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 guides about becoming angel investor list random tactics without clear sequence. You need specific steps in specific order to build foundation properly.

The six-step framework that actually produces successful angel investors.

Step 1: Verify Requirements Honestly (Week 1)

Before anything else, confirm you genuinely meet all requirements. This isn't exciting but it's mandatory foundation.

Legal requirement: Verify accredited investor status. Check you meet either income threshold ($200,000 individually or $300,000 jointly for past two years) OR net worth threshold ($1,000,000 excluding primary residence). Don't proceed if you don't clearly meet one of these.

Capital requirement: Calculate risk capital actually available. Identify $15,000-20,000 over next 2-3 years that you can lose completely without affecting lifestyle, delaying major purchases, or creating financial stress. This is 5-10% of liquid net worth for most people.

Time requirement: Assess whether you can commit 3-5 hours weekly for 2-3 years minimum. Be honest about calendar capacity alongside career, family, and other priorities. Sporadic engagement doesn't work.

Emotional requirement: Consider whether you can handle watching 60-70% of investments fail over 18-36 months without getting discouraged or personalizing outcomes. Some people can't tolerate this psychologically.

If any requirement isn't genuinely met, address gaps before proceeding. Starting without proper foundation leads to expensive mistakes and early abandonment.

As Elizabeth Yin, co-founder and GP of Hustle Fund, explains: "Most of your investments will return $0. You will lose money. So it's important to have great portfolio construction." Requirements ensure you can sustain portfolio approach despite inevitable losses.

Step 2: Learn Fundamentals Systematically (Weeks 2-3)

Invest 20-30 hours learning angel investing fundamentals before joining community or evaluating opportunities. This foundation prevents expensive beginner mistakes.

Core concepts to master: Portfolio construction theory (why you need 15-20+ investments), power law returns (how few massive winners drive all portfolio returns), realistic failure rates (60-70% return zero), expected timeline (7-10 years minimum to exits), realistic returns (2-3x over decade is success), and basic terminology (SAFEs, convertible notes, valuations, cap tables).

Quality sources: Read content from actual practitioners, not academic business professors or motivational entrepreneurs. Focus on honest assessments from experienced angels and VCs about what actually happens, not aspirational content about what could happen.

Specific frameworks: Learn how to think about team evaluation, market sizing, product-market fit signals, and appropriate due diligence for small check sizes. You don't need expertise, just basic literacy.

Why this matters: These 20-30 hours of study prevent mistakes that cost thousands. Understanding portfolio construction before investing prevents concentration errors. Knowing realistic timelines prevents premature abandonment. Learning proper frameworks improves early decisions.

Step 3: Select Community Carefully (Week 4)

Community selection determines whether you sustain angel investing practice or quit within 2-3 years. Research thoroughly before committing.

Identify candidates: Research 5-7 angel investing communities. Evaluate based on deal volume (10+ opportunities reviewed monthly minimum), deal quality (institutional backing and professional screening), educational structure (weekly programming from experienced investors), investment minimums ($1,000-2,000), cost transparency (clear membership fees and carry percentages), and member engagement (active participation, not ghost community).

Talk to current members: Request conversations with 2-3 members from each top candidate. Ask specific questions: How much time do you actually spend weekly? What's deal flow quality really like? Is educational programming genuinely helpful? Would you recommend to others? What frustrations or downsides exist?

Current members reveal reality beyond marketing claims. They'll tell you if deal volume is overstated, education is superficial, or hidden issues exist.

Compare systematically: Create spreadsheet comparing communities on key factors. Don't choose based on marketing sophistication or name recognition. Choose based on actual structure, costs, and member satisfaction.

Angel Squad demonstrates quality structure: 2,000+ members prove sustainability at scale, curated deal flow from Hustle Fund's pipeline of 1,000+ monthly applications provides consistent quality opportunities, weekly educational programming from experienced VCs teaches proven frameworks, and $1,000 minimums enable proper portfolio construction affordably.

As Eric Bahn, co-founder and GP of Hustle Fund, emphasizes: "For beginners, a bigger startup portfolio is better. It helps with diversification and helps you learn and get reps in. Investing requires practice like everything else." Community provides infrastructure for getting those reps efficiently.

Step 4: Observe Before Investing (Weeks 5-12)

Join selected community but don't invest immediately. Spend 6-8 weeks observing, learning, and building frameworks before committing capital.

Review opportunities without pressure: Look at every deal presented. Read pitch decks. Attend presentations. Follow community discussions. You're building pattern recognition without financial risk.

Attend all educational programming: Weekly sessions teach evaluation frameworks, due diligence approaches, portfolio construction principles, and lessons from experienced investors. This systematic education compresses learning timeline dramatically.

Develop initial frameworks: Based on opportunities you've seen and education received, create basic decision criteria. What are your must-have requirements? What are automatic disqualifiers? What types of opportunities interest you most?

