How to become an angel investor (even if you're starting small)

I invest in companies, and I founded The Hatchery to bring investors and entrepreneurs together. Women ask me how to start writing checks. Here's what I tell them, starting with the part nobody likes to hear.

What an angel investor actually does

An angel is usually one of the first people to put money into a company. Often it's before there's much revenue, sometimes before there's much of anything. A founder, an idea, and a deck.

Now the part nobody likes to hear. Figure about 1 out of 10 deals makes it. When you write an angel check, you have to be ready to lose all of it. The money is also stuck for years. You can't call the founder next spring and ask for it back because you want to redo the kitchen.

You also need a stomach for the ups and downs. Building a company is hard work and, like life, it has lots of curve balls.

So only invest money you truly don't need. If losing it would keep you up at night, it's too much.

Can you become an angel investor with little money?

Sometimes, but check the rules first.

In the U.S., many private startup deals are only open to accredited investors, which is a definition the SEC sets based on things like income, net worth and certain professional credentials. Read the SEC's accredited investor rules before you assume you can or can't get in. And talk to your own financial advisor or lawyer.

If you aren't accredited, there are still doors. The SEC's Regulation Crowdfunding lets non-accredited investors put smaller amounts into startups through SEC-registered platforms, with limits on how much you can invest each year.

Whatever your number is, start small. Several small checks over a few years will teach you more than one big one, and one bad call won't wipe you out.

Deal flow is a people business

Everyone thinks the hard part is picking the winner. The first hard part is seeing the good deals at all. This is about networks of good deals.

The best founders don't post their round on a bulletin board. They call the people they know and trust. So the question is whether you're one of those people.

I play poker with guys who swap million-dollar deals over the course of one game. Everyone's trying to learn how to pitch. You just have to get to the right table and sit down and play. (I wrote about that in Get to the right table.)

It works the other way too. When I look at a founder, I'm asking the same thing I ask about everyone. If I don't want to be friends with you, why would I fund your company? Why would I introduce you to my friends? Trust comes first. The check comes after.

If I don't want to be friends with you, why would I fund your company?

I've watched it happen at our tables. Two founders in Seattle met a longtime Amazon executive at one of our dinners. She went on to lead their $1.4 million round and join their board (GeekWire wrote it up). Dinner first. Then the deal.

How to become an angel investor

1. Check the rules. Look up the SEC's accredited investor definition and figure out which kinds of deals are open to you.
2. Pick a total you can afford to lose. ALL of it. Decide that number before you meet a single charming founder.
3. Join a group first. An angel group, a syndicate, an investing circle. You see more deals, you watch experienced investors ask the hard questions, and you can often put in a smaller amount than you'd need on your own. Many groups still require accredited status, so ask.
4. Learn before you write checks. Sit in on pitches. Ask how other angels decide. Learn the basics of how a round is structured and what the terms mean. Ask dumb questions now, while they're free.
5. Invest in what you know. Your industry experience is your edge. You can tell a real business from a pretty deck, and you can actually help.
6. Write small checks, more than one. If 1 out of 10 makes it, you need to spread your bets. Go across several companies and a few years.
7. Be useful after the check. Make the introduction. Answer the 10pm call. Founders tell other founders who actually helped, and that's how the next good deal finds you.

What stage are you investing in?

Your check size mostly answers this for you.

Smaller checks: pre-seed or seed. This is the earliest money in, and it's where most angels start.

Larger checks: Series A. If you can write a bigger check, you can get into an A round alongside funds. This is particularly true if you're writing out of a family office.

