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

Moses Lo didn't need investors who understood Indonesian payment infrastructure. He needed investors who understood that Xendit was solving a real problem in a market with almost no competition.

That's the reality of early-stage investing in unfamiliar industries. You're not evaluating the technical nuances. You're evaluating whether the founders can execute and whether customers will pay.

The Team Over Everything

When we talk about evaluating companies at Hustle Fund, we always point to two things: the team and the customers. In industries you don't understand, the team becomes even more critical.

You're looking for founders with domain expertise. Did they work in this industry for years? Do they have operational experience? Can they articulate the problem without using jargon that makes your eyes glaze over?

At greenfield markets like Indonesia, the bar is different. There's less competition, which means founders can capture market share even if their product isn't perfect. But they still need to execute. They need to hire the right people. They need to predict obstacles or at least know how to overcome them when they appear.

Elizabeth Yin talks about culture mattering more than most people realize. If you introduce a potential team member to your customers, would your customers love that person? Not tolerate them, but genuinely love them. That's the test. The same applies to founders. If you wouldn't want to work with them, don't invest.

The reality is you're betting on people, not industries. Your diligence should focus on whether these specific humans can build something customers want. The industry knowledge will come from them.

Customer Validation Trumps Everything

In unfamiliar industries, customers are your north star. Are they paying? How much? How often? Are they expanding their usage or churning?

You can't evaluate whether a B2B SaaS platform for dental offices is technically sophisticated. But you can evaluate whether dental offices are paying $500 per month and renewing their contracts. That signal is universal.

Early traction matters more than perfect unit economics. Founders will iterate. Pricing will change. But if customers are willing to pay for a barely functional product, that tells you something about the pain point.

Nicole Quinn from Lightspeed talks about using her network for due diligence. She knows people at companies testing new tools. She can call them and ask, "Are you actually using this product? Do you like it?" That's more valuable than understanding the technical architecture.

If the startup claims Fortune 500 companies as customers, verify it. Reference calls aren't just for checking founder character. They're for validating that customers actually exist and actually care about the product.

Focus on the Fundamentals

Some things are universal across industries. Does the company have a clear go-to-market strategy? Can they acquire customers profitably? Is there a path to sustainable growth?

Customer acquisition cost relative to lifetime value matters everywhere. If they're spending $10,000 to acquire a customer worth $5,000, the math doesn't work. You don't need to understand the industry to know that.

Distribution always matters. First-time founders focus on product. Second-time founders focus on distribution. If the founders can't articulate how they'll reach customers at scale, that's a red flag in any industry.

At Hustle Fund, we've seen thrifty founders who watch every dollar outperform well-funded founders who raised millions. The ones who understand unit economics and cash flow tend to survive downturns. That's true whether they're building fintech or dog walking apps.

What You Can Skip

You don't need to become an expert in the industry. You're making an angel investment, not joining the team.

If the founders are building AI infrastructure and you don't understand transformer models, that's fine. Ask if engineers are adopting the tool. Ask if usage is growing. Ask how they're different from the five other companies building similar things.

Competitive analysis matters, but you don't need to understand every technical detail. You need to understand why this team can win. What's their unfair advantage? Network effects? Proprietary data? A technical innovation that's genuinely hard to replicate?

The honest answer might be, "We're in a greenfield market with no competition." That's valid. Xendit succeeded in Indonesia partly because there weren't 15,000 payment startups like there are in the US. Lower competition means easier customer acquisition and better odds of capturing meaningful market share.

Learning from Your Portfolio

The best way to get better at evaluating unfamiliar industries is by working with your portfolio companies. Help them with their pitch deck. Provide product feedback. Make introductions.

Over time, you'll build mental models. You'll understand which signals actually predict success and which are noise. You'll learn that most company updates don't say much about real progress.

Elizabeth Yin talks about mentoring at accelerators before putting down her own money. Working with companies week over week teaches you what matters. You see which teams execute and which teams make excuses. You validate or disprove specific hypotheses about what works.

This is a long-term game. Most companies that do well won't look great in the beginning. They'll face downs and pivots. You need to be comfortable waiting years and potentially losing all your money on any individual bet.

When to Pass

Sometimes you should just say no. If the founders can't explain their business in terms you understand, that's a problem. Not because you need to understand the technical details, but because they should be able to communicate clearly.

If there's no customer validation and no clear path to getting it, be cautious. Pre-revenue is fine. Pre-product is fine. But pre-customer conversations is risky unless you have strong conviction in the team.

If the market seems too crowded and the founders can't articulate their competitive advantage, that's a red flag. You don't need to understand the industry to know that being the 147th company solving the same problem is a tough position.

The other situation to avoid is when founders are overconfident about things you know they can't predict. Startup outcomes are uncertain. Founders who admit what they don't know are more trustworthy than founders who claim to have all the answers.

Building Your Advantage

Your advantage in unfamiliar industries isn't domain expertise. It's pattern recognition across multiple companies and sectors.

If you've invested in 15 startups across different industries, you start seeing patterns. Strong founders communicate clearly. They iterate based on customer feedback. They manage cash carefully. They hire well.

Weak founders make excuses. They blame external factors. They don't know their numbers. They avoid hard conversations. These patterns are universal.

At Hustle Fund, we invest across many industries and geographies. Some of our greatest returns came from companies in markets we didn't deeply understand at first. But we understood the founders could execute and customers were paying.

The risk in unfamiliar industries isn't that you'll miss technical details. It's that you'll get distracted by complexity and forget to evaluate the basics. Team and customers. Everything else is secondary.

Join Angel Squad to connect with investors who've successfully navigated investments across diverse industries and learn frameworks for evaluating opportunities outside your expertise.