How to Be an Angel Investor

March 2009

(This essay is derived from a talk at AngelConf.)

When we sold our startup in 1998 I thought one day I'd do some angel
investing. Seven years later I still hadn't started. I put it off
because it seemed mysterious and complicated. It turns out to be
easier than I expected, and also more interesting.

The part I thought was hard, the mechanics of investing, really
isn't. You give a startup money and they give you stock. You'll
probably get either preferred stock, which means stock with extra
rights like getting your money back first in a sale, or convertible
debt, which means (on paper) you're lending the company money, and
the debt converts to stock at the next sufficiently big funding
round.
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