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 focus on tactics (how to evaluate deals, what terms mean, where to find opportunities). They skip the harder questions about whether you should become angel investor at all and what it actually takes.

The unfiltered requirements, expectations, and realities.

The Non-Negotiable Legal Requirement

In the US, you must qualify as accredited investor: $200,000 annual income ($300,000 jointly) for past two years with reasonable expectation of continuation, OR $1,000,000 net worth excluding primary residence.

This isn't suggestion or guideline. It's legal requirement for participating in private securities offerings. Companies and platforms that facilitate private investments verify accreditation status.

Some people think requirements are flexible or that small investments don't count. Wrong. The requirements apply regardless of investment size.

Regulations aim to protect less sophisticated investors from high-risk investments they can't afford to lose. Whether this paternalism makes sense is debatable. But it's current regulatory framework you must navigate.

If you don't meet requirements currently, focus on reaching them (career advancement, savings growth, income increase) rather than trying to circumvent them.

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." Regulatory requirements exist partly because these harsh realities make angel investing inappropriate for people who can't afford losses.

The Capital Reality Check

Beyond legal status, you need capital you can genuinely afford to lose completely. Not "willing to risk" or "comfortable allocating." Capital whose total loss wouldn't affect your lifestyle, delay major purchases, or create financial stress.

Safe approach: maximum 5-10% of liquid net worth excluding retirement accounts and primary residence. If you have $200,000 in accessible savings and investments, $10,000-20,000 over 2-3 years is appropriate maximum.

Most successful professionals don't have substantial capital sitting idle that they can afford to lose. Money is allocated to retirement savings, home down payments, kids' education, emergency funds, and other priorities.

If you're stretching to find capital for angel investing, you're probably allocating too much. The honest test: if all your angel investments returned zero tomorrow, would your life change materially? If yes, you're overallocated.

$20,000 invested in angel portfolio over 10 years versus index funds likely means $30,000-50,000 difference in outcomes (index funds typically outperform on risk-adjusted basis). This opportunity cost is real.

The Time Commitment Nobody Emphasizes

Sustainable angel investing requires 3-5 hours weekly consistently for 2-3 years minimum (portfolio building phase), then 1-2 hours weekly for years 4-10 (portfolio management phase).

This isn't casual hobby you pursue sporadically. It's sustained commitment of 150-250 hours annually for years. That's nearly month of full-time work annually.

What the time actually involves: Reviewing opportunities you'll mostly pass on (not exciting). Attending educational programming about topics you partially know (sometimes tedious). Reading quarterly updates from companies making incremental progress (often boring).

Very little time goes to glamorous activities like celebrating exits or meeting famous founders. Most time is routine evaluation and maintenance.

Can you commit 3-5 hours weekly for years without neglecting career, family, health, or other priorities? Be honest. Most people think they can sustain commitments they actually can't maintain long-term.

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." That practice requires time.

The Emotional Requirements

You'll watch most investments struggle and fail over 18-36 months. Founders you believed in will run out of options. Companies you were excited about will shut down. This happens repeatedly.

Can you handle this psychologically? Some people can compartmentalize investment losses. Others take failures personally and feel guilty about companies that didn't work.

The hardest period is years 2-5 when nothing interesting happens. No exits occur. Companies are building but progress is ambiguous. You're waiting with no idea which investments will succeed.

Many angels quit during this valley because maintaining engagement when nothing is happening is psychologically difficult. The ability to stay disciplined through boring years separates successful long-term angels from those who abandon practice.

You have no control over outcomes. Companies make decisions you might disagree with. They pivot in directions you question. They hire people you wouldn't hire. You can't do anything about it.

Some people need control to feel comfortable. If that's you, angel investing will be frustrating.

The Knowledge Requirements

You need to understand portfolio construction theory, basic startup terminology, common investment structures, and fundamental evaluation frameworks. This knowledge is learnable in 20-40 hours of focused study.

Quality communities teach these fundamentals through structured programming. You don't need MBA or finance background. You need willingness to learn systematically.

