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.

Most people know Max Levchin as the co-founder of PayPal. Fewer people realize he's been one of the most consistently successful tech investors over the past two decades. But here's what really matters: studying Max Levchin investments reveals a specific philosophy about backing hard technical problems that most investors avoid.

After analyzing his portfolio and public statements, I've found patterns that completely contradict conventional early-stage investing wisdom. And honestly? That's exactly why his approach works.

Who is Max Levchin (beyond the PayPal story)?

Levchin co-founded PayPal in 1998, serving as CTO and building the fraud detection systems that made online payments actually work. After eBay acquired PayPal for $1.5 billion in 2002, he could have retired. Instead, he became one of the most active members of the PayPal Mafia.

But here's what separates Levchin from other successful founders turned investors: he's consistently tackled problems that other smart people said were impossible or not worth solving. PayPal had to solve fraud detection when everyone said online payments would never work. Affirm had to reinvent consumer lending when everyone said fintech was too regulated. Glow had to use data science for fertility tracking when everyone said health tech was too risky.

This willingness to tackle hard problems? That's the thread running through every Max Levchin investment.

What does Max Levchin actually invest in?

Levchin's portfolio spans several distinct areas. He was an early investor and chairman of Yelp, he founded Affirm (a buy-now-pay-later company), Glow (a fertility tracking app), and Slide (acquired by Google). Through his fund SciFi VC, he backs companies in fintech, marketplaces, and technical or regulated markets. Notable companies in his portfolio include Opendoor, Wise (formerly TransferWise), and Brex.

The pattern? Levchin invests in companies solving problems that require serious technical chops and regulatory navigation. He's not backing lifestyle apps or social media clones.

The "Hard, Valuable, Fun" framework

Levchin's innovation lab HVF literally stands for "Hard, Valuable, Fun." This framework explains everything about his investment philosophy.

Hard: The problems need to be technically difficult. Levchin has a computer science background and gravitates toward companies building complex systems. Fraud detection, payment infrastructure, data-driven fertility tracking. These aren't problems you solve with a weekend hackathon.

Valuable: The market opportunity needs to be massive. Levchin isn't interested in niche plays. He wants companies that can become multi-billion dollar businesses if they execute correctly.

Fun: This is the part most investors miss. Levchin genuinely enjoys working on hard technical problems. If a problem doesn't excite him intellectually, he's not interested, regardless of the potential returns.

For early-stage investors, this framework is incredibly useful. It forces you to ask: Is this problem actually hard? Is the market actually big? And honestly, would I enjoy spending the next decade thinking about this problem?

Why Levchin backs regulated industries

Here's where it gets really interesting. SciFi VC explicitly seeks out founders in hard, regulated, or technical markets such as enterprise software, healthcare, and security.

Most investors run away from regulated industries. Too much complexity. Too slow. Too much risk of regulatory changes killing your business.

Levchin runs toward them. Why?

Regulation creates moats: If a market is heavily regulated, it's harder for competitors to enter. Once you figure out the regulatory puzzle, you have a structural advantage.

Regulation means high switching costs: Customers in regulated industries don't switch vendors lightly. Too much compliance risk. This creates stickier customers and better unit economics.

Regulation scares away competition: While other investors are chasing the latest consumer app, Levchin is backing companies in payments, lending, and healthcare. Less competition for deals means better valuations and better terms.

This is contrarian thinking at its finest. And it's worked incredibly well.

The data-driven everything thesis

One thread running through Max Levchin investments is the belief that traditionally analog processes will become data-driven.

As Levchin wrote about creating Glow: "In the next decades we will see huge number of inherently analog processes captured digitally. Opportunities to build businesses that process this data and improve lives will abound."

This isn't about putting existing processes online. It's about fundamentally reimagining how things work when you have data and algorithms.

