| name | angel-investing |
| description | Use when acting as an angel or early-stage investor evaluating a startup opportunity — screening an inbound pitch deck, preparing or running a founder interview, planning or executing due diligence, sanity-checking valuation or SAFE/convertible/term-sheet terms, reading a cap table or modeling dilution, assessing portfolio fit, or writing an investment memo and go/no-go recommendation. Triggers on pitch deck review, due diligence, SAFE/KISS/convertible note, term sheet, valuation cap, cap table, dilution, critical success factor (CSF), LTV:CAC, NRR, burn multiple, pre-seed/seed/angel, investment memo, IC recommendation. |
Angel Investing
Investor-side evaluation OS for early-stage deals. The job is to replace the pitch narrative with validated evidence and decide where your time and capital go — not to reward a polished deck or a charismatic founder. Decision support, not investment advice.
Opposite chair from the startup-consulting skill. That one builds the company (founder-side); this one evaluates inbound deals (investor-side). Same disciplines — TAM, unit economics, SAFEs — read from the buyer's seat. Founder-side request → use startup-consulting.
Core principles
- Screen for rejection first — a 5-minute pass answers "does this deserve more time?", never "should I invest?".
- Thesis-fit ≠ investable-for-you — a strong company can still be wrong for your stage, check size, geography, or edge.
- Pick deal-specific CSFs — identify the 3-7 critical success factors that actually drive this deal; don't apply a generic rubric blindly.
- Superpowers and fatal flaws don't add — a critical flaw in a high-importance CSF kills the deal regardless of a high average.
- Separate evidence types — facts, founder claims, assumptions, external data, and analyst judgment stay structurally distinct.
- Validate, don't trust — the founder interview produces hypotheses; diligence tests them.
- Don't false-precision early valuation — use ranges, comps, scorecards; label assumptions; never a single misleading point figure.
- Model ownership, dilution, terms — not just price — liquidation preference, anti-dilution, and the cap table can outweigh the headline valuation.
- Portfolio construction underwrites outcomes — returns are power-law; size every check inside a diversification and reserve plan.
- Escalate professional issues — legal, tax, regulatory, IP, security, and audits require qualified experts.
The three-tier funnel (reject ~90% per tier)
| Tier | Time | Purpose | Output |
|---|
| 1 — Assess | 5 min | Screen for rejection: thesis fit, team/product/market sanity, evidence of pain | Reject / clarify / interview |
| 2 — Evaluate | 45-60 min | Founder interview: score CSF skill, red/green flags, how they think | Pass / request data room / deeper diligence |
| 3 — Validate | 3+ hr | Diligence: validate decision-drivers first, then standard, then lower-risk | Memo + recommendation |
Mechanics in SCREENING.md (Tiers 1-2) and DILIGENCE.md (Tier 3).
CSF model + override
Pick 3-7 Critical Success Factors per deal; rate each importance 1-10; score founder/company skill 1-5.
- Critical flaw — skill ≤2 in a high-importance CSF → caps the recommendation at Pass, regardless of total score.
- Superpower zone — skill ≥4.5 in a high-importance CSF with no critical flaw → a real positive signal.
A high weighted average never overrides a critical flaw. Full rubric, thresholds, and risk taxonomy in SCORING.md.
Stage calibration (ground every answer here)
| Stage | Primary investor question | Appropriate bar | Do NOT expect |
|---|
| Idea / Pre-seed | Why is this team uniquely positioned for this shift? | Customer-workflow insight; bottom-up TAM | Stable unit economics; low churn |
| MVP / Pre-product | Can they build a stable solution at high velocity? | Working prototype; delivery cadence; IP assigned | Scaled ARR; multi-channel funnels |
| Commercial Traction / Early Seed | Real demand and willingness to pay? | Signed contracts/pilots; MRR/ARR; references | Mature LTV:CAC; multi-cohort retention |
| Scalable Traction / Series-A-ready | Repeatable, predictable, capital-efficient to scale? | Multi-cohort retention; verified channels; NRR>120%; LTV:CAC>3:1 | Organic retention persisting without management |
Apply growth-stage bars only to growth-stage companies — never penalize a pre-seed team for lacking SaaS unit economics.
Evaluation workflow
- Intake & label evidence — capture the opportunity; tag each datum documented / founder-claimed / model-derived / external / unknown; state confidence.
- Tier 1 screen — reject, clarify, or advance.
- Design CSFs — 3-7, each with importance, evidence quality, a test question, and the evidence that validates it.
- Tier 2 interview — score CSF skill; capture exact claims to validate; separate red/green flags.
- Tier 3 diligence — staged validation, decision-drivers first.
- Valuation, terms & cap table — stage-appropriate value; convertible/equity terms; dilution.
- Portfolio fit — check size, ownership, reserves, concentration, edge.
- Memo & recommendation — pass / investigate / proceed to diligence / proceed to IC / no recommendation, with confidence.
Reference modules
| File | Covers |
|---|
| SCREENING.md | Tier 1 screen, CSF design, Tier 2 interview, question bank, red/green-flag library |
| DILIGENCE.md | Tier 3 staged validation, evidence hierarchy + labeling, decision rules, external-verification gaps |
| VALUATION-TERMS.md | Valuation by stage, SAFE/convertible math, priced-equity terms, cap table & dilution |
| PORTFOLIO-FIT.md | Portfolio construction, investor thesis/fit, deal flow, syndicates, post-investment support |
| SCORING.md | Weighted rubric + CSF override + thresholds, 15-area risk taxonomy, critical red flags, anti-patterns |
| TEMPLATES.md | Investment memo, screen/intake forms, founder brief, trackers, decision tree, prompt pack |
When NOT to use — escalate, don't improvise
Issue a disclaimer and route to a human expert for: legal (term sheets, SAFEs, SPAs, IP assignment) → corporate counsel; tax (QSBS, cross-border, entity structuring) → CPA / tax attorney; regulated financial advice (telling anyone to buy/sell a security, managing assets) → licensed advisor; guaranteed outcomes — early-stage venture is speculative with high loss rates; high-risk regulated domains (medical/biotech, defense/aerospace, complex fintech) → independent expert technical + regulatory review.
Mandatory disclaimer (include in all memos/recommendations): "This is analytical decision support based on available materials — not legal, tax, or regulated financial advice, and not a recommendation to buy or sell any security. Confirm all terms with qualified counsel and licensed advisors before committing capital."
Completion criteria
An evaluation is done only when: stage classified · evidence separated from founder claims · 3-7 CSFs set and scored · critical flaws surfaced · valuation, terms, and dilution modeled · portfolio fit assessed · recommendation issued with confidence level · data gaps disclosed · professional-review boundaries stated.
