Angel Investors, a Field Guide(www.jeanyang.com)
193 pointsby azhenley3 days ago20 comments
  • davecyen3 days ago
    > if a VC investor is doing their job well, they will make sure to keep investing in your company until they have a good amount of ownership. This means it is against their incentives to introduce you to other investors or do anything else that interferes with their ability to buy more shares in your company for a good price.

    this is only true for larger multi-stage funds who compete with each other, not for Seed or Series A-only funds

    • pnw3 days ago
      Yes, it's completely backwards really. In most successful companies, a VC's holdings are likely to decrease over time, not increase, as the company raises more money and existing investors are diluted. And investors are (in general) motivated to introduce you to new later stage investors because it increases the value of their holdings, even when diluted.
      • fragmede2 days ago
        That's because most of us can't actively remember back to the dot com bust and have only been around for the boom times since. Success is great! Say you're an early investor, with 2 million shares out of 10 million issued, or 20% of the company at a $10 million valuation, or $2 million dollars. Pretty good! $2 million is $2 million.

        The AI boom is in full swing. You've got product market fit, lots of paying users, everything is gucci. So when they issue 40 million more shares to new investors, there's 50 million shares out there, you have 2/50 million, but, hey, lookit! The new valuation is $100 million. You now have $4 million of a $100 million company. Not bad! It turns out that when things are good, things are quite good!

        Unfortunate, it's discovered that your product is actually the torment nexus. Users flee, the bubble pops, the entire sector goes bust, your remaining users sue you, you run out of money. Your board fires you and the new CEO takes on a new round of investors. They issue 950 million shares, at a $one million valuation.

        Fuck.

        For all your hard work, your blood sweat and tears. Failed personal relationships. Your 2 million shares are now 2/1000 of $1 million, or $2,000. That's right, two thousand dollars only. Do not past go, Do not collect money to FIRE, hope you can get a job running Door Dash, except that got automated away so you can't do that.

        Edit: Before commenters reply, That's not possible! I have preferential rights written into my contract. They won't and can't do that! And maybe you're right. Maybe you've got a totally iron clad contract written up by a lawyer who experienced the com bust and there are provisions against the exact scenario written above isn't possible. Except you were collecting a founder's salary of $50,000 /year and don't have $200k in savings to afford a high-powered corporate lawyer to sue and get back what's left of your company. Say you do regain control, it's got a $1 million valuation for a reason. Maybe it'll be like Pebble and you win, and you can run it as a life-style business because there are enough loyal customers who like your brand of torment nexus, and you eke out $10,000 of revenue (gross, not net) per month. Not bad per se, but still not the NYSE bell ringing IPO you were hoping for. Plus you're in debt to your lawyers and it's going to take forever to pay them off.

        • pnw15 hours ago
          No successful company is issuing 40 million shares to new investors from a base of 10 million. Why would investors or founders sign off on that level of dilution?

          And ultimately, if your product is the torment nexus, nobody is going to make money regardless of valuation.

          FWIW, I remember the dot com bust very well.

          • fragmedean hour ago
            > Why would investors or founders sign off on that level of dilution?

            That’s fair. It was just to get to the third act. If you can think of a way to do part two that’s equally succinct that’s more plausible, I’d love to hear your rendition.

    • pavlov2 days ago
      Yeah. In my experience investors in the early rounds are eager to do introductions because they’re still seeking to validate the investment internally.

      If they led a pre-seed, they’d be happy to see someone else lead the seed round because then it’s easier to make the case within the fund that they should maintain or increase their stake.

      External validation means a lot when the company is young.

    • testbjjl2 days ago
      Do you have a portfolio or any direct experience to share? It seems the author is speaking from experience.
      • bix62 days ago
        Many funds only invest in a few rounds. The $10M micro VC that participated in your seed round isn’t making a dent in your $100M D raise.

        Syndicates are much stronger than a sole VC leading everything. There’s just way more capital and help with a syndicate.

  • bix63 days ago
    I like this in general but I think it’s sad the friends and family who helped you don’t get any financial upside.

    I also take issue with calling this angel investing:

    > I angel invest primarily through my scouting relationship with the VC firm Andreesson Horowitz. They give me a budget for investing in each fund and I get a fraction of the carry.