PayPal: Turned fraud detection from a manual process into an algorithmic system
Affirm: Used data to underwrite consumer loans differently than traditional credit scores
Glow: Applied data science to fertility tracking and family planning
Yelp: Created a data-driven approach to finding local businesses

The pattern? Take something that's always been done manually or inefficiently, collect massive amounts of data, and use that data to create a fundamentally better experience.

What Levchin looks for in founders

Based on his public statements and portfolio, Levchin evaluates founders differently than most VCs.

Technical depth matters more than business credentials: Levchin comes from a computer science background. He wants founders who can actually build the complex systems their businesses require. An MBA is nice. Being able to architect a distributed system is better.

Obsession with the problem, not the solution: Levchin backs founders who are deeply obsessed with a specific problem. Not founders who are opportunistically chasing markets. There's a difference between "I want to build a payments company" and "I'm obsessed with making online transactions secure and accessible."

Willingness to grind through hard problems: Levchin spent years at PayPal fighting fraud. He built Affirm in the shadow of the lending regulations. He knows that hard problems take time and persistence. He wants founders who understand this reality.

Domain expertise or willingness to acquire it: You don't need to be an expert in payments to start a payments company. But you need to become one. Levchin looks for founders who either have deep domain knowledge or are learning machines.

The platform play strategy

Here's something subtle about Max Levchin investments: many of them are infrastructure plays disguised as consumer products.

PayPal started as a way to send money between Palm Pilots. It became the payment infrastructure for eBay and eventually much of the internet.

Affirm looks like a consumer lending product. But it's actually building the infrastructure for point-of-sale financing that any merchant can integrate.

Yelp looks like a reviews site. But it became a critical piece of local business discovery infrastructure.

The pattern? Start with a consumer use case to prove the model and build the dataset. Then become the infrastructure layer that other companies depend on.

This is a smart approach for early-stage investors. Consumer products are easier to understand and evaluate. But infrastructure businesses have better economics and defensibility.

Where Levchin's thesis shows up in his portfolio

Let's look at some specific Max Levchin investments and what they reveal:

Mixpanel: Analytics infrastructure for consumer products. Classic Levchin bet on technical infrastructure that solves a hard problem (understanding user behavior).

Brex: Corporate credit cards for startups. Hard problem (underwriting companies without traditional credit history), regulated industry (financial services), massive market (every startup needs banking).

Opendoor: Instant home buying. Hard problem (pricing homes algorithmically), regulated industry (real estate), huge market (residential real estate is a trillion-dollar market).

Wise (TransferWise): International money transfers. Hard problem (navigating international banking regulations), regulated industry (payments), massive market (global remittances).

See the pattern? Every one of these companies is tackling a technically hard problem in a regulated industry with a massive addressable market.

What didn't work (and why that matters)

Not everything Levchin has touched has turned to gold. Slide, which he sold to Google in 2010, was eventually shut down. Some of his angel investments haven't worked out.

But here's what's instructive: even the failures followed his investment thesis. Slide was a technically ambitious project trying to solve a hard problem (cross-platform media sharing). It just didn't find product-market fit before Facebook and others solved the problem differently.

The lesson? Having a clear investment thesis doesn't guarantee success. But it does mean your failures teach you something useful rather than just being random misses.

The compound advantage of serial entrepreneurship

What makes Levchin particularly effective as an investor is the compound knowledge he's built across multiple companies.

He co-created the Gausebeck-Levchin test, one of the first commercial CAPTCHAs. That security expertise informs how he evaluates security companies.

He built PayPal's fraud detection systems. That gives him unfair advantages in evaluating fintech companies.

He navigated PayPal through complex financial regulations. That helps him advise portfolio companies on regulatory strategy.

Each company he's built has added to his knowledge base, making him better at evaluating and helping the next generation of companies.

How SciFi VC operates differently

SciFi VC describes its philosophy as bringing "unprecedented intellectual rigor to early stage investing" and provides "deep domain expertise to supporting portfolio companies through critical product, strategy, and fundraising decisions."

This isn't your typical spray-and-pray seed fund. SciFi VC gets involved early, often at the company formation stage, helping founders define product and strategy before leading the seed round.