Build conviction about process: Before investing, you need confidence in your evaluation approach. Observation period builds that confidence. You've seen enough companies to recognize patterns. You understand what experienced investors focus on. You're ready to make informed decisions.

Why waiting matters: Your first investments made before developing judgment are typically worst decisions. By observing first, you avoid making those weak decisions with real capital. Your first actual investment is more thoughtful than it would be without observation period.

Step 5: Build Portfolio Discipline (Months 4-36)

Make first investment when you find opportunity meeting your criteria. Continue making 1-2 investments quarterly to systematically build portfolio.

First investment execution: Choose company where you understand market, believe in team, think business model makes sense, see other experienced investors participating, and feel comfortable with terms. Keep it to $1,000. Document your investment thesis before committing.

Maintain consistent check sizes: Invest exactly $1,000 in each company for first 15-20 investments regardless of excitement level. Your conviction is noisy signal. Discipline matters more than feeling.

Quarterly rhythm: Make 1-2 investments per quarter (every 12-13 weeks). This builds portfolio systematically (18-24 investments over three years) while allowing learning between decisions. Too fast doesn't provide learning time. Too slow never reaches diversification.

Track everything systematically: Maintain detailed spreadsheet with investment date, amount, terms, thesis, and space for updates. This record enables learning from outcomes and provides tax documentation.

Continue education: Keep attending programming and reviewing all opportunities even when not investing. Sustained engagement builds judgment faster than sporadic participation.

Why discipline matters: Beginners naturally want to concentrate in companies they love and skip companies they're lukewarm about. This conviction-driven approach produces worse outcomes than disciplined portfolio construction. Force yourself to maintain consistency.

Step 6: Maintain Long-Term Engagement (Years 4-10)

After building 15-20 investment portfolio over three years, most work is portfolio management and occasional follow-on decisions.

Quarterly portfolio reviews: Every 3 months, review entire portfolio. Update tracking with information from company updates. Note which companies are progressing versus struggling. Look for patterns in what's working.

Selective follow-ons: When portfolio companies raise next rounds, evaluate whether to invest additional capital. In early years, new investments for diversification usually matter more. Later, following on in winners makes more sense.

Occasional portfolio company help: Be helpful where you have specific expertise or connections to share. Respond to specific requests promptly. But don't overcommit to advisory relationships that become time-consuming.

Sustained community participation: Continue attending some educational programming (even if less frequently). Stay connected to other investors. Maintain engagement even during years 5-7 when nothing exciting happens.

Why long-term engagement matters: Most angels quit during years 2-5 when nothing interesting is happening. No exits occur. Companies are building but progress is ambiguous. Maintaining discipline through boring years separates successful angels from those who abandon practice before portfolio matures.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere." Learning to recognize them requires seeing many companies over years, not making few investments then stopping.

Common Failure Patterns to Avoid

Skipping verification (Step 1): Starting without genuinely meeting requirements leads to problems. Either you can't legally invest, or you're overextending financially in ways that create stress.

Skipping education (Step 2): Diving straight into investing without learning fundamentals causes preventable mistakes. Twenty hours of study saves thousands in prevented errors.

Rushing community selection (Step 3): Joining first community you find rather than researching thoroughly often means joining wrong community. The switching costs are high.

Skipping observation (Step 4): Investing immediately after joining community means your earliest (weakest) decisions involve real capital. Observation period improves first actual investments substantially.

Abandoning discipline (Step 5): Varying check sizes based on conviction, deploying capital too quickly, or making concentrated bets undermines portfolio approach. Discipline determines outcomes more than individual deal selection.

Quitting early (Step 6): Abandoning practice during years 3-5 when nothing exciting happens means you never see outcomes from years of work. Patience through boring period is crucial.

The Timeline in Practice

Week 1: Verify all requirements. Don't proceed if anything is genuinely missing.

Weeks 2-3: Learn fundamentals through focused study (20-30 hours total).

Week 4: Research and select community. Talk to current members. Join best fit.

Weeks 5-12: Observe without investing. Review opportunities, attend education, build frameworks.

Month 4: Make first investment.

Months 4-36: Continue making 1-2 investments quarterly. Build to 15-20 total investments.

Years 4-10: Manage existing portfolio. Occasional follow-ons. Wait for exits.

This timeline is realistic. It builds proper foundation before investing. It creates portfolio systematically. It maintains engagement through full lifecycle. It's proven approach thousands of successful angels have followed.

Angel Squad enables six-step framework through structured infrastructure: membership verification ensures Step 1 compliance, educational library supports Step 2 learning, transparent operations facilitate Step 3 evaluation, platform enables Step 4 observation, curated deal flow supports Step 5 portfolio building, and active community sustains Step 6 engagement. The infrastructure removes barriers while maintaining discipline.

The six steps aren't shortcuts. They're proper sequence that builds foundation, develops judgment, constructs portfolio systematically, and maintains engagement through completion. Following them doesn't guarantee success but it prevents most common failures.