You’re reading an excerpt of Angel Investing: Start to Finish, a book by Joe Wallin and Pete Baltaxe. It is the most comprehensive practical and legal guide available, written to help investors and entrepreneurs avoid making expensive mistakes. Purchase the book to support the authors and the ad-free Holloway reading experience. You get instant digital access, commentary and future updates, and a high-quality PDF download.
Joe is a Seattle-based attorney who has been working in the early-stage company space since the late 1990s. He has worked with hundreds of founders and investors on too many financing and M&A transactions to count. Okay, maybe he hasn’t seen it all. But he has seen a lot. Joe represents startups, investors in startups, and founders and executives of growth companies. He is a member of the Angel Capital Association’s public policy advisory council, where he is actively involved in trying to make the law better for investors and founders.
Pete has played many roles in the startup ecosystem, and has been an angel investor for 10 years. As a serial entrepreneur, he raised over $25M in seed financing and venture capital, and had two successful exits, an acquisition for 2Market and an IPO for RedEnvelope. For 25 years, Pete has advised startups on fundraising and product strategy, both individually and as part of accelerators like Techstars. He has the dubious distinction of losing most of his first $200K in angel investments, in part because he didn’t have the knowledge and wisdom in this book. He strongly believes that one learns more from the failures than from the successes, and his goal is to give you the benefit of those hard lessons without the financial (and emotional) pain.
After his first two years of angel investing, Pete had the equivalent of a bad hangover. $200K had disappeared into companies that had looked very promising but had failed. He had invested too fast, committed too much to a single investment, failed to do thorough enough due diligence in one case, and committed one or two other angel investing mistakes. It can be gut wrenching to watch a company you have invested in fail, and take with it a couple years of your kid’s college tuition, or more.
Angel investing can be fun, financially rewarding, and socially impactful. But it can also be a costly place in terms of money, time, and missed opportunities. This book is intended to help you optimize your experience as an angel investor and avoid some pain by learning from those who have gone before you.
If you want to read a book about “How to make millions in angel investing without even trying,” this is not it. In this book you are going to learn from our successes, failures, and collective experience working on angel deals. We are going to talk about how to be good and thorough at the often rewarding work involved, how to increase your chances of success in a world where 80%-90% of startups fail,* how to position yourself to stay involved with your companies, how to increase your payout when your investment succeeds (we’ll show you how VCs do it), and what to do if things go sideways. In short, we want to help you improve how you go about angel investing so that you make the most of your money and your time.