Is being an “angel investor,” as fun and lucrative as it’s cracked up to be?

One of the most interesting professions anyone can have in the finance area today is that of an angel investor. Even if you remotely track the history of many of today’s big unicorns, you know that it’s names like Peter Thiel, who helped give Facebook a real shot at making it big, or Marc Andreessen, who helped build up Airbnb, Twitter, and Instacart. 

Well, one Reddit user wants to know if this job is as glorious and fun as seeing these individuals talking on stage or being portrayed in a movie. Posting in r/financialindependence, this Redditor wants to hear good and bad stories about the successes and failures of those who do angel investing. 

This is a fascinating topic, especially after re-watching Super Pumped, the story about Uber’s founding, and Kyle Chandler’s portrayal of famed angel investor Bill Gurley. 

The Big Question 

While this Redditor doesn’t give us any reason for the post and question outside of general curiosity, it’s an interesting topic to discuss all the same. They want to hear from people about how they determine which companies to invest in and what mistakes they have made. There is also an interest in understanding these mistakes and sharing how they have learned from them and influenced new decision-making with other investments. 

This topic is certainly interesting, and there is little question that everyone reading this would love to have enough disposable income to do angel investing. Whether or not it’s fun, it’s hard to argue that some angel investors have gone on to find massive success in the business world. 

The Real Answer

According to the responses in the comment section of the Reddit thread, there is no question that those who are angel investors find the role fulfilling, but it comes with significant risks and downsides. 

One Redditor offered great advice on finding success, which can make the job more fun. First and foremost, they recommended investing in what and who you know, as having an existing level of trust can make you feel more comfortable about any investment. 

Another solid piece of advice is that this pseudo-angel investor recommended spreading your risk. They advised providing $25,000 to 10 companies instead of dumping $250,000 in just one company. As many angel investments fail, this way, you limit the risk amount and only need one big payoff to make your initial money back. 

There is also a strong agreement among the commenters that many great investments are missed, which can make angel investing pretty hit or miss. This doesn’t mean it isn’t fun, but disappointment can creep in if you pass something over only to see it perform well and miss out on a windfall. 

The bottom line among the feedback from the angel investors in the Reddit thread is no one would call it “fun,” but they would and can call it lucrative. There is no question this field is an opportunity to make money (A LOT of money), but as with many things, you must spend money to make money, which means you need plenty of available capital. 

The Most Important Advice

Ultimately, the most critical piece of advice that this Redditor learned isn’t that the job is not fun but that there are certain tenants most angel investors agree on. This includes going into an investment with other angels, as you don’t want to be the only one investing and then being the only one left losing money. 

The second most significant thing is ensuring you invest in people as much as a product or idea. Investing in a founder, something we have seen work repeatedly on Shark Tank is one of the smartest tactics an angel investor can follow to find their way toward a lucrative investment. If you find a passionate, intelligent, and driven individual, they will find a way to make things work and leave nothing on the table before giving up. 

Echoing an earlier thought, the last big caveat is to spread your money around. Don’t invest in just one Uber, instead try to invest in 20 different Ubers in the hopes that one will take off.