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

Eagerness to start angel investing sometimes outpaces genuine preparation. Before writing your first check, multiple considerations deserve careful attention to ensure you're positioned for success rather than setting yourself up for frustration.

This is the complete guide to what you should consider before your first investment.

Consideration 1: Financial Preparation

Have you verified accreditation status? $200,000+ income ($300,000 joint) for two years with continuation expectation, OR $1,000,000+ net worth excluding primary residence. Don't assume. Verify with actual numbers.

Is investment capital genuinely surplus? Not money you might need. Not money with other purposes. True extra that could disappear without any lifestyle impact.

Have you calculated total commitment? $15,000-25,000 over 2-3 years for proper portfolio. Not just first check but full deployment required for success.

Are financial fundamentals solid? Emergency fund complete. Retirement on track. No high-interest debt. Major purchases funded. Angel investing is last priority, not substitute for basics.

Action item: Create written financial assessment confirming all criteria before proceeding.

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."

Financial preparation means being ready for those losses.

Consideration 2: Time Commitment Understanding

Do you understand the weekly requirement? 3-5 hours weekly during active portfolio building (years 1-3). 2-3 hours weekly during portfolio management (years 4-10).

Can you sustain this commitment? Not just current enthusiasm but ongoing discipline for years. History of similar sustained commitments suggests capability.

What will you reduce or eliminate? Time must come from somewhere. Identify what you'll do less of to accommodate angel investing commitment.

Have you blocked calendar time? Specific recurring blocks for deal review, educational programming, and portfolio management. Vague intention isn't sufficient.

Action item: Block specific calendar time and identify what activities will be reduced to accommodate.

Consideration 3: Emotional Preparation

Are you prepared for individual investment failure? 60-70% of investments will return $0. Not might return nothing. Will return nothing. This is normal and expected.

Can you maintain discipline through failures? When your first three investments fail, will you continue with portfolio strategy or abandon the approach?

Have you internalized the timeline? 7-10 years to meaningful outcomes. Not a few years. A decade. Extended uncertainty is feature, not bug.

Are you comfortable with illiquidity? Money is locked. Period. No access regardless of circumstances. Have you accepted this reality?

Action item: Write statement acknowledging failure rates, timeline, and illiquidity. Sign it as commitment.

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."

Emotional preparation supports the practice required for success.

Consideration 4: Knowledge Foundation

Do you understand portfolio construction? Why 20+ investments required. How power law returns work. Why check size consistency matters. Why diversification beats conviction.

Do you understand investment structures? How SAFEs work. What valuation caps mean. How dilution affects ownership. What happens at exit.

Do you have evaluation framework? Basic criteria for assessing opportunities. Understanding of what's evaluable at early stage. Appropriate due diligence scope.

Have you completed foundational learning? 20-30 hours of structured education before first investment. Not just casual reading but intentional preparation.

Action item: Complete structured learning curriculum. Write personal evaluation criteria document.

Consideration 5: Infrastructure Setup

Have you joined community? Quality deal flow requires community access. Angel Squad provides curated opportunities from Hustle Fund's pipeline of 1,000+ monthly applications.

Is tracking system prepared? Spreadsheet for recording investments, theses, and outcomes. Ready before first investment, not created after.

Are banking logistics arranged? Wire transfer capability from appropriate account. Understanding of how fund transfers work.

Is documentation system ready? Method for storing investment documents, company updates, and correspondence. Organized from the start.

Action item: Complete community joining, create tracking spreadsheet, verify wire capability.

Consideration 6: Expectation Calibration

Are financial expectations realistic? Median returns are 1.0-1.5x. Top quartile is 2.5-4x. You're more likely to be median than top quartile.

Do you value non-financial returns? Learning, networks, and engagement often exceed financial returns in total value. Are these valuable to you?

Are you prepared for boring middle years? Years 3-7 often have little visible progress. No exits, limited updates, extended uncertainty. Can you maintain engagement?

Have you set appropriate success criteria? What would make the experience worthwhile for you? Written criteria before starting, not rationalized after.

Action item: Write expected outcomes document including financial expectations and non-financial value targets.

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

Expectation calibration includes openness to unexpected outcomes from unexpected sources.

Consideration 7: Support System

Do you have accountability partner? Someone who will check on your progress and commitment. Community provides this but personal accountability also helps.

Have you discussed with relevant family members? If applicable, spouse or partner understands the commitment, risks, and timeline. Shared expectations prevent conflict.

Do you have peer investors to discuss with? Community provides peer network. Relationships with other angels for discussing decisions and experiences.

Is ongoing education planned? Not just pre-investment learning but continued development. Weekly programming, reading, peer discussion.

Action item: Identify accountability partner. Have conversation with relevant family. Plan ongoing education engagement.

The Pre-Investment Checklist

Financial Preparation:

• Accreditation verified
• Surplus capital confirmed
• Total commitment calculated
• Financial fundamentals solid

Time Commitment:

• Weekly requirement understood
• Sustainability assessed honestly
• Trade-offs identified
• Calendar time blocked

Emotional Preparation:

• Failure rates internalized
• Discipline commitment made
• Timeline accepted
• Illiquidity understood

Knowledge Foundation:

• Portfolio construction understood
• Investment structures learned
• Evaluation framework developed
• Foundational learning completed

Infrastructure Setup:

• Community joined
• Tracking system prepared
• Banking logistics arranged
• Documentation system ready

Expectation Calibration:

• Financial expectations realistic
• Non-financial value identified
• Boring years anticipated
• Success criteria defined

Support System:

• Accountability partner identified
• Family discussion completed
• Peer network access arranged
• Ongoing education planned

When You're Ready

All checklist items complete: Proceed to observation period. Review opportunities for 6-8 weeks before first investment.

Most items complete: Address gaps before first investment. Don't proceed with significant preparation gaps.

Many items incomplete: Continue preparation. First investment should wait until genuinely ready.

Angel Squad supports complete preparation: structured onboarding covers infrastructure setup, educational programming builds knowledge foundation, community provides accountability and peer network, and curated deal flow is ready when you are.

The time invested in preparation pays dividends throughout your angel investing journey. Don't rush to first check before you're genuinely prepared.