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

Most angel investors evaluate startups by analyzing markets, metrics, and product features. Former CEOs know something everyone else misses: companies don't fail because of bad ideas. They fail because founders can't lead, teams fall apart, or organizations become dysfunctional as they scale. Leadership matters more than the pitch deck suggests.

If you've been a CEO, you've made every mistake in the book. You hired the wrong person for a critical role and watched them nearly tank the company. You burned out your best performers by not seeing the warning signs. You delayed a necessary firing until morale collapsed. These painful lessons create a unique lens for evaluating founders.

Reading Founders Beyond the Pitch

CEO angels watch how founders handle pressure, make decisions, and interact with their teams. The pitch is performance art. The interesting data shows up in how founders answer unexpected questions, how they talk about their co-founders, and whether they take responsibility for failures or blame external factors.

During diligence, former CEOs ask about the last major disagreement between co-founders. They want to know how it got resolved. Hustle Fund GP Elizabeth Yin specifically asks: "When was the last time you disagreed on a business issue? How did you resolve it?" This reveals whether founders can actually work through conflict or if they're papering over fundamental cracks that will widen under pressure.

The quality of the co-founder relationship predicts outcomes more than most investors realize. Research shows 60% of startups fail because of co-founder conflict. CEO angels have lived through these dynamics. They can spot the early warning signs: co-founders who don't make eye contact, one founder who dominates while the other stays quiet, or founders who give conflicting answers about strategic direction.

The Hiring and Team Building Lens

CEOs understand that early hires define company culture and execution capacity for years. When evaluating startups, they assess not just whether the founding team is strong, but whether they can attract and retain the talent they'll need.

Specific questions former CEOs ask: Who do you need to hire in the next 18 months to be successful? How are you thinking about equity splits for early employees? What's your approach to performance management? These aren't theoretical questions. CEOs have lived through the consequences of getting these answers wrong.

One investor who worked at Twitter and Stripe talked about helping portfolio companies find hires, advisors, and consultants through their network. CEO angels build systematic approaches to the talent problems their portfolio companies face. They've solved similar challenges before and know which patterns work.

Recognizing Communication Patterns

Great CEOs are exceptional communicators. They can translate complex strategy into simple goals that energize teams. They can pitch investors, recruit talent, and manage boards simultaneously. Former CEO angels recognize this skill when they see it.

During pitches, they notice how founders explain their business. Can they adapt their message for different audiences? Do they speak in jargon or clear language? Can they tell a compelling story that makes people want to join the mission? These skills predict whether founders can recruit top talent and raise future rounds.

Communication matters as much inside the company as outside. CEO angels probe how founders share information with their teams, handle difficult conversations, and maintain transparency during tough periods. These capabilities often matter more than technical skills or market insights.

Operational Judgment and Prioritization

The hardest part of being a CEO is deciding what not to do. Every opportunity sounds compelling. Every potential partnership could be huge. Every feature request seems urgent. Former CEOs have developed the judgment to prioritize ruthlessly.

They evaluate whether founders have this capability. Do founders articulate clear priorities? Can they explain why they're focused on specific metrics rather than others? Do they understand the concept of sequencing, or are they trying to do everything simultaneously?

Hustle Fund GP Eric Bahn looks at whether founders can build the technology or need outside help. CEO angels extend this question: can founders make the operational and strategic calls required to scale, or will they need to be replaced as the company grows? This assessment requires having been in the hot seat yourself.

Understanding Organizational Scaling

Most founders have never built organizations beyond 10-20 people. CEO angels have lived through the transitions: 10 to 30 people requires process. 30 to 100 requires management layers. 100 to 300 requires systems and culture work that most technical founders find tedious.

Former CEOs can assess whether founders have the aptitude and interest to grow with the company. Some founders are phenomenal at zero-to-one but terrible at one-to-scale. Nothing wrong with that, but it's important to know early. CEO angels can sometimes predict whether founders will successfully navigate these transitions.

They also recognize that different CEO archetypes succeed in different contexts. A visionary CEO who inspires but doesn't focus on details might work great for a consumer brand. That same person would struggle running an infrastructure company that requires operational excellence.

The Board Dynamics Advantage

Former CEOs understand board management from lived experience. They know what good board members do versus board members who cause problems. They can help founders think through board composition, prepare for board meetings, and handle difficult board dynamics.

This perspective is invaluable for first-time founders who've never had a board. CEO angels can explain what information boards need, how to manage investor expectations, and when to push back on board suggestions. This guidance prevents a lot of painful mistakes.

Hustle Fund emphasizes doing investor due diligence and reference calls before accepting capital. CEO angels reinforce this message and can help founders interpret what they learn from those conversations. They know which investor behaviors to watch for and which red flags actually matter.

Where CEO Experience Has Limits

Former CEOs can overindex on leadership and underweight other factors. Not every company needs a transformational leader. Some companies win through great product execution, smart pricing, or superior distribution. CEO angels need to recognize these different paths to success.

They also sometimes project their own CEO journey onto founders who will follow different trajectories. What worked in 2015 might not work today. The leadership style that succeeded in B2B enterprise might fail in consumer apps. The best CEO angels maintain humility about the limits of their experience.

Additionally, former CEOs might not have deep expertise in technical diligence, market sizing, or financial modeling. The strongest CEO angels recognize these gaps and partner with co-investors who bring complementary skills. They lean into their leadership assessment advantages while deferring on areas outside their expertise.

The Portfolio Support Value

Post-investment, former CEO angels provide coaching that founders desperately need. They've navigated similar challenges and can offer specific, tactical advice. When a founder is struggling with a difficult firing, considering a pivot, or dealing with board pressure, a CEO angel has been there.

This support is most valuable during inflection points. Raising the next round. Hiring executives. Expanding internationally. Dealing with a crisis. These moments require judgment that comes from experience, and CEO angels can provide context that helps founders make better decisions.

The key is maintaining boundaries. As one investor mentioned, they focus on what they're actually good at and don't promise things they can't deliver. CEO angels who try to be everything to every portfolio company burn out or provide superficial help. The ones who focus their support on leadership and organizational challenges create real value.

Former CEOs bring a perspective to angel investing that complements technical and market-focused angels. While others debate product features or analyze TAM, CEO angels assess the leadership capacity that will ultimately determine whether the company succeeds. 

In a market where everyone is chasing the same deals based on similar metrics, the ability to evaluate founders as leaders provides genuine edge. Angel Squad offers former CEOs and operators a community focused on leveraging operational experience into smarter investment decisions.