This approach requires more time per company but creates deeper relationships and better alignment. For early-stage investors with limited capital, this is a useful model. You can't back 100 companies, so back fewer companies and be genuinely helpful.

The fintech infrastructure bet

A huge portion of Max Levchin investments are in fintech infrastructure. This makes sense given his PayPal background, but it's also a specific bet about where the financial system is heading.

Levchin believes the financial infrastructure built in the 1970s is being replaced by modern API-driven systems. Companies like Plaid, Stripe, and Affirm are building the rails for the next generation of financial services.

This is a 20-year bet. The incumbent financial system won't be replaced overnight. But Levchin is patient. He's building the infrastructure layer that will eventually power most financial services.

What early-stage investors can learn from Levchin

After studying Max Levchin investments, here are the tactical takeaways for angel investors:

1. Develop technical judgment: You don't need a computer science degree, but you need to understand technology well enough to evaluate technical risk. Take online courses. Read technical blogs. Build prototype products yourself. The more you understand technology, the better you'll be at evaluating hard technical problems.

2. Don't avoid regulated industries: Most investors avoid healthcare, fintech, and other regulated spaces. That's exactly why you should look there. Less competition, higher barriers to entry, stickier customers. Just make sure founders understand the regulatory landscape.

3. Look for infrastructure plays: Consumer products are easier to evaluate, but infrastructure businesses have better economics. Look for companies that start with a consumer use case but have a path to becoming infrastructure.

4. Value domain expertise: Founders who deeply understand their industry have massive advantages. They see problems others miss. They know which regulatory hurdles actually matter. They understand customer pain points at a granular level.

5. Think in decades, not years: Levchin's best investments have taken 10+ years to fully play out. If you're not willing to be patient, don't invest in hard problems. Stick to faster-moving consumer businesses.

The "boring but valuable" strategy

Here's what separates Levchin from most investors: he's willing to back boring companies if they're solving valuable problems.

Payments infrastructure isn't sexy. Expense management isn't exciting. Analytics tools aren't going to generate viral tweets.

But these businesses are incredibly valuable. They have great unit economics. They're defensible. They compound over time.

Most early-stage investors chase excitement. Levchin chases value. And over the long term, value wins.

The intersection of technical and regulatory complexity

The sweet spot in Max Levchin investments is companies that sit at the intersection of technical complexity and regulatory complexity.

These are problems that require both serious engineering talent and serious regulatory expertise. Very few teams can execute on both dimensions. But if you can, you're building a nearly impossible-to-replicate advantage.

For early-stage investors, this means looking for founders with hybrid backgrounds. Engineers who understand regulation. Business people who can code. Domain experts who've built products before.

Where is Levchin investing now?

Levchin's most recent investment was in Bland AI in January 2025, a business productivity software company. This fits his thesis perfectly: taking an analog process (phone calls) and making it data-driven and algorithmic.

The broader theme? He's still betting on data-driven automation of traditionally manual processes, especially in regulated or complex industries.

The bottom line for angel investors

Max Levchin's approach comes down to a simple framework: back founders tackling hard, valuable problems in markets with high barriers to entry. Be patient. Be deeply helpful. And don't chase trends.

For those of us writing smaller checks, we can apply the same principles. You don't need Levchin's capital to invest in infrastructure companies. You don't need his access to find founders solving hard problems. You just need to look where others aren't looking.

The best opportunities aren't in the hyped sectors everyone's chasing. They're in the regulated, technical, complex markets that scare away most investors. That's where you find great founders with room to execute. If you want to connect with other investors who value technical depth and think about these longer-term infrastructure opportunities, Angel Squad brings together early-stage investors who focus on fundamentals over hype and get access to companies solving genuinely hard problems.

The real lesson from Max Levchin investments isn't about copying his portfolio. It's about developing the courage to back hard problems, the patience to let them play out, and the expertise to actually help founders execute.