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Most angels invest backwards

Here is how most angel investing actually works.

A deal shows up. Through a syndicate, a founder friend, a group chat, a forwarded deck. The deal creates urgency. The urgency creates attention. The attention creates research. And the research, done under deadline, inside the deal’s own materials, produces something that feels like conviction.

Deal. Then thesis. Then investment.

That order feels natural because it matches how opportunities arrive. Deals come to you. Markets do not send calendar invites.

But look at what that order actually does.

It means your view of the market was born inside the pitch deck. The company defined the category for you. The founder framed the competition for you. The round materials selected which facts you saw. You are not evaluating the deal against your understanding of the market. You are evaluating the deal against the deal’s understanding of the market.

That is not diligence. That is grading a student with the answer key they wrote themselves.

The right order is the reverse.

Thesis. Then deal. Then investment.

Build an independent view of where value will accrue in a market. Do it on your own time, with your own research, before any specific opportunity is asking for money. Then, when a deal arrives, you are not learning the market from the deck. You are checking the deck against the market. In fairness, many seasoned Angels have made the decision to view deals opportunistically as they arrive. They thoroughly analyzed the idea of building a thesis and after educating themselves, they decided they would produce better outcomes by opportunistically evaluating opportunities without a thesis. If that works for you, I am not here to convince you to stop.

In my experience, the best investors either conduct their own research on a specific market after they see a deal or they conduct their research before they deploy capital and form a specific thesis (or a few thematic thesis). They do not discover their thesis in a pitch deck.

They bring one with them.

What building a thesis actually looks like

I want to make this concrete, because “build a thesis” is exactly the kind of advice that sounds right but will make you feel like I added no value to you.

In early 2025, I was seeing a flood of AI deals. Model companies. Wrapper companies. Infrastructure companies. Agent companies. Every deck told me its layer of the stack was where the value would land.

They could not all be right.

So I stopped evaluating companies and started evaluating the stack.

I spent weeks mapping AI into its layers: infrastructure, chips, data, models, execution, applications. For each layer, I asked the same operator questions I would ask before an acquisition. Where are the bottlenecks? What can be replicated, and how fast? Where does pricing power actually live? What is the cost to compete (to replicate this business)? What happens to each layer when the layer below it improves?

No deal on the table. No deadline. No founder narrating the answers.

What came out of that work surprised me.

The barbell

The value in AI does not distribute evenly across the stack. It concentrates at the two ends.

At the bottom, value pools in physical bottlenecks. Ultra-pure quartz from a single region. Specialty films with no scalable substitute. Mineral refining concentrated in one country. Gas turbines and grid connections sold out years in advance. These things cannot be replicated within the time horizon of AI demand, and scarcity like that collects tolls.

At the top, value pools in vertically integrated platforms and applications that own something a model update cannot take away. Proprietary data generated by real operations. Embedded workflows with real switching costs. Regulatory authority. Distribution.

And the middle, the layer most decks live in, commoditizes fast. Frontier models get matched within months. The cost of reaching last year’s state of the art keeps collapsing. Open weights and distillation mean a capability advantage is a lease, not a deed. An application whose entire moat is “we got to the model first” is renting its differentiation from a landlord who keeps cutting everyone else’s rent.

A barbell. Heavy on both ends. Thin in the middle.

I am not sharing this because I think you should adopt my AI thesis. I am sharing it because of what it did to my judgment.

Before that research, an AI deck could tell me almost anything about its market and I had no independent basis to push back. After it, every AI deal landed somewhere on a map I had drawn myself. I knew before opening the deck what questions that layer of the stack had to answer.

The deal I passed on in Part 1 sat in the thin middle of the barbell. The deck did not mention that. Decks never do. The deck told a clean story about momentum and category leadership.

My map said the category was a treadmill.

I trusted the map.

Why operators already know how to do this

Here is what took me embarrassingly long to see: I already knew how to build a thesis. I had done it for years. I just did not call it that.

Every acquisition I ever made started with strategy, not a target. Before I bought anything, I knew what capability I wanted to add, what a good target looked like, what integration would require, and what price made the math work. When a broker sent me a company, I was not learning the market from the sell-side memo. I was checking the memo against a strategy that already existed.

