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

Your first five angel investments are not about finding winners. They're about building learning foundations that serve you for years.

Most beginners optimize for the wrong things. They hunt for the next unicorn or try to pick the "perfect" first deal. This misses the point entirely.

What your first five investments should actually accomplish and how to structure them correctly.

Investment #1: The Learning Investment

Purpose: Learn the process without pressure.

Characteristics:

• Company in industry you understand at basic level
• Founding team seems competent (not necessarily exceptional)
• Business model makes intuitive sense
• Terms are standard (SAFE or convertible note)

Check size: $500-1,000 maximum

Why this matters: Your first investment teaches you mechanics. How does paperwork work? What does due diligence actually involve? How do you track investments?

These are process lessons, not investing lessons. Keep the financial risk minimal while you learn operations.

Don't agonize over whether this company will succeed. It probably won't (most don't). That's fine. You're learning how angel investing works.

As Elizabeth Yin, co-founder and GP of Hustle Fund, explains: "Don't try to pick a company. Select a portfolio. One of the biggest mistakes new investors make is thinking they can really pick well and putting a big chunk of cash on one company."

Your first investment starts building that portfolio mindset.

Investment #2: The Industry Expertise Investment

Purpose: Leverage your professional knowledge.

Characteristics:

• Company in your industry or adjacent space
• You understand the problem they're solving
• You can evaluate team's technical or domain expertise
• You could potentially provide value beyond capital

Check size: $1,000

Why this matters: This investment tests whether your professional expertise translates to investing judgment. Do you actually spot better opportunities in your domain? Can you evaluate founding teams effectively?

You should feel more confident about this investment than #1 because you understand the context deeply. If you don't feel more confident, that's valuable signal about limitations of domain expertise.

This investment also begins building your reputation. If you're helpful to this company, founders in your industry will hear about it. Your deal flow improves.

Angel Squad members often make this second investment in companies from Hustle Fund's pipeline that match their professional backgrounds—leveraging expertise while benefiting from additional professional screening.

Investment #3: The Stretch Investment

Purpose: Invest outside your comfort zone.

Characteristics:

• Company in industry you don't know well
• Business model different from #1 and #2
• Different founding team profile
• Requires you to evaluate with less certainty

Check size: $1,000

Why this matters: This teaches you to evaluate opportunities when you can't rely on existing expertise. How do you assess founders you don't naturally understand? How do you evaluate markets unfamiliar to you?

This investment will feel less comfortable. That's the point. You're expanding beyond obvious pattern matching.

You'll likely use frameworks from educational programming more explicitly here. That's good. You're testing whether those frameworks actually help.

Investment #4: The Team-Focused Investment

Purpose: Bet primarily on founders.

Characteristics:

• Exceptional founding team, even if idea seems uncertain
• Founders have track record of execution
• Team complementary skills and clear roles
• You believe these founders could succeed with different idea if needed

Check size: $1,000

Why this matters: At early stages, team matters more than idea. This investment tests your ability to evaluate founders independent of business plan.

Can you recognize exceptional founders? What signals actually predict execution ability? How much does past success predict future success?

This investment also teaches you when to trust people over plans. Early-stage investing is often about backing talented people figuring things out, not perfected business models.

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."

By investment four, you're getting meaningful reps on different evaluation approaches.

Investment #5: The Market-Focused Investment

Purpose: Bet on market opportunity.

Characteristics:

• Obviously large and growing market
• Team is competent but not exceptional
• Product is good enough but not revolutionary
• You believe market will pull company forward

Check size: $1,000

Why this matters: Some investors prioritize market size above everything. This investment tests whether that approach works for you.

In great markets, even mediocre teams can succeed. In terrible markets, even great teams fail. This investment probes that thesis.

You're also learning to evaluate market timing. Is this market actually ready for the solution? Or is it too early/late?

Portfolio Analysis After 5 Investments

At this point, you should have:

Diversification across evaluation approaches:

• Process learning (#1)
• Domain expertise (#2)
• Framework application (#3)
• Team evaluation (#4)
• Market evaluation (#5)

Total capital deployed: $5,000-5,500

Exposure to different: Industries, business models, founding team profiles, stages

Learning foundation: You've practiced multiple evaluation frameworks, seen how different deals work, built relationships with various founders.

What You've Actually Accomplished

Pattern Recognition Started

Five investments isn't enough for statistical significance, but patterns begin emerging. What types of founders do you naturally connect with? Which markets feel comprehensible versus opaque? What business models make intuitive sense to you?

Frameworks Tested

You've applied educational frameworks to real decisions. Which frameworks actually helped? Which were too theoretical? What did you learn that wasn't taught?

Network Building

You're now an investor in five companies. You've built relationships with 10+ founders. You're starting to be seen as "someone who invests in startups" in your professional network.

Mistakes Made (Probably)

You've likely already made at least one investment you regret. Maybe you ignored red flags. Maybe you invested in a friend's company despite skepticism. Maybe you got caught up in hype.

These mistakes are valuable. You learn far more from mistakes than successes, especially early on.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere." Your first five investments teach you to recognize great founders beyond superficial signals.

What to Avoid in First 5 Investments

Don't concentrate in one sector: Even if you know the sector well, diversify. You're learning, not making concentrated bets.

Don't invest in friends' companies: Friendship clouds judgment. Save friend investments for after you've developed frameworks.

Don't chase valuations: Whether cap is $8M or $12M barely matters for $1,000 investment. Focus on learning, not optimizing return on first few deals.

Don't skip due diligence: Even on small investments, go through evaluation process. You're building habits that persist.

Don't invest more than $1,000 per deal: Keep risk low while learning. Increase check sizes after 10-15 investments.

Setting Up for Investments 6-15

Your first five investments create foundation for next ten. You've learned:

• Which evaluation approaches work for you
• What types of founders you connect with
• Which markets you can evaluate effectively
• What your time commitment actually looks like
• How to provide value beyond capital

Investments 6-15 build on these learnings. You might start concentrating slightly in areas where you have edge. You might develop loose thesis about interesting markets or team profiles.

But you're still diversifying. Still learning. Still building.

The goal is reaching 15-20 total investments over 2-3 years. At that point, portfolio theory starts working in your favor. You have enough shots on goal that some might succeed.

Community vs. Solo for First 5

Making first five investments through communities is dramatically easier than solo.

Community advantages:

• Consistent deal flow (don't need to hunt for each opportunity)
• Standard terms (know you're getting fair deal structure)
• Peer comparison (learn from others' evaluation approaches)
• Educational support (frameworks for each investment type)

Solo challenges:

• Sporadic deal flow (might take 2-3 years to make 5 investments)
• Term negotiation (don't know if you're getting good deal)
• Isolated learning (no peer comparison or feedback)
• No structure (must create own frameworks)

Angel Squad's model makes first five investments straightforward: curated deal flow from Hustle Fund's 1,000+ monthly applications provides diverse opportunities across sectors and stages, $1,000 minimums enable all five investments with just $5,000 total capital, educational programming teaches frameworks for evaluating different opportunity types, and community of 2,000+ investors shows how others approach early portfolio construction. 

Members typically complete first five investments within 6-9 months versus 2-3 years for solo investors.

Your first five investments are foundation. Structure them deliberately. Learn from each one. Build habits that serve long-term success.