Earlier today I had a chance to give a 30 minute talk about my limited experiences as an angel investor for Angel Lounge. The theme was lessons learned from Internet startups, so I had a few stories to share. At the end of the presentation I summed up my four personal criteria that I look for when considering an angel investment in a startup:
- Coachable entrepreneur
- Small, fast-growing market
- Opportunity for cash flow break-even in 24 months
- Scalable way to generate leads
Notice there’s nothing in there about potential return on investment or timeline to business exit. Angel investing is as much about helping aspiring entrepreneurs and mentoring as it is making money. Now, if you don’t make money the chance of continuing to do it goes down significantly but when you do it allows you to help even more entrepreneurs. My four criteria for angel investment in a startup are straightforward and practical.
What else? What other criteria would you have for making an angel investment?