The strategy is what made me hard to sell to.

That is the entire point of a thesis. It is not a prediction. It is a defense. It is the thing that lets you read a beautiful deck and notice what is missing, because you knew what had to be true before the deck got a chance to define “true” for you.

Operators build this instinctively for their own businesses. You do not enter a market because a customer asked. You study the market, decide where your edge is, and then evaluate opportunities through that lens.

Somehow, many of us leave that discipline at the office when we start writing personal checks.

I did. For a full year.

What a thesis is not

Three clarifications, because each of these cost me money to learn.

**A thesis is not a sector preference.** “I like AI” is not a thesis. “I like healthcare” is not a thesis. A thesis makes a claim about where value accrues and why, specific enough that it can say no to a deal. If your thesis cannot reject anything, it is a mood.

**A thesis is not permanent.** Markets move. My AI map has already been redrawn more than once as the research changed. A thesis you never revisit stops being a lens and becomes a bias. This is the same discipline as revisiting company strategy every planning cycle. You do not throw it out each quarter. You pressure-test it.

**A thesis is not sufficient.** A thesis tells you whether you should want deals in a category at all. It does not tell you whether this founder, this valuation, this structure, this round is the right expression of it. Plenty of deals match my thesis and still fail my underwriting. The thesis is the first gate, not the whole gauntlet.

That last gap is what Part 3 covers.

The Simplest Version

If you are writing angel checks today, here is the exercise. It is not complicated. It is just work most people skip because no deadline forces it.

Pick the one or two markets where you actually deploy capital. Then, with no live deal on the table, answer four questions in writing:

1. Where does value accrue in this market, and where does it commoditize?

2. What is scarce here, and how fast can the scarce thing be replicated?

3. What would have to be true for a new company in this market to keep its margin for ten years?

4. What kind of deal in this market would I decline no matter who else is investing?

That fourth question is the test. If you cannot describe a deal you would decline, you do not have a thesis. You have enthusiasm.

Write the answers down. Date them. Revisit them quarterly, the way you would revisit a company strategy.

Then when the next hot deal arrives with a 72-hour close, you will not be doing your market research inside their deadline, with their materials, under their framing.

You will just be checking a map you already drew.

The takeaway

Deploying capital is a serious decision. Serious decisions deserve to be made against convictions you built yourself, on your own time, before anyone was selling you anything.

Deal first, thesis second is how you end up with a portfolio of reactions.

Thesis first, deal second is how you end up with a portfolio of decisions.

But a thesis only answers the first question: should I want deals in this market at all?

It cannot answer the second: is this specific deal, this founder, this price, the right one?

For that, I built something else. An eleven-category scoring system I now run every deal through before I wire. Every category exists because skipping it cost me something real.

That is Part 3.

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*You don’t need to know everything. Just one more thing than you knew before.*

I have invested in more than 200 startups.

The biggest investing mistake I made in my first year was not losing money.

It was realizing I could not explain why I had invested after the wire had already gone out.

That scared me more than the loss.

Because luck is not a process.

Three wires

Three times in my first year of angel investing, I wired money into the same company.

Three wires. One company. Nearly 9% of everything I had spent years building.

The first wire was a decision.

The second and third were something more dangerous:

confirmation of a decision I had never properly underwritten.

No thesis about where value was accruing in the market. No framework for evaluating whether this specific deal matched that thesis. No structured method for comparing one opportunity against another.

I had instinct. I had pattern recognition from years of operating. I had excitement about the category.

That last part was the most dangerous.

The invisible problem

Good outcomes can reinforce bad decisions.

That is one of the hardest lessons in investing.

The company has since marked up.

It feels like proof.

It is not.

It was a coin that landed heads.

The markup did not validate my process, because I didn’t have one. It validated a decision I had made for reasons I couldn’t even remember. And because the result looked good, it took me 6 months before I went back to examine whether it was an investment that I should have made.

When you invest without a system and things go well, the success becomes the argument against building the system. Why would I slow down? Why would I add structure? The returns say I am doing this right.

Except the returns do not say that.

The returns say something happened. They do not say why.

In angel investing, where the feedback loop is measured in years, the distance between a good decision and a lucky one can stay hidden long enough for your entire approach to calcify around the wrong lessons.

