Active Angel path

A thesis, a repeatable screen, startup evaluation, cap tables, first valuation methods, diligence and sizing each cheque.

The lessons, in order

  1. A thesis is a belief that can be wrong. A preference cannot. — Most people who say they have an investment thesis have a preference - a list of things they like the sound of. The difference is whether anything could show it to be mistaken. (10 min)
  2. The best opportunities are rarely the ones being shown to everyone — Deal flow is not one thing. It arrives through channels with very different quality, and the channel an opportunity came through tells you something before you have read a word of it. (10 min)
  3. A process you actually run beats a better one you do not — Screening only compounds if it is written down, identical every time, and produces a record - which is what turns a year of declined opportunities into knowledge about a category. (11 min)
  4. Team, market, product, business - and why the order matters — At the earliest stage there is little business to analyse, so evaluation leans on the team and the market. As a company matures, the evidence shifts toward product and business fundamentals. (10 min)
  5. Retention and unit economics say more than the growth chart — Growth can be bought. Retention shows whether customers get lasting value, and unit economics show whether each customer is worth what it costs to win. (13 min)
  6. Each customer must be worth more than it costs to win — Unit economics compare what a single customer or order contributes with what it costs to acquire and serve. Growth only creates value when those numbers work. (11 min)
  7. A cap table is a list of who owns what, and it only ever gets longer — A capitalisation table records every share, option and convertible claim in a company. Ownership percentages depend on whether you count only issued shares or everything that could become shares. (9 min)
  8. A SAFE is a promise of future shares, and post-money SAFEs stack on the founders — A SAFE gives an investor the right to shares at a future priced round, usually at a valuation cap. With post-money SAFEs, each additional SAFE dilutes the founders rather than earlier SAFE holders. (12 min)
  9. The VC method works backwards from the exit — The venture capital method starts from a plausible exit value, divides by the return an investor needs, and adjusts for future dilution to reach what the company can be worth today. (11 min)
  10. What you were told, what you inferred, and what you checked — Almost everything that later turns out to be wrong was never actually verified - it was assumed, because it arrived alongside things that were true. (10 min)
  11. Red flags: the signals that mean slow down — A red flag is not a reason to stop. It is a reason to stop moving at the speed you were moving, and to go and find out which of two explanations is the true one. (11 min)
  12. The same company can be a good investment at one price and a bad one at another — An investment decision weighs the range of outcomes against the price paid. Scenario-based expected value shows how quickly a higher price erodes the return from the same company. (11 min)
  13. Size each investment for the likely loss, not the hoped-for win — Once an investment is attractive, the remaining decision is how much. Position size should reflect the probability of losing everything, the portfolio you plan to build and what you can afford to lose. (10 min)
  14. Write the decision down before you know how it turns out — A decision record captures what you decided, why, the conditions, the main risks and what would change your mind. It turns each decision into something you can learn from later. (9 min)

All Investor Academy subjects