Make sure you understand the term sheet

The term sheet is the short document that sets the deal. If you can't explain it to a friend, you're not ready to sign it. The basics:

• Valuation. What the company is said to be worth. Pre-money is before the new investment, post-money is after. Your check divided by the post-money is roughly the slice you own.
• SAFE or convertible note. Early rounds often use these instead of selling shares. Your money turns into shares at a later round. A note is a loan with interest and a due date. A SAFE isn't.
• Valuation cap and discount. Your reward for going early. A cap limits the valuation your money converts at. A discount gets you a lower price than the next investors pay.
• Pro rata rights. Your right to invest more in later rounds so you can keep your percentage. When a company takes off, you'll want this.
• Liquidation preference. Who gets paid first if the company is sold, and how much. It decides what you actually walk away with.
• Board and information rights. Who gets a board seat, and whether you get regular updates or have to chase them.

Then have your own lawyer read it.

The founders I walk away from, and the ones I say yes to

I walk away from founders who:

• Don't know their business.
• Say there are no competitors.
• Don't have a strong team.
• Don't understand how to build a team to scale, and want to do everything themselves.
• Don't know how to hustle and work around the clock, if that's what it takes to make a pivotal deal happen.
• Show up late.
• Can't sell.

And the founders who get a yes on the spot? There's no pitching. We're just two people talking about the opportunity, and specifically how to get there, in every way. She can walk me through the product, how she'll sell it, which clients come first, who she needs to hire and when, and what the next raises look like. She sees the 360 of the situation, every step ahead and every pitfall along the way. When I push on the weak spot, she's already thought about it and has a plan. By the end, I've stopped being pitched. We're already working on the problem together.

You don't have to do it alone

Doing a deal on your own is a lot of work. You vet the company, read the legal documents, negotiate the terms, and keep an eye on it for years. There are two easier ways in.

Join a syndicate or an angel network. Diligence is centralized, formalized and shared. Everyone looks at the same deal the same way, members split the work, and you get to watch how experienced investors think.

Follow a lead. If you want even less work, be the angel who follows. A lead investor does all the diligence, the legal and the oversight. You read what she found, decide yes or no, and write your check.

Two things to check first. You're trusting her judgment with your money, so look at her track record the way you'd look at a founder's. And ask what it costs, because many leads take a share of the profits, called carry, and sometimes fees. You can still lose ALL of it.

Give before you write a check

You can start being an investor before you have a dollar in. Help founders now. Give advice. Make introductions. Be the person founders come to for advice, the one they leave with six pages of notes.

That's the same way I've seen board seats happen. I invest in companies, and joining the board is a natural progression. Every one of those seats came from people I knew, who valued my opinion. (More in how to get on a board.)

The guys have done this forever, on the golf course and at the poker table. Women need to be at that table too, and not just pitching. Writing the checks.

Plenty already are. Women are about four in ten U.S. angels (UNH Center for Venture Research). Companies with a woman founder took a record 27.7% of U.S. venture dollars in 2025, but two companies took 40% of that money (PitchBook).

Questions women ask me

How do I become an angel investor?

Check whether you meet the SEC's accredited investor rules, set a budget you can afford to lose, and join an angel group or syndicate so you can learn alongside experienced investors. Start with small checks in industries you know, and build real relationships with founders.

Can I become an angel investor with little money?

Possibly. Many private deals require accredited investor status, but Regulation Crowdfunding lets non-accredited investors put limited amounts into startups through SEC-registered platforms. Only invest money you can afford to lose completely.

Do I need to be accredited to be an angel investor?

For many private startup deals in the U.S., yes. The SEC sets the definition, and it can change, so read the SEC's accredited investor page and ask your own advisor before you invest.

Can I be an angel investor without doing all the work?

Yes. Join a syndicate or angel network, where diligence is shared, or follow a lead investor who handles the diligence, legal and oversight. Check her track record and ask what she charges before you invest.

How do angel investors find deals?

Mostly through people. Founders, other investors, angel groups, and friends who trust you send the good ones your way. The stronger your relationships, the better the deals you see.

Dr. Yao Huang founded Wonder Women more than twenty years ago with a table of four friends in New York. Today it's 20,000 women and 5,000 dinners in 30+ cities. She is also the founder of The Hatchery and a three-time TEDx speaker.