I was calcifying.

The Pitch Deck

Months later, I sat down with one of those original pitch decks. Not because something had gone wrong. Because something felt off and I could not name it.

I opened the deck looking for the insight that had driven my conviction to back the deal. The analytical breakthrough. The piece of work I would look at and that would remind me why I was so clear about backing that deal at the time.

Instead I found something alarming.

My investment thesis for that deal fit on one sentence:

"Most of the smart and successful people in my network are investing."

If you write angel checks, you know how easy this is to justify.

You do not say, “I am outsourcing my judgment.”

You say, “I am following strong signal.”

You do not say, “I am afraid of missing the deal.”

You say, “The round is moving fast.”

You do not say, “I have not built conviction.”

You say, “The people around the table are excellent.”

That is what makes social proof so dangerous. It lets a weak thesis dress itself in sophisticated language.

Social proof is a signal.

It is not a thesis.

A strong cap table can tell you that smart people are interested.

It cannot tell you whether the market will support the company, whether the founder has earned the insight, whether the moat compounds, or whether the price leaves room for a venture return.

I had mistaken a signal for a reason.

That was not a thesis. That was an observation about other people's behavior. And it had been enough to get me to wire 3 meaningful checks.

I closed the laptop, disappointed in myself.

Not because I thought the company would fail. Maybe it would do great. The company's outcome was not the issue.

The issue was that I had no independent reason to believe anything about the outcome.

In investing, that independent view is called a thesis.

A thesis is not “I like this company.”

It is a researched belief about where value will accrue in a market, why it will accrue there, and what kind of company is most likely to capture it.

I had none of that.

No view of the market before the deal showed up. No conviction built on my own time, with my own research. No map that this deal either confirmed or contradicted.

The deal came in. I reacted. Then I called the reaction a decision.

An Operator First, I Knew Better

This is the part that still embarrasses me.

I am a five-time founder. I have built companies, scaled companies, sold companies, acquired companies, merged seven firms together, raised $33 million in a recapitalization, and then completed six additional acquisitions. I have built sales teams, run forecasting processes, built process and structure in every facet of every business, created integration playbooks to use when doing acquisitions and operated under real pressure with real consequences.

In every one of those environments, I understood the importance of process. Without process, you have chaos.

Not because process is exciting. Because process is how quality scales. It is how you make decisions repeatable. It is how you set high standards and keep them high when the volume increases and the complexity compounds. It is how you stop depending on heroics and start depending on systems.

When I ran a sales organization, I did not let reps close deals on gut feel. I built a pipeline. I built qualification criteria. I built a forecast methodology. I built accountability into the cadence. Not because I lacked trust. Because the business was too important to run on instinct alone.

When I acquired companies, I did not sign letters of intent because the opportunity felt right. I ran diligence. I called clients. I analyzed revenue quality. I separated recurring revenue from one-time revenue. I built bear, base, and bull cases. I pressure-tested integration before I signed.

I did not decide to buy a payroll company and then invent the reason afterward.

I already knew exactly what capability I wanted to add.

When I ran a business, I mastered the processes first. I used my own operating experience to identify our differentiators. I revisited strategy as the market shifted. I did not just react to what showed up. I built conviction about where we were going and then evaluated opportunities through that lens.

That is how operators build.

Then I looked at my own investing.

There was not a sales process. There was not an acquisition playbook. There was not even a strategy.

Just excitement.

Somehow I had demanded rigor from every business I had ever run.

But when it came to my own capital, I had replaced process with optimism.

What no thesis looks like

Here is the practical problem.

When you do not have an independent view of a market before a deal arrives, your only inputs are the inputs the deal gives you. The pitch deck. The cap table. The round terms. The founder's energy on the call. The speed of the close.

All of those are real signals. But they are signals created by the deal. They are not signals you created independently.

An investor with a thesis sees a deal and asks: does this match what I have spent months building conviction around? Does this company sit in a part of the market where I believe value will accrue? Is this the right team to capture that value?

An investor without a thesis sees a deal and asks: does this feel right? Are the people involved credible? Am I going to miss something if I do not move now?

The first investor is evaluating. The second is reacting.

