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

Finding good startup investments is harder than evaluating them. Most beginners focus on "how to pick winners" when real challenge is "how to see enough opportunities that some might be winners."

The complete process from sourcing to closing, with realistic expectations about what individuals can accomplish.

The Deal Flow Challenge

Why Deal Flow is Hard

The best startup opportunities are competitive. Founders have multiple investors interested. They choose investors based on check size, value-add, reputation, and speed. As individual angel writing $1,000-5,000 checks, you're not top priority for most founders.

You're competing with established angels who have track records, VCs who write larger checks, and well-connected individuals who bring immediate value. Your deal flow disadvantage is structural.

The Three Deal Flow Channels

Personal network sourcing (friends, colleagues, former co-workers raising money), community/platform access (curated opportunities through angel groups), and direct founder outreach (attending demo days, pitch events, or cold networking).

Each channel has different strengths and weaknesses. Most successful individual angels use combination of all three, with different channels dominating at different experience stages.

Starting Point: Community Deal Flow

Why Communities First

For beginners, communities provide only realistic path to consistent quality deal flow. You can't outcompete experienced angels in personal network sourcing. Direct founder outreach is extremely time-consuming and low-conversion.

Communities aggregate members' capital into meaningful check sizes ($20,000-50,000 through SPVs), handle all administrative work, and provide pre-screened opportunities you couldn't source independently.

As Elizabeth Yin, co-founder and GP of Hustle Fund, explains: "Getting deal flow & education have been the bigger blockers to date" for new investors. Communities solve both systematically.

Angel Squad members get access to opportunities from Hustle Fund's pipeline of 1,000+ monthly applications that professional investors screen. This provides consistent exposure to quality pre-seed and seed companies immediately rather than waiting years to build independent deal flow.

Maximizing Community Deal Flow

Review every opportunity presented, even if outside your stated interests. You're building pattern recognition. The practice of evaluation matters more than only focusing on specific sectors.

Attend all pitch calls and Q&A sessions. You learn what questions experienced investors ask and what answers indicate strong versus weak opportunities. This education is as valuable as the specific deals.

Participate in community discussions about opportunities. Other members' perspectives reveal evaluation dimensions you missed. This collective intelligence improves your individual judgment over time.

Community Deal Flow Limitations

You're limited to opportunities the community sources. If community focuses on B2B SaaS and you want consumer products, mismatch exists. You see same deals as hundreds or thousands of other members, so no proprietary access.

These limitations are acceptable when starting but become constraints after 20+ investments when you've developed judgment and want more control.

Building Personal Network Deal Flow

The Long Game Approach

Personal network deal flow takes 2-3 years minimum to develop. You build it through being helpful to founders, making valuable introductions, and establishing reputation for quick decisions and constructive feedback.

Don't expect personal network to provide meaningful deal flow in year one. By year three, if you've been genuinely helpful to portfolio companies, founders start referring other founders to you.

How to Actually Build Deal Flow Network

Make 3-5 valuable introductions quarterly to portfolio companies. Not generic "you should meet this person" emails, but specific high-value connections (potential customers, key hires, follow-on investors). Founders remember investors who provide tangible value.

Respond to founder questions quickly and thoughtfully. Even if you can't help directly, acknowledge promptly and point toward resources. Founders value responsiveness highly.

Share relevant articles, insights, or connections without being asked. Proactive helpfulness builds stronger relationships than reactive support.

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 bigger portfolio creates more opportunities to provide value, which generates more referrals over time.

What Doesn't Work

Attending endless networking events hoping to meet founders. This is time-intensive and low-conversion. Aggressive LinkedIn outreach to random founders. This annoys people more than creating opportunities.

Trying to "build brand" on social media without actual investing track record. Founders see through this quickly.

Focus on being genuinely helpful to small number of founders rather than trying to network widely with everyone.

Direct Founder Outreach (Advanced)

When This Makes Sense

After you've made 15-20 investments through communities and have track record of being helpful, direct outreach to founders becomes viable. Before that, you have nothing differentiated to offer.

The Approach That Works

Identify 3-5 companies you're genuinely interested in. Research thoroughly, understand their product, customers, competition, and challenges. Reach out with specific value proposition based on your expertise or network.

Example: "I noticed you're building X for healthcare providers. I spent 10 years in hospital administration and could introduce you to 3-4 CIOs at major health systems who might be ideal early customers. Would welcome chance to learn more about what you're building."

This is specific, valuable, and demonstrates genuine interest. It works occasionally. Generic "I'd like to invest in your company" outreach never works.

Realistic Expectations

Even with perfect approach, conversion rate is low. You might reach out to 20 companies and get 3-4 meetings. Of those, maybe 1-2 turn into investment opportunities. This is normal.

Direct outreach supplements other channels but shouldn't be primary source unless you have exceptional expertise or network that founders actively seek.

The Evaluation Process

Initial Screen (30 Minutes)

Review pitch deck and any available materials. Ask basic questions: Does team have relevant experience? Is market large and growing? Is business model plausible? Does traction (if any) seem real?

Most opportunities fail initial screen. You're filtering to spend time only on legitimately interesting companies.

Deeper Evaluation (2-3 Hours)

For opportunities passing initial screen, spend 2-3 hours on deeper evaluation. Talk to founders in pitch calls or one-on-ones. Research market and competition. Check references on founders if possible.