    • mvkel2 days ago
      Full agree. This is... just being a VC. If it's not your own money and you're aligning with someone else's thesis, you're just a vc with crappier terms
      • kdazzle2 days ago
        Well, sounds like a VC but without a good bit of the stress and hassle. Like you wouldnt have to gin up money from LPs
        • bix62 days ago
          That’s what angel investing is.

          Instead with this strategy you get a whopping 5% of profits and Andreessen gets 95% for your efforts / network.

          • CoffeeOnWrite2 days ago
            What? The scout doesn’t risk capital, of course they get only limited return.
            • bix6a day ago
              Yeah as mvkel said it’s just being a VC with shittier terms.

              Why not just be an actual angel? Presumably the author has the capital for it now. And if they’re confident enough to risk someone else’s capital why not risk their own?

    • zipy1242 days ago
      Yeh this is more like being a salesman selling funding contracts for a VC firm to startups, a weird dynamic.
      • pempem2 days ago
        Its the same as "bird dogging" or wholesaling in real estate or really any series of other middlemen or wholesale business who do the hard work of finding the deal but don't necessarily have the cash or want to run the business end to end.
    • 2 days ago
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  • abc123abc1232 days ago
    Stay away from the Angel investor game unless:

    1. You're extremely rich. 2. You see it as a learning opportunity or you enjoy helping, without thought of financial reward.

    What will happen, at the slightest whiff of success, is that professional investors and VC will swoop in at a moments notice, and dilute you to pieces.

    In the end, you will have paid for the company while it was small, to get it started, and then the VC:s will snatch it away by diluting you. Hence nr 1 above, but be prepared to spend!

    • AYBABTME2 days ago
      How does this happen with the typical SAFE?
      • financetechbro2 days ago
        Future investors can negotiate liquidation preference and participation terms that will give them a bigger part of the pot than their % ownership during a “liquidation event” I.e. basically any outcome other than an IPO will trigger those rights
        • AYBABTMEa day ago
          But aren't the terms of a SAFE that you'll get the same terms as the best terms (MFN) offered to investors in the next round, up to a cap?

          Seems like you get just as diluted by future rounds as the professional VCs that will make up the next round, if you get the same terms?

          FWIW I don't think angel investments make any financial sense but see them as a minor chance of upside and a significant way to help and connect with people.

    • paulddrapera day ago
      100%

      Angel investing is a fools game, unless you enjoy it for its own sake.

  • meagher3 days ago
    > Martin and Mike both advised strategic angels instead of friends and family to fill out the round, so that’s what we did.

    How is Kevin Durant (pro basketball player) a strategic angel for a monitoring/observability company?

    • jjmarr3 days ago
      He's a retired pro basketball player. He's since made early investments in companies like Hugging Face[1], Coinbase, and Robinhood.[2] If you earn millions in your 20s, didn't spend it, and have a killer work ethic, you can flip careers to professional investor.

      Idk why nobody's done a good feature on him.

      [1] https://finance.yahoo.com/news/kevin-durant-investment-portf...

      [2] https://parlemag.com/2025/04/kevin-durant-business-ventures/

      • meagher3 days ago
        I'm not questioning his investment abilities, just curious what he offers that is strategic (advice, dealmaking, etc).

        Aside: Saquon Barkley's (pro football player) portfolio is insane https://www.readtheprofile.com/p/saquon-barkley-investment-p...

        • didgeoridoo2 days ago
          The ability of your enterprise sales team to invite a $50M deal prospect to a luxury box with Kevin Durant is not to be underestimated.
          • htrp2 days ago
            This 100%

            KD is trying to be steve young and leverage his bay area fame to get a seat at the table

      • harmmonica3 days ago
        Not retired (plays for Houston) but doesn’t lessen your point one bit.
        • jjmarr2 days ago
          lol that's egg on my face. I just assumed he wouldn't be working two full time jobs at once.

          That's wild.

          • skeeter20202 days ago
            He's an hall of fame basketball player who has made a shit-ton of money, drafted after one year of collge with a team of bankers investing his money, he's definitely not "hustling two jobs" simultaneously. The semi-remarkable thing is he hasn't blown his wealth on gambling or pet sharks.
            • snayan2 days ago
              If it were that easy, the norm wouldn't be blowing the wealth on gambling or pet sharks lol.

              If he has successfully assembled a team of bankers that has been as successful as his portfolio suggests, while allowing him to be completely hands off, the man clearly has talents beyond the basketball court.