Startup investing should work the same way every acquisition I ever made worked. The strategy comes first. The criteria come first. The conviction about what you are looking for comes first. Then when an opportunity arrives that matches, you have a lens to evaluate it through.

I did not have a lens.

I was reacting to what was on the shelf.

The deal that broke the pattern

A few months after that uncomfortable moment with the pitch deck, another deal landed.

Same shape. Impressive company. Interesting category. The kind of opportunity that makes you feel like speed is the right response.

But this time, something was different.

I had spent the previous weeks deep inside a research project on the AI stack. Not the company. Not the deal. The full landscape. Where value accrues. Where it commoditizes. Where the bottlenecks sit. Where the moats form and where they dissolve.

I was not doing the research for this deal. I was doing it because I had gotten tired of having opinions about AI companies without having a thesis about the AI economy.

For the first time, I had built conviction about a market before a deal showed up inside it.

And when this deal arrived, the thesis gave me a structured reason to say no.

The company sat in a layer of the stack my research suggested was commoditizing fast. The product was technically interesting, but the moat was thin. The defensibility story depended on staying ahead of foundation models improving every quarter.

None of that was visible from the pitch deck. The deck told a clean story. The category had momentum. The investors were credible. Every signal the deal produced said yes.

But the signal I had built independently said no.

I passed. Not because I was smarter. Because for the first time, I had done the work before the deal asked me to.

The Warning

That pass was not a victory.

It was a warning.

The only reason I got it right was timing. The research happened to come before the deal.

If the deal had landed six weeks earlier, I probably would have evaluated it the same way I evaluated the first wire: on momentum, social proof, and excitement.

That forced me to look at my portfolio the way I would look at a business I was running.

And what I saw was an operation with no process.

No independent thesis about the markets I was investing in. No structured way to evaluate whether a deal matched that thesis. No consistent method for comparing opportunities across time. No system for revisiting my assumptions as markets shifted.

If someone showed me a company that operated this way, I would not invest in it. I would tell the founder to build infrastructure before scaling further. I would say: you cannot keep making important decisions this way and expect the results to hold.

The returns were real. The markups were real. Every external signal said things were working.

But underneath all of it, I was running a capital allocation operation the same way a first-time founder runs their company before they learn that instinct does not scale.

That terrified me.

Luck compounds until it does not.

Looking back, what surprises me is not that I risked 9% of my net worth on one early-stage company.

It is that I could not explain why.

That was the moment I knew luck had become a substitute for process.

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What Changed

Looking back, what surprises me is not that I risked nearly 9% of my net worth on one early-stage company.

It is that I could not explain why.

That was the moment I knew luck had become a substitute for process.

I did not build a framework because I wanted another spreadsheet.

I built one because I never wanted to stare at a wire confirmation again and realize my conviction had been borrowed.

The fix started with one rule:

No deal gets to define the market for me.

In Part 2, I will show you why thesis has to come before deals.

Subscribe below so you do not miss it.

Who else would benefit from reading this?

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In April 2023, I had access to OpenAI at a $27 billion valuation.

$100,000 minimum. Through a friend’s allocation. Tiger Global and Sequoia leading a $300 million round.

I passed.

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Not because I didn’t believe in AI.

I deployed $325,000 into AI over the next three months. Into SpaceX, xAI, and Anthropic.

I passed because I had limited capital, and I thought the better bet was on the competitor set with cleaner structures and lower valuations.

Here’s what happened.

OpenAI is now worth $852 billion.

Anthropic is worth $965 billion and just filed confidentially for an IPO.

xAI merged into SpaceX at a $250 billion valuation. SpaceX IPO’d last week, raised $75 billion in the largest IPO in history, and crossed $2.25 trillion in market cap inside its first seven days of trading.

My $325,000 AI portfolio is now worth approximately $3.58 million net of fees.

I still think I made the right call.

The OpenAI opportunity

April 2023. ChatGPT had been public for five months. It was the fastest-growing consumer product in history. The market was beginning to understand that something fundamental had shifted.

Tiger Global, Sequoia, a16z, Thrive, and Founders Fund were moving into a $300 million round at a $27 billion post-money valuation.

The allocation came through a friend. $100,000 minimum.

I looked at it hard.

And I chose to pass.

