurses to have the opportunity to gain access to this education and network.”

                  Alison, the Managing Director of One Tech shared that, “One Tech will cover the costs for 5 people to gain access to this opportunity who need it most, we have no doubt it will be a great learning experience and we are proud to partner with Andy on this journey.”

                  If you would like to qualify for a One Tech scholarship for AIS: APPLY HERE.

                  Applications will be reviewed at the deadline date of 14th July 2020, and recipients will be announced on Monday 20th July 2020.

                  To learn more about The Angel Investing School, visit angelinvestingschool.com, and to explore the offerings of One Tech, visit weareonetech.com.


                  Angel Investing School FAQs

                  What is Angel Investing?

                  An angel investor is an individual that finances (invests) in privately owned small businesses. They leverage their experience, expertise and network to add value and support the company through growth. They receive equity in exchange for this with the hope to share in the returns if the company experiences a liquidation event such as an IPO or acquisition.

                  Who is this course designed for?

                  The curriculum is designed for individuals who have not invested in private companies (startups) or have invested in just a handful (incl. equity crowdfunding) and want to learn how to become a more effective angel investor through learning from other more experienced angel investors.

                  It is ok for you to have no prior knowledge of finance and investing as we cover the basics, share content in advance of the course and hold your hand through the experience answering your questions along the way.

                  Whilst many founders could be interested to gain insight and empathy into angel investing, it is only suitable for founders interested in getting started with angel investing. We will not be eroding the quality of the learning experience with cross-selling e.g. from accountants and lawyers attending the class with the goal of selling services to participants.

                  Professionals from all backgrounds are welcome, from teachers and nurses to plumbers and creatives. We want to widen participation in this opaque asset class to professionals from all backgrounds.

                  What topics will the course cover?

                  The course will cover 8 key topics:

                  • Overview of angel investing
                  • Developing a thesis
                  • Sourcing & assessing deals
                  • Transaction economics
                  • Legal process (incl. term sheets and understanding tax relief)
                  • Adding value beyond capital (post-deal support)
                  • Structuring a deal
                  • Building a brand

                  What happens after the course?

                  You will have lifetime access to the resources and links shared along with the relationships you build. There will be a private community (AIS Alumni) that shares useful information such as demo days, deals within the network, relevant events and more.

                  How much does the course cost?

                  One-time fee of £495 (incl. VAT)

                  How long will this course take to complete?

                  The course duration is 8 weeks long, every Wednesday from 6.30pm – 8.00pm, ran virtually, so you can join from the comfort of your home.

                  Do I need to be in London to take this course?

                  No, we run courses every April and September remotely. So you can join us from the comfort of your home or office.

                  For those who can’t commit to attending each and every Wednesday, we have created an On-Demand course that you can take at your own pace.

                  Can my company get in-house training?

                  We offer a 4 week of tailored corporate training experience. Please email team@angelinvestingschool.com to learn more.

                  We also offer for corporates to sponsor the April and September cohorts to widen accessibility for diverse professionals.

                  How do I get a return on my investment?

                  It is important to understand that investing in privately held companies is an extremely risky asset class. Riskier than investing in buy-to-let properties, mutual funds, index funds and other asset classes. The truth is, most new businesses fail and therefore there is a high probability you may not make a return on your investment.

                  Andy Ayim MBE treated his initial investments as skin in the game to gain practical learning experience rather than risk money he couldn’t afford to lose (which is not advisable). He is comfortable at a minimum learning about new technology, business building and new markets through his investments. Focusing on nurturing long term relationships regardless of the outcome.

                  What are the course founders & facilitator investment backgrounds?

                  The course was curated by Andy Ayim, MBE who has invested in over a dozen startups and has worked for over a decade in the London startup ecosystem, firstly as a founder, before developing his craft as a product manager and more recently as an investor.

                  The facilitators are a diverse range of angel investors who each have experience investing in privately held companies. Most of what they will teach will be through personal stories and lessons learned with tools and templates shared throughout the experience.

                  Why did you create the course?

                  I personally wanted to learn how to get started with angel investing and learn from the experience and lessons learned by others. I want to democratise access to knowledge so that people from all backgrounds can learn whether or not angel investing is right for them.

                  Are there any regulatory requirements for being an angel investor?

                  The guidance from a regulatory perspective, under the FCA rules Financial Promotion Order and Markets Act states that you can be an angel investor and make investments in a small business through your own decision if you can self-certify as either High Net Worth or Sophisticated investor.

                  Simply put, you need to understand the high risk associated with investing in small businesses and therefore be able to invest an affordable sum of money.  Don’t invest what you can’t afford to lose. Once you invest your money could be tied up for a number of years and still result in a loss. Ensure that this money is not part of your lifestyle costs or money tied up with your monthly costs, it should be a sum of money you can afford to invest.

                  I know it sounds pessimistic, but it is important to level set before even taking the course. This isn’t a get rich quick scheme or promise of any riches. There is a possibility that you could make a return on your money and potentially access some tax reliefs, which will be covered in the course.

                  Is there a minimum amount of money one should have when starting out in angel investing?

                  Personal finance is what it says, ‘personal.’ So given how risky this asset class is, you don’t want to expose more than 5% of your annual income to angel investing. For an illustrative example, If I earn £100,000 per year. I wouldn’t risk more than £5,000 on angel investing per year. On the course, we teach how you can invest as little as £1,000 alongside other angel investors.

                  Disclaimer: this is not to be deemed as financial advice, please seek advice independently from a registered financial advisor.

                  Why do you aim for 50% of the course to be women, men of colour, LGBT and/or non-binary?

                  We believe the ‘opportunity cheque’ or the first money invested into a small business can be pivotal to the outcome of whether that business can grow to succeed or fail. Therefore with less than 1p in every pound going to all-female teams and the lack of funding going to diverse-led startups we believe if we can train up more diverse angel investors, more diverse startups will gain investment as a result.