Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

You have $50,000 to start angel investing. What do you do? Write five $10,000 checks? Twenty $2,500 checks? Invest it all in one amazing opportunity?

Most new angels pick wrong. They concentrate too much in too few companies, or they spread so thin they can't meaningfully support anything. They don't reserve capital for follow-ons. They deploy everything in the first six months and then sit idle for years waiting to see if anything works.

Portfolio construction isn't intuitive. It's a skill you develop by learning from people who've built portfolios that actually return capital. Communities help you avoid the mistakes that cost most first-time angels their returns.

Here's the playbook.

Start With The Math

Angel investing is a power law game. Most of your investments will return zero. A few will return 2-5x. One or two will (hopefully) return 20-100x. That one big winner needs to cover all your losses and still leave you with profits.

The math only works if you have enough companies in your portfolio for outliers to emerge. With 5 investments, you probably won't see a winner. With 50 investments, you almost certainly will.

But most new angels can't write 50 checks at $25,000 each. That requires over $1 million in deployable capital. So you need to lower your check size or slow your deployment pace.

Communities solve this by dropping minimums. Angel Squad lets you invest as little as $1,000 per deal. That means a $50,000 angel portfolio can include 50 companies if you want maximum diversification, or 20-25 companies with some reserved for follow-ons.

Lower minimums also mean you can start investing while you're still learning. You don't need to wait until you've saved $250,000 to begin. You can write your first check with $1,000 and learn whether this is something you actually want to do.

Stage Allocation Strategy

Not all stages work for first-time angels. Pre-seed is the highest risk but offers the best potential multiples. Series A is lower risk but compressed returns. You need to match stages to your goals.

A reasonable first portfolio might look like this:

60% in pre-seed (valuations $2-6M): This is where you get the most equity for your capital. Companies are unproven but have founding teams and initial direction. Most will fail. The few that work can return 50-100x. These are companies raising their first $500,000-$1M.

30% in seed (valuations $6-12M): More validation, more risk removed. These companies have some product-market fit signals, maybe early revenue, possibly a few customers. Returns cap closer to 10-30x, but odds of success are higher than pre-seed.

10% in growth/secondary (Series B+): Lower risk, lower returns. These are optionality plays. Companies like Anthropic or Databricks where you're investing in something that's already working and likely to have liquidity within 3-5 years. These give you 2-5x returns and stabilize your portfolio.

Angel Squad gives you access to all three stages through different pools: the Angel Squad Fund for pre-seed and seed, Vertical Deals for Series A, and HustleFund Scale for late-stage opportunities. You can construct a diversified portfolio across stages without needing relationships at multiple funds.

Check Sizing and Reserve Strategy

Here's what most new angels get wrong: They write $5,000 checks into 10 companies and call it a portfolio. Eighteen months later, three companies are doing well and raising Series A rounds. The angel wants to maintain their ownership by investing more.

But they already deployed all their capital. They watch their 0.5% stake get diluted to 0.2% because they can't participate in the follow-on. Their potential 10x return becomes a 3x return because of dilution.

The fix: Reserve 50-70% of your total angel capital for follow-ons. Use the remaining 30-50% for initial checks.

If you have $50,000 total:

• Deploy $15,000-25,000 in initial checks (15-25 companies at $1,000 each)
• Reserve $25,000-35,000 for follow-ons in your top 3-5 performers

This strategy gives you diversification upfront while preserving capital to double down on winners. Communities teach you this because they've seen what happens when angels don't plan for follow-ons.

Elizabeth Yin from Hustle Fund talks about this constantly. The firm increased its initial check sizes specifically to capture more ownership upfront, but they still reserve capital for follow-ons in companies hitting milestones. Angel Squad members learn this framework and apply it to their own portfolios.

Tracking and Documentation

You write your first check. You're excited. You forget to document anything. Six months later, you can't remember why you invested. Two years later, you can't find your investment documents. Five years later, the company gets acquired and you miss the payout because you lost your paperwork.

This happens more than you think.

Good portfolio management starts with documentation:

Deal memos: Write down why you invested in each company. What was your thesis? What traction did they have? What did you check during diligence? Future you will thank current you for this context when deciding whether to follow-on.

Tracking spreadsheet: Company name, valuation, check size, date invested, ownership percentage, key contacts, follow-on decisions. Track whether the company is growing, stalling, or dying. Update it quarterly.

Secure document storage: Investment agreements, SAFEs, side letters, wire confirmations. Keep everything in a single location (Google Drive, Dropbox, whatever). Label files clearly. Future you will be very angry if you lose these.

Angel Squad provides templates for all of this. Members get Hustle Fund's Deal Assessment Framework to structure their thinking. They can reference their community discussions when writing deal memos. They learn what to track because they see what institutional investors track.

Sector Diversification

Should you invest across multiple sectors or concentrate in one you know well?

Both strategies work, but for different reasons:

Concentrated (one sector): You develop deep expertise. You can spot trends early. You provide more value to founders. You build a brand as "the fintech angel" or "the climate tech investor." This helps with deal flow over time. The risk: If your sector hits a downturn, your entire portfolio suffers.

Diversified (multiple sectors): You spread risk across different market cycles. When fintech struggles, maybe climate tech thrives. You learn about different business models and customer behaviors. The risk: You stay a generalist and never develop competitive advantage in deal selection.

For first-time angels, I lean toward diversification. You don't yet know which sectors you'll be good at evaluating. Write checks across 5-7 different sectors in your first 20 investments. See where you develop intuition. Then concentrate more heavily in sectors where you're having success.

Angel Squad makes this easy because Hustle Fund invests across sectors. Members see opportunities in SaaS, fintech, health tech, climate, consumer, and more. You can diversify naturally without needing to source your own cross-sector deal flow.

Learning From Your Portfolio

Your portfolio is your education. Every company teaches you something. Winners teach you what works. Losers teach you what to avoid. But you only learn if you pay attention.

Schedule regular portfolio reviews. Quarterly is good. Ask yourself:

• Which companies are executing well? What patterns do they share?
• Which companies are struggling? What did I miss in diligence?
• What would I do differently if I could re-invest today?
• Am I seeing any trends across my winners or losers?

Communities accelerate this learning by letting you compare notes with other angels who invested in the same companies. Angel Squad members discuss portfolio performance in deal buddy groups. Someone who invested in the same company as you might notice something you missed. That shared learning compounds your judgment faster than investing alone.

The Community Advantage

You can build an angel portfolio solo. People do it. But you'll make expensive mistakes along the way. You'll concentrate too heavily. You'll deploy too fast. You'll miss follow-on opportunities. You'll fail to document your decisions and lose track of investments.

Communities help you avoid all of this by showing you what good looks like. Angel Squad members see how Hustle Fund constructs portfolios across 600+ companies. They learn reserve strategies. They get templates for tracking and documentation. They discuss portfolio construction with other members who are building their own portfolios.

This is the real value. Not just access to deals, but access to frameworks that work. Frameworks built from thousands of investments, not just a handful.

If you're ready to start building your first angel portfolio, learn from people who've already made the mistakes you're about to make. Join a community that teaches portfolio construction using real institutional experience. Write your first check alongside investors who know what they're doing. And document everything so future you doesn't lose track of what present you is building.