Why I passed

I had three concerns. All of them were real. All of them still feel right.

The non-profit governance structure created uncertainty I couldn’t underwrite.

OpenAI wasn’t a standard startup. It was a capped-profit entity controlled by a non-profit board whose mission was to ensure AGI benefits all of humanity, not to maximize investor returns. That structure introduced real questions.

• What happens if the board decides growth conflicts with safety?

• What happens if the return cap becomes binding?

• What happens if governance and commercial incentives diverge?

I kept asking: at $27 billion, am I underwriting AI leadership or am I underwriting a governance experiment?

I couldn’t answer that in a way that made me comfortable deploying six figures.

When an investment structure creates questions I cannot resolve in the diligence process, I don’t assume the best case. I pass and find a better-structured entry into the same theme.

Sam and Elon’s Falling Out Signaled Founder Instability.

By April 2023, the split between Sam Altman and Elon Musk was public. They had co-founded OpenAI together. Elon walked away after disagreements over direction, control, and mission.

Elon is one of the most successful operators alive. He had walked away from OpenAI and decided to compete with it directly.

If the person who understands AI infrastructure, compute economics, and long-term category creation as well as anyone in the world decided OpenAI’s structure wasn’t worth his time, I had to take that seriously.

He wasn’t just leaving. He was betting against it with his own capital.

That told me something.

The Valuation Left Limited Room for Error

$27 billion was expensive for a company with minimal revenue, unclear monetization, massive compute costs, and structural questions about competitive moats in a category where models were being open-sourced and replicated every quarter.

I understood the TAM case. I understood the category-defining narrative.

But $27 billion required OpenAI to become one of the most valuable companies in the world just to produce a reasonable return after dilution, fees, carry, and time.

I thought: if I’m going to bet on AI, I’d rather own more of something at a fraction of the valuation with standard shareholder governance.

That’s not pessimism about the category. That’s underwriting discipline.

What I Did Instead

I had limited capital. Deploying $100,000 into OpenAI meant not deploying it somewhere else.

I believed multiple AI winners would emerge. I believed the category was large enough to support OpenAI and serious competitors. I believed betting on those competitors, at lower valuations with cleaner structures, was the smarter portfolio construction decision.

So over the next three months, I deployed $325,000 into AI.

$125,000 into SpaceX at $125/share in July 2023.

Elon’s track record spoke for itself. SpaceX had revenue, customers, government contracts, a path to dominance in space and AI infrastructure, clear shareholder governance, and a valuation that reflected real operations, not narrative.

$135,000 into xAI at a blended average of $14.15/share across two allocations.

Elon was building a direct competitor to OpenAI. xAI had a smaller valuation, a focused mission, standard equity structure, and no non-profit governance layer. If anyone could build a credible OpenAI competitor, it was the person who co-founded OpenAI, understood its weaknesses better than anyone, and left to do it differently.

$65,000 into Anthropic Series C at $43.05/share.

Former OpenAI researchers who left to build Constitutional AI with an enterprise focus, a cleaner cap table, and no non-profit structure. The valuation was a fraction of OpenAI’s. The team was world-class. The differentiation was real.

Three positions. Three different structural advantages. All three capturing the same category at prices that made the return math work.

What Happened, in Real Dilution-Adjusted Dollars

This is the part most investing narratives skip.

Headline markups are not what investors actually capture. Stock-based compensation, follow-on dilution, secondary discounts, carried interest, and time all compress the real multiple. An investor who underwrites at the headline valuation and ignores the dilution path will be disappointed even when they pick the right company.

Here is the honest, dilution-adjusted math on my AI portfolio.

SpaceX: ~5.8x.

My $125,000 entry at $125/share is worth approximately $725,000 today after accounting for stock-based comp and dilution through the IPO. That is the real number after the company issued billions in equity compensation and raised additional capital across multiple rounds before going public last week at a $1.77 trillion valuation.

xAI: ~5.3x at merger. ~10.6x if the lock-up holds.

My $135,000 entry at $14.15/share converted to SpaceX equity in the February 2026 all-stock merger at around a 5.3x multiple, bringing the position to roughly $715,000 at conversion. SpaceX has approximately doubled in value through the IPO. If that valuation holds through the lock-up period, the xAI position is worth approximately $1.43 million, or ~10.6x my entry.