The valuable knowledge is pattern recognition about which teams execute well, which markets are attractive, and which business models can scale. This comes only from seeing many companies and tracking outcomes over years.

You can't shortcut this. First 20 investments won't show great judgment regardless of preparation. Your 40th investment will likely be much better decision than your 5th because accumulated pattern recognition improves evaluation.

Markets change. Investment structures evolve. New business models emerge. You must stay current through ongoing learning.

Who Actually Succeeds Long-Term

People who succeed tend to have: realistic expectations about modest returns and high failures, disciplined approach to portfolio construction over conviction-driven concentration, sustained engagement through boring years, genuine interest in startups and innovation beyond just money, professional networks and expertise they can share, and appropriate capital allocation that's truly expendable.

People who struggle typically have: unrealistic expectations about returns or timeline, lack of discipline leading to concentration mistakes, inability to maintain engagement through slow periods, purely financial motivations without interest in learning, insufficient capital leading to stress about losses, or time constraints that prevent consistent participation.

Which profile matches you honestly? Don't answer based on aspirations. Answer based on demonstrated behaviors in other domains of life.

Your honest self-assessment predicts success more than intelligence, wealth, or connections.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere." The same applies to successful angel investors.

The Actual Steps to Become Angel Investor

Step 1 (Week 1): Verify requirements. Confirm you meet accredited investor status. Calculate risk capital actually available. Assess time commitment capacity realistically.

Step 2 (Week 2-3): Foundation learning. Spend 20-30 hours learning fundamentals through high-quality practitioner content.

Step 3 (Week 4): Community selection. Research 5-7 communities thoroughly. Talk to current members. Select best fit.

Step 4 (Week 5-8): Observation phase. Join community and observe without investing. Review opportunities, attend programming, build initial frameworks.

Step 5 (Week 9+): Begin investing. Make first investment. Continue making 1-2 per quarter to build toward 15-20 investment portfolio over 2-3 years.

The Uncomfortable Questions to Answer First

Can you afford to lose $15,000-20,000 completely without affecting your life? (If no, don't start.)

Can you commit 3-5 hours weekly for 2-3 years, then 1-2 hours weekly for years 4-10? (If no, wait until you can.)

Are you comfortable watching 60-70% of investments fail? (If no, reconsider entirely.)

Can you wait 7-10 years for returns without needing capital back? (If no, find liquid investments.)

Are you doing this for learning and networks as much as returns? (If purely for money, choose index funds.)

Do you have realistic expectations about 2-3x being success? (If expecting 10x+, recalibrate.)

If you can't answer yes to all six questions, becoming angel investor is probably mistake. These aren't gatekeeping questions. They're honest assessment of what success requires.

The Alternative Paths

If you don't meet requirements: Focus on reaching accreditation through career advancement and savings growth. Use time to learn about angel investing so you're prepared when qualified.

If you can't afford risk capital: Build your financial foundation first. Angel investing shouldn't happen until you have emergency fund, retirement savings on track, and genuine surplus capital.

If you can't commit time: Acknowledge this honestly and pursue other interests. Angel investing done half-heartedly produces poor results and isn't enjoyable.

The Unfiltered Bottom Line

Becoming angel investor requires meeting specific legal and financial requirements that exclude most people appropriately. Even among those who qualify, many shouldn't participate because time, emotional, or motivational fit isn't right.

This isn't pessimism. It's realistic assessment. Angel investing done properly with appropriate expectations can be valuable for right people. Done improperly or by wrong people, it wastes money and time while producing frustration.

The question isn't whether you're smart enough or connected enough. It's whether you meet requirements, can commit resources, and have expectations matching reality.

Angel Squad provides infrastructure for those who meet requirements: $1,000 minimums make proper portfolio accessible, curated deal flow from Hustle Fund's pipeline removes sourcing burden, structured education compresses learning timeline, and realistic community expectations prevent unrealistic mindsets.

Be honest about whether you should become angel investor before figuring out how to become one. The unfiltered truth is that most people reading this probably shouldn't. For those who should and who meet requirements with realistic expectations, the path forward is clear.