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

Before deciding whether to angel invest, you need honest answers to questions that determine fit. External advice can only go so far. The answers that matter come from honest self-reflection about your specific situation.

These are the seven questions to ask yourself before making the angel investing decision.

Question 1: Do I Have Genuinely Surplus Capital?

The question behind the question: Is the money I'd invest truly extra, or would its loss affect my life in any meaningful way?

Honest assessment criteria:

• Would losing entire investment require any lifestyle adjustment?
• Is this money clearly separate from retirement, emergency fund, and family obligations?
• Could I lose it completely and feel only mild disappointment, not genuine financial stress?
• Is this 5-10% or less of my liquid investable assets?

Green light answer: "I have $15,000-25,000 that I could lose entirely without any impact on my financial security or lifestyle plans."

Red flag answer: "I'd have to dip into savings, delay major purchases, or feel genuine financial stress if this money disappeared."

Why it matters: Angel investing has 60-70% failure rate. If losing capital would cause real problems, you shouldn't be angel investing regardless of potential upside.

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."

Portfolio construction can't help if capital isn't genuinely surplus.

Question 2: Can I Commit 3-5 Hours Weekly for Years?

The question behind the question: Do I have sustained time availability, not just current enthusiasm?

Honest assessment criteria:

• Can I protect 3-5 hours weekly in my schedule for the next 3-5 years?
• Have I successfully maintained similar commitments in the past?
• Is my work and family situation stable enough to sustain ongoing engagement?
• Would this time otherwise go to lower-value activities?

Green light answer: "I can reliably allocate this time and have track record of maintaining similar commitments."

Red flag answer: "My schedule is unpredictable, I struggle to maintain optional commitments, or this would require sacrificing important priorities."

Why it matters: Angel investing requires sustained engagement over years. Sporadic involvement produces poor outcomes and wastes earlier investment.

Question 3: Am I Genuinely Comfortable With High Risk?

The question behind the question: Can I emotionally handle watching most investments fail?

Honest assessment criteria:

• How do I react when investments lose value? Panic, stress, or acceptance?
• Can I maintain strategy when individual components are failing?
• Do I understand that 60-70% of investments returning zero is normal, not failure?
• Am I comfortable making decisions with incomplete information and uncertain outcomes?

Green light answer: "I can accept individual losses as part of portfolio strategy and maintain discipline through volatility."

Red flag answer: "Investment losses cause me significant stress even when expected. I struggle with uncertainty."

Why it matters: Angel investing involves watching most investments fail. If this causes emotional distress, the experience will be negative regardless of eventual outcomes.

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."

Practice includes watching failures. You must be emotionally prepared for that reality.

Question 4: Why Do I Want to Angel Invest?

The question behind the question: Are my motivations aligned with what angel investing actually provides?

Honest assessment criteria:

• Am I primarily seeking financial returns, or do I value learning, networks, and engagement?
• Do I have genuine interest in startups and innovation?
• Would I find value in the activity even if financial returns were modest?
• Is this about portfolio optimization or about specific benefits angel investing provides?

Green light answer: "I'm genuinely interested in startups, would value the learning and networks, and view potential financial returns as bonus."

Red flag answer: "I'm primarily seeking financial returns and would feel the activity was wasted if returns were modest."

Why it matters: Motivation mismatch is primary predictor of dissatisfaction. Those seeking primarily financial returns often report disappointment even with decent outcomes.

Question 5: Can I Wait 7-10 Years for Outcomes?

The question behind the question: Do I have patience for extremely long feedback loops?

Honest assessment criteria:

• Can I maintain engagement and discipline for years without knowing if decisions were correct?
• Am I comfortable with capital being completely illiquid for a decade?
• Can I avoid judging portfolio success based on early results (years 1-5)?
• Is my life situation stable enough that I won't need this capital unexpectedly?

Green light answer: "I'm genuinely comfortable with decade-long timeline and have no foreseeable need for this capital."

Red flag answer: "I'd want to see progress within a few years. Extended uncertainty would be frustrating."

Why it matters: Angel investing outcomes take 7-10+ years. Impatience leads to poor decisions and premature abandonment.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere."

Recognizing great founders sometimes takes years as companies develop. Patience is essential.

Question 6: Would I Value the Learning Independent of Returns?

The question behind the question: Is the educational component genuinely valuable to me?

Honest assessment criteria:

• Would understanding startup mechanics, business models, and investment evaluation be professionally valuable?
• Do I find business and innovation topics genuinely interesting?
• Would I read about startups and investing even if I weren't investing?
• Does my career benefit from startup ecosystem knowledge?

Green light answer: "I'd find the learning valuable regardless of financial outcomes. This knowledge has professional applications."

Red flag answer: "I'm not particularly interested in startups. Learning is secondary to potential returns."

Why it matters: Learning value often exceeds financial returns. If you wouldn't value the learning, you're missing major component of the value proposition.

Question 7: Am I Willing to Join and Engage With Community?

The question behind the question: Can I participate in community-based activity rather than purely individual investing?

Honest assessment criteria:

• Am I willing to join community for deal flow and education?
• Can I engage consistently with educational programming and peer discussions?
• Am I open to learning from others rather than relying solely on my own judgment?
• Do I value collective wisdom and peer accountability?

Green light answer: "I'd value community engagement and am willing to participate actively in learning and discussion."

Red flag answer: "I prefer to invest independently and wouldn't want community obligations."

Why it matters: Solo angel investing is unsustainable for most people. Community provides essential infrastructure that individual effort cannot replicate.

Angel Squad provides the community structure successful angels need: curated deal flow from Hustle Fund's pipeline, weekly education from active VCs, peer discussion and accountability, and operational infrastructure enabling focus on evaluation rather than administration.

Scoring Your Answers

7 green light answers: Strong candidate for angel investing. Proceed with confidence.

5-6 green light answers: Probable fit with some areas to monitor. Address weak areas consciously.

3-4 green light answers: Marginal fit. Consider whether weak areas can be addressed or if angel investing isn't right match.

0-2 green light answers: Poor fit currently. Focus on other priorities until situation changes.

What to Do With Your Answers

If answers support angel investing: Begin structured path. Join community. Build education foundation. Start with observation period before first investment.

If answers are mixed: Identify specific weak areas. Determine if they can be addressed. Don't proceed until answers improve.

If answers don't support angel investing: Don't invest. Focus resources where they fit better. Revisit if situation changes.

The honest truth: Angel investing is excellent fit for some people and poor fit for others. These questions help determine which category you're in. There's no shame in concluding it's not right for you.