Anthropic: 27.87x gross. 22x net of fees.

My $65,000 entry at $43.05/share is currently being marked at $1,200/share in secondary transactions according to That is a 27.87x gross MOIC. Net of 2% management fees and a 20% carry, the position is approximately 22x, worth roughly $1.43 million.

Total.

$325,000 deployed.

$3.58 million in current value, net of fees, based on secondary marks and the SpaceX IPO price.

11x net return on the AI portfolio.

Now compare that to the OpenAI position I didn’t take.

$100,000 at $27 billion in April 2023, with the same stock-based comp and follow-on dilution OpenAI has issued across rounds at $86 billion, $157 billion, $300 billion, $500 billion, and $852 billion, would not produce the 31.5x headline multiple the valuation chart implies.

The dilution-adjusted, net-of-fees return on an OpenAI Series E position is meaningfully smaller than the headline math suggests.

The portfolio I built outperformed the single concentrated bet I didn’t make.

Was I wrong to pass?

No.

And this distinction matters.

Being wrong about a decision means the reasoning was flawed. Being wrong about an outcome means the result differed from expectations. Those are not the same thing.

My reasoning was sound. Let me show you where it held.

Structure mattered.

In November 2023, seven months after I passed, OpenAI’s non-profit board fired Sam Altman, nearly destroyed the company, and reinstated him five days later after a near-total employee revolt and investor pressure.

That is exactly the governance risk I identified at the diligence stage. The structure created real instability. OpenAI survived it. But the risk was real, not hypothetical, and it materialized within months of my decision.

When a structural concern you identify in diligence actually occurs, that is not a coincidence. That is the framework working.

Backing Elon was the right call.

SpaceX is now a $2.25 trillion public company. xAI merged into it at a $250 billion valuation. The bet on Elon’s ability to compete with OpenAI and build category-defining infrastructure worked. It worked because the operator thesis was sound, not because the outcome was obvious.

Valuation discipline created better entry points.

Anthropic at $43.05/share is now marking at $1,200 on the secondary market. That is 27.87x gross. Anthropic is now the most valuable AI company in the world, worth more than OpenAI, and my entry price reflects the advantage of buying before the narrative was consensus.

Diversification captured the category.

OpenAI won. Anthropic won bigger. SpaceX-xAI won. Three positions meant I didn’t need to predict which single company would dominate. I just needed to be right that the category would produce multiple generational outcomes. I was.

The underwriting framework behind the decision

Every capital allocation decision I make runs through the same process.

It is not about access. It is not about whose name is on the cap table. It is not about how fast the round is closing.

It is about structure, valuation, operator quality, portfolio construction, and dilution-adjusted return modeling.

Here is how that framework applied to OpenAI in April 2023.

Does the governance structure protect or threaten shareholder value?

Non-profit control, capped returns, mission-first mandates are not theoretical. They are structural. If I can access the same category through a vehicle with standard investor protections, I will.

Who is the operator I trust most in this category?

In a category-defining shift, operator quality compounds faster than early entry into the market leader. I trusted Elon’s ability to build AI infrastructure more than I trusted OpenAI’s governance. That assessment was correct.

Is this the only way to capture the category?

If OpenAI was the only AI bet available, concentration would have made sense. It wasn’t. Anthropic and xAI were available at better valuations with better structures. Owning the category through three positions was smarter than owning one position in the most expensive entry point.

What does the return look like after dilution and fees, not at the headline?

Headline valuations are the story investors tell each other. Dilution-adjusted, net-of-fees returns are the story the portfolio tells. Every investment I underwrite models the full dilution path. Not the headline. Not the best case. The realistic path from entry to exit after the cap table fills in.

Does the portfolio build toward a strategy, or does it chase individual outcomes?

Spreading $325,000 across three AI positions, each selected on independent structural merit, produced an 11x net return. That is not three lucky picks. That is a portfolio thesis executed consistently.

What this teaches about underwriting in category-defining moments

The temptation in a category-defining moment is to throw the framework out.

To say: the market is moving too fast for discipline. The opportunity is too big for valuation concerns. The governance issues are footnotes.

I didn’t do that.

