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

There are two opposing forces at work when you start angel investing.

On one side, you need to see enough companies to recognize what a good bet looks like. On the other side, you need to actually write checks in order to learn and (eventually) make returns.

This tension between watching from the sidelines and getting in the game is something every new angel wrestles with. So when someone asked Elizabeth Yin "How should we think about how quickly to deploy money as a new angel investor?" during a recent AMA, it cut right to the heart of the issue.

It is a Numbers Game

Here is the uncomfortable truth. Most startups will not return your money. This could be because the startup runs out of cash. The founders get tired and shut it down. They keep it running as a small lifestyle business that never has a liquidity event. They get acqui-hired, which is great for them but means investors typically see nothing.

The best way to stack the odds in your favor is to make a lot of investments. Elizabeth recommends building a portfolio of about 50 companies over time. Not all at once. Over time.

The Deployment Strategy

This does not mean going out and finding 50 companies tomorrow. That would be reckless, and your earliest picks would almost certainly be your worst.

Elizabeth recommends making 5 to 10 small investments per year. By small, she means $1,000 to $5,000 per deal. That works out to $5,000 to $50,000 per year in angel investing capital.

Follow this pattern for 5 to 10 years, and you end up with roughly 50 companies in your portfolio. By spreading out your portfolio construction over that period, you learn from your earlier investments and apply those lessons to future ones. Your year-seven picks will be dramatically better than your year-one picks because you have built real pattern recognition.

What This Means for Deal Flow

If your goal is to invest in 5 companies a year, you need to be looking at far more than 5 deals. Elizabeth recommends reviewing roughly 100 companies per year to find the 5 best ones to back.

That is a 5% selection rate. And it makes sense when you think about it. The quality bar for venture-scale returns is high. You need to see enough volume to develop a sense for what "good" actually looks like.

This is where deal flow becomes critical. If you do not have deal flow, you will not see 100 companies a year. Or you will not see 100 reasonably good companies, anyway. Deal flow does not happen organically. You have to go find it.

Two reliable sources: syndicates and accelerator mentoring. Syndicates provide some level of vetting before you see a company. The syndicate lead has done diligence, so you are presumably seeing moderately vetted opportunities. Mentoring at an accelerator gives you a front-row seat to what is actually happening inside companies. You can see whether founders are acquiring customers, retaining them, and executing with speed.

Your Earliest Investments Will Not Be Great

Accept this now, and it will save you a lot of anxiety later. Like anything, investing takes practice.

Imagine you have never used a bow and arrow. Someone asks you to hit a bullseye. You would miss the first few times. Eventually you would start getting closer. This is investing. Your first attempts will probably miss. As you get better, you learn what went wrong and apply those lessons.

Over time, you start to recognize patterns. Both good and bad. Which founders talk a good game but do not execute. Which markets sound exciting but have terrible unit economics. Which customer acquisition strategies actually scale and which are smoke and mirrors.

Elizabeth Yin has emphasized that investing requires practice like everything else. You need to see a lot and invest a lot to get better. For beginners, a bigger portfolio of smaller checks is better because it helps with diversification and gives you more learning reps.

The Practical Framework

Here is the simple version. Set an annual angel investing budget. Something you can afford to lose entirely. Deploy that budget across 5 to 10 small investments per year. Review at least 100 deals to find those 5 to 10. Track your decisions and revisit them 6 to 12 months later. What did you get right? What did you miss?

Do not be afraid to deploy money for fear of picking the wrong startup. At the same time, do not blow your entire budget before you have gathered enough reps to know what you are doing.

If you want deal flow, evaluation frameworks, and a community to learn alongside, Angel Squad gives you access to Hustle Fund's pipeline of 1,000+ monthly applications and co-investment opportunities starting at $1,000. It is built for exactly this kind of ramp-up. Explore it at hustlefund.vc/squad.

The best time to start investing was five years ago. The second best time is now. Just start small.