      • mi_lk3 days ago
        A good feature wouldn't call KD a retired NBA player yet :)
    • antognini2 days ago
      Later on it looks like he classifies him as a "vanity angel" rather than a "strategic angel." It sounds like it can be useful to have someone with name recognition as an investor when you're talking to people who aren't very familiar with the space.
      • skeeter20202 days ago
        if you are trying to convince people to invest on name recognition vs. knowledge of your space, or ability to move the company forward it doesn't seem like a great guide for getting angels: "be lucky and get someone famous with lots of money".
    • boomskats3 days ago
      Low time burden, low emotional burden, unlikely to interfere or micromanage?
  • tqi2 days ago
    > Elad was elusive but the angel who was most consistently influential and supportive during my entire five-year run at Akita. We had a fifteen-minute call almost every quarter, sometimes at an unpredictable time, but always full of great guidance.

    How helpful can a person who spends less than 5 hours over 5 YEARS be? How much time are they even spending learning / thinking about the company?

    • htrp2 days ago
      Literally thinking of how to solve your problems while you are on call with them
  • ryanmarr3 days ago
    Unrelated to article, but I had a call with Jean when she was running Akita pre-acquisition, and she was so thorough and thoughtful. We didn't end up buying Akita for various reasons, but I remember walking away thinking, this person can not fail.
    • swyxa day ago
      she seems a force of nature for sure. appreciate you sharing
  • ungreased06752 days ago
    How to win the lottery, a field guide.

    Not really anything actionable there.

  • ashtakeaway2 days ago
    If you don't want to lose your money, don't become an angel investor.
  • tevon3 days ago
    Kevin Hartz is the most desirable angel in the valley IMO. His advice and generosity with his time is unparalleled.
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  • pavlov2 days ago
    I’m not quite sure what’s the takeaway here:

    ‘One conversation that stuck with me: I was telling Kevin how my two lead investors had both interviewed a key product hire for the company. One was positive and one was in the middle. Kevin said to always be “strong yes” or “strong no” if I could help it. I still hire according to this philosophy today.‘

    Is the idea that you should ask for strictly binary yes/no feedback from interviewers, and only move forward if there’s a “strong yes” consensus from this process?

  • 2 days ago
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  • sails3 days ago
    Good guide.

    In the spirit of finding the right person through serendipity:

    I’m actively looking for intros to angels who are interested in B2B lending. The tariffs have completely disrupted the US SMB lending ecosystem and automation is going to have to ramp up rapidly to close the gap.

    Myself and my team have a AI automation tool, we are revenue generating, technical founding team with 2x maths PhDs

    Please email me (email in profile) if relevant to someone you know

  • whearyou2 days ago
    May we all have this man’s network
    • pavlov2 days ago
      This woman.

      Her name is Jean Yang.

  • renewiltord2 days ago
    Fascinating. I guess people go through this in different ways. Don’t know any startup founders who took a path with this structure.

    Ultimately she did exit to Postman so whatever she did was successful though of course one cannot cargo cult everything.

    https://news.ycombinator.com/item?id=36787860

  • mathattack2 days ago
    Great post. She applies her analytical CS thinking to the angel process.
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  • tootie3 days ago
    I see the crux of this post is that they gave a lot of valuable advice to someone who was, at the time, inexperienced. Surely you can acquire sage advice without giving up equity by just hiring someone with experience. And they'd be onboard full-time instead of 15 minutes a quarter. It seems to me the biggest value is the obvious one. That they give you money.

    And sorry for opening a political can of worms, but I wouldn't touch anything that touches Andreesen with a 10 foot pole at this point. He's taken a serious heel turn and is openly endorsing Fascism.

  • throwaway20372 days ago
    Hot take: Another woman talks about her emotional journey as an angel investor. I am tired of these articles. A huge number of them: You can beat them by investing in the S&P 500 via a low cost ETF. What (economic) value these angel investors providing? I will tell you: Little, to zero, to negative.
  • skeeter20202 days ago
    >> I told him I wanted investment from Kevin Durant. It was fall 2018, KD was playing for the Warriors, and he had won Finals MVP earlier that year. I was a KD fan and had heard he did tech investing.

    So you skipped a friend or family member because KD is good at basketball and has lots of money? Super "field guide" /s

    • raw_anon_11112 days ago
      A friend or family member can’t get you box seats in an NBA game. You would be surprised how far that gets you in sales. I was a client of a recruiting company - hiring people through them - and they had season tickets to basketball games and baseball games they would give away.