I kept the framework. I found better entries into the same category. And the framework outperformed the consensus.

That is the point.

Judgment is not about finding the most obvious opportunity and getting into it before it closes.

Judgment is about understanding the full structure of an opportunity, the realistic path to return, and the best way to own a category across multiple positions at prices that make the math work.

OpenAI at $27 billion was a great company.

I don’t know whether or not it was the best entry into the AI category.

I don’t have the dilution-adjusted return data for OpenAI investors to make that comparison honestly. What I do know is that the entries I found produced strong marks.

The best entries I found were Anthropic at $43.05, xAI at $14.15, and SpaceX at $125.

The best entries available to me were Anthropic at $43.05, xAI at $14.15, and SpaceX at $125.

I found all three because I was looking for them.

That is what a disciplined process produces.

Not perfect outcomes.

Better decisions.

The Real Lesson

When most people hear this story, they focus on the wrong question.

“Would you rather own OpenAI today?”

That’s outcome thinking.

The better question is:

If you were allocating capital again in April 2023, with only the information available at the time, would you follow the same process?

My answer is yes.

The goal of investing is not to identify every future winner.

The goal is to consistently make decisions where the odds are in your favor.

In April 2023, I saw governance risk I couldn’t underwrite.

I saw alternative ways to capture the same category.

I saw lower valuations, cleaner structures, and operators I trusted.

So I built a portfolio instead of chasing a logo.

That portfolio produced an 11x return.

More importantly, it validated the framework.

Because eventually every investor gets access to a deal that everyone wants.

The question isn’t whether the company is great.

The question is whether it’s the best risk-adjusted use of capital.

Sometimes the right answer is to invest.

Sometimes the right answer is to pass.

The discipline to know the difference is where returns come from.

The capital efficiency of the startup matters greatly when it comes to returns and to the dilution of your initial investment.

Disclosure: All figures above reflect current secondary market marks and post-IPO trading prices, not realized returns. SpaceX figures are subject to lock-up expiration. Anthropic figures reflect secondary transaction pricing and will be determined at IPO. Paper marks and realized returns are not the same thing. Past performance on individual positions does not guarantee future results.

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Most investment content focuses on outcomes.

I am more interested in decisions.

Over the next several years, I’ll be publishing the actual underwriting notes, investment memos, missed opportunities, portfolio construction decisions, secondary purchases, follow-on investments, and lessons learned from deploying capital across more than 200 startup investments.

Some investments worked.

Some didn’t.

The goal is not to present a highlight reel.

The goal is to show how capital is actually allocated when real money is on the line. Still early in the deployment phase, most of my investments are still too early to know how they will play out. 41 months into my first check, I am sitting at a gross “paper” return of 4.1X on my portfolio. I fully expect to see my portfolio mature to a value far greater than 4.1X gross MOIC (Multiple on Invested Capital).

If you’re a GP, founder, operator, angel investor, family office, or aspiring allocator, subscribe below.

Every week, I’ll share another real investment decision and the framework behind it.

Next week: I will share an investment memo used at the time to invest in a company which subsequently IPO’d, and how substantial the variance from the “pop” of the IPO and potential returns appeared to be versus the share price once the 180 day lock up period ended. This investment taught me the value of seeking pre-IPO liquidity in volatile public markets.

The first time you get access to a deal you are not supposed to see, something happens in your chest.

It feels like proof.

You got the call. You got the allocation. Someone who matters decided you belong in this round. The company has the right investors. The round is moving fast. The allocation is small. You feel lucky to be there.

That feeling is real.

It is also one of the most dangerous things that can happen to a new angel investor.

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What access actually signals

Access in private markets is not random.

It is earned, or borrowed, or occasionally manufactured.

You earn access by building genuine relationships with founders and investors who trust your judgment. You borrow it when someone with a strong network pulls you into a deal because they need the allocation filled or they want you to feel included. And sometimes it gets manufactured by deal sponsors who need social proof and momentum to close.

The tricky part is that from the outside, all three look identical.

A founder you have known for years gives you a call on a round you helped them think through. That is earned access. It means something.

A fund manager you just met invites you into an SPV because they need another $50K to close. That is borrowed access. It may still be a good deal. But the invitation is not the signal you think it is.

Understanding which version you are holding changes everything about how you should respond.

Most new angels cannot tell the difference.

And the market does not help you figure it out.

How Scarcity Becomes a Substitute for Diligence

Private markets are structurally designed to make you feel urgency.

Rounds close fast. Allocations get capped. If you are evaluating an investment through an SPV, you may not even be able to speak directly with the founder. Getting into the deal at all can feel like the culmination of months of relationship building.

That structure creates a specific emotional pattern.

The scarcity makes the deal feel valuable before you have done any independent analysis. The fast close compresses your diligence timeline. The strong cap table gives you borrowed conviction. The small allocation makes passing feel like a loss.

By the time you are sitting with the wire instructions, you have already been emotionally pre-sold.

The question is whether you noticed.

Scarcity is not diligence.

A fast-moving round is not evidence of quality.

A famous cap table is not a thesis.

These are features of a deal’s momentum. They are not features of its quality. And momentum and quality often travel together. But they are not the same thing.

Where I Went Wrong Early

In my first year of angel investing seriously, I made a version of this mistake more than once.

I would get access through another syndicate lead’s deal flow. The round had credible investors. The founder was impressive in the recorded pitch. The syndicate lead had done real work, more than most. The market looked large. The narrative was clean. The allocation was moving.

And I would get excited in the wrong order.

I would feel validated by the access first. Then I would feel validated by the cap table. Then I would feel validated by the early revenue numbers. I was building a case on top of a feeling rather than building a feeling on top of a case.

I was not doing diligence.

I was performing diligence.

There is a difference.

Performing diligence looks like this: review the deck, get on a call, ask reasonable questions, conclude that everything checks out.

Doing diligence looks like this: form an independent view of the market, understand what makes this founder specifically suited to win it, stress-test the price against the likely exit scenario, and be able to defend the investment without referencing anyone else on the cap table.

The performing version feels just like the real version from the inside.

That is the trap.

The three questions that helped slow me down

At some point I started noticing the pattern. The excitement was arriving before the conviction. I needed a circuit breaker that did not kill the pace that early-stage investing requires.

Three questions did it.

1. Why am I seeing this?

This forces you to understand the source of the access. Is it because you have built a genuine reputation in a specific category and founders seek you out? Is it because a fund manager needs to fill allocation? Is it because someone owes you a favor? The answer shapes what the invitation actually means.

2. Why is the round still open?

The best companies with the most momentum can fill rounds almost entirely without you. If a slot exists for you, there is a reason. Maybe it is a deliberate decision to bring in specific operators. Maybe it is because the round is harder to fill than the narrative suggests. Maybe it is both. You should know which one.

3. What has to be true for this price to work?

Entry valuation is not separate from investment quality. It determines what outcome you need. A company can be exceptional and still be a mediocre investment if it requires a $5 billion exit to generate a 3x return after dilution, fees, carry, taxes, and time. Run the return math before you fall in love with the story. Make sure you run the math accounting for all fees in the investment.

Three questions. Twenty minutes of honest thinking. That is what separates access from conviction.

What I used to ask versus what I ask now

Before: Is this a good company?

Now: Is this a good investment at this price for someone in my position?

Before: Who else is in?

Now: What do I believe that is not just borrowed from the cap table?

Before: Can I get allocation?

Now: Why would I want it?

The first set of questions sounds like investing.

The second set actually is.

The Most Dangerous Stage of Your Development as an Angel

I have watched a version of this play out more times than I can count.

An investor builds access faster than they build judgment. They are seeing better deals than they can properly evaluate. The deals move fast. The people in the room are smart. The momentum is real. And they are doing something that looks like investing while actually doing something closer to pattern matching under social pressure.

The portfolio looks impressive for 18 months.

Then the marks go sideways.

Then the real story starts.

The most dangerous stage of developing as an angel investor is when your access starts outpacing your judgment. Because you are not just risking capital. You are building a set of investing habits while the feedback loop is too short and too noisy to teach you anything useful.

You learn to move fast. You learn to trust strong rooms. You learn that saying yes feels better than saying no.

And you do all of this before you have enough data to know whether any of it is working.

The Room is Not the Reward

Here is what I got wrong for longer than I should have.

