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Investing Angel Investing Principles from Alex Lieberman

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Alex Lieberman who is the Chairman of Morning Brew has been angel investing for almost two years now.
Although its been a short time, here are 9 principles he wishes he knew at the beginning as an an angel investor as shared on a Twitter thread.


Principle 1
: ANGEL INVESTING IS AN INVESTMENT IN YOURSELF As an angel, you surround yourself with energized, big thinkers. It brings out the greatest creative energy in yourself. Angel Investing leads to a supercharged MBA. Priceless visibility into entrepreneurs' experiences at various stages. Access to data, insights, and challenges that you can actively support as an angel.

Principle 2: Try to provide a worthy value. Capital doesn't differentiate most investors. Unless you're a Tier A VC that can give more capital faster than others, you won't build reputation through money.

Best ways ways to add value as an angel:
  • Advise around your superpower (product, brand, hiring, tech, financials)​
  • Intros to investors, employees, partners​
  • Quasi-exec coach/voice of reason/listener​
  • Marketing channel with distribution​
  • Product feedback​
Principle 3: DEAL FOMO IS REAL. Don't give into it. When you see friends invest, that should not impact your conviction. If you act on FOMO, it just means you'll have friends to cry with when the biz fails.

Principle 4: BET ON SPECIAL FOUNDERS. There are need-to-haves & nice-to-haves that I look for.

Things Founders need:
  1. Obsessive thinker Wake up & go to sleep thinking about their business. Biz is a puzzle they want to solve.​
  2. Self-aware. The biggest blind spot in business is lack of awareness. They hire into weaknesses and they double down on strengths​
  3. Independent thinker Take in info, work from 1st principles, and form views. Do they draw inspiration? Yes Do they blindly follow?​
  4. Optimistic but realistic They believe in their business & themselves that they'll figure it out. But they're not blind to the facts.​
Qualities to look for in founders;
  1. The founder should not be running his/her first business/startup. The bigger the experience the less the blind spots.​
  2. It should be a plus if they have experienced trauma and come out of it bigger and better.​
  3. Founders who are most of the times ignored by the market.​
  4. Founders betting everything on their startup.​
  5. Founders who are customer of their product​
Principle 5: MEMORIALIZE EVERY INVESTMENT. The number one method to learn from experiences is to memorialize them. It is highly advisable to decision journal every investment you make make and every investment you don't make. Growth comes from thoughtfulness and quick feedback loops.

Principle 6: AWARENESS OF CIRCLES OF COMPETENCE. For example in the case of Alex, he says "If it's a media, marketing, community investment: I invest on my own. If it's outside my circle of competence: I need to invest alongside an expert".

Principle 7: 24-HOUR RULE .
Alex waits for 24 hours before deciding whether he's going to invest or not. Entrepreneurs' energy is contagious & can cloud judge.

Principle 8: KEEP IT SIMPLE. As a pre-seed/seed investor, you're not doing financial analysis. You're doing founder & vision analysis. Beyond finding special founders, always ask yourself:
  • Is this a big/growing market?​
  • Is this product orders of magnitude better?​
Principle 9: INVEST IN VALUE-ALIGNED STARTUPS. A business could be massive. A founder could be special. Doesn't mean you should invest. If the product isn't offering the world something YOUR proud of, it's not worth it.
If you invested, it is because you value wealth over the world

Wrap
  1. Invest in yourself
  2. Add worthy value
  3. Don't fall for FOMO
  4. Find special founders
  5. Decision journal
  6. Invest based on competence
  7. 24-hour rule
  8. Keep it simple
  9. World and wealth should go hand in hand.
 

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