Write short investment memo articulating why you're interested, what has to be true for success, and what major risks are. This forces clear thinking and creates record for future learning.

Final Decision (1-2 Hours)

Review all information gathered. Discuss with other investors if possible. Make final decision: invest or pass.

Don't agonize. Early-stage investing requires making decisions with incomplete information. Decide based on available data and move forward.

Understanding Terms (Without Negotiating)

The Individual Angel Reality

As individual angel investing $1,000-5,000, you typically don't negotiate terms. Founders set terms, and you either invest on those terms or pass. You lack leverage to negotiate unless you're writing $25,000+ checks.

This isn't bad, it's just reality. Accept standard terms from reputable companies rather than trying to extract special treatment.

What Standard Terms Look Like

SAFEs (Simple Agreement for Future Equity) are most common at pre-seed/seed. Typical caps range $5M-15M for pre-seed, $8M-20M for seed. Discounts typically 10-20% if offered.

Understand what you're buying: SAFE converts to equity at future priced round at discount to that round's valuation or based on cap, whichever is more favorable to you. You're not buying equity immediately but right to future equity.

Red Flags in Terms

Extremely high valuations ($30M+ for pre-revenue company) without strong justification. Unusual terms that deviate significantly from standard SAFEs. Requirements for ongoing fees or unusual investor obligations.

If terms seem unusual, that's signal to be cautious. Pass unless you have strong conviction and understanding of why terms differ from standard.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere." Great founders typically use market-standard terms rather than creating unusual structures.

Due Diligence for Small Checks

The Appropriate Level

For $1,000-2,000 investments, spending 20+ hours on due diligence doesn't make economic sense. The opportunity cost of your time exceeds potential benefit from marginally better decision.

Right level is 2-4 hours of focused due diligence covering most important factors: founder backgrounds, market basics, obvious red flags.

What to Actually Check

Google founders thoroughly. Look for any concerning history or patterns. Check LinkedIn backgrounds against what they claim. Does experience match pitch?

Research market briefly. Read industry reports or news. Understand if market is growing, who competitors are, and whether timing seems right.

Talk to company if possible. Even 15-minute call reveals whether founders are thoughtful, honest, and coachable. These qualities matter more than specific answers to technical questions.

What You Can Skip

Detailed competitive analysis (you don't have information advantages to evaluate this accurately). Complex financial modeling (unit economics will change anyway). Extensive customer references (companies may only have handful of customers).

These activities make sense for large investments or professional investors. For small angel checks, focus on highest-signal activities.

The Closing Process

Through Communities (Easy)

When investing through communities like Angel Squad, closing is simple. You indicate investment amount through platform. Community handles all paperwork via SPV. You receive confirmation and tax documents centrally.

Total time commitment: 15-30 minutes to indicate amount and complete any required forms. Everything else is automated.

Direct Investments (More Complex)

If investing directly, founder sends you SAFE or other investment document. You review (ideally with lawyer if investing material amounts). Sign document. Wire funds to company. Receive signed copy for records.

Total time commitment: 1-3 hours depending on complexity and whether you involve legal counsel.

For $1,000-5,000 investments, legal review often costs more than reasonable given check size. Many angels at this level review documents themselves, accepting some risk of missing nuances.

Post-Investment Management

Tracking Investments

Create detailed spreadsheet with all investment details: company name, date, amount, terms, founder contact information, your thesis document, and space for quarterly updates.

Update this quarterly with company progress. You're creating record for learning from outcomes.

Staying Connected

Respond promptly when founders reach out. Offer help when you can provide value. Don't be demanding or high-maintenance, founders are busy.

Most communication happens via quarterly email updates from companies. Read these carefully and note what's working versus what's struggling.

Follow-On Decisions

When portfolio companies raise next rounds, decide whether to invest additional capital. This requires same evaluation process as initial investment: do you believe in company's progress and future potential?

Reserve 30-40% of annual budget for follow-ons in companies showing strong progress. This maintains your ownership percentage in winners while letting losers naturally decrease as percentage of portfolio.

The Timeline Reality

Deal Flow Development Timeline

Months 1-12: Community deal flow only. Month 13-24: Community deal flow plus occasional personal network referrals. Month 25-36: Community deal flow plus regular personal network referrals. Year 4+: Possibility of substantial independent deal flow if you've been helpful to founders.

This timeline assumes consistent helpfulness and relationship building. Without that foundation, personal deal flow may never develop meaningfully.

From First Contact to Closed Investment

Through communities: 1-3 weeks typically from seeing opportunity to closing investment. Direct investments: 3-8 weeks from first founder contact to closed investment, sometimes longer.

Community investments close faster because infrastructure exists. Direct investments require more back-and-forth and negotiation.

Angel Squad's structure enables fast evaluation-to-closing timelines: professionally screened opportunities mean initial evaluation is compressed, standard terms eliminate negotiation time, SPV infrastructure handles all paperwork, and digital closing process completes in days rather than weeks. Members go from "this looks interesting" to "investment closed" in 1-2 weeks typically versus 4-8 weeks for direct investments.

Finding and closing startup investments requires systematic approach, realistic expectations, and patience. Communities provide deal flow infrastructure that lets you focus on evaluation rather than sourcing. Personal networks develop over years through genuine helpfulness. Direct outreach works occasionally but isn't primary channel for most angels.

The process gets easier with experience and track record, but it's never completely effortless. Budget time appropriately and focus on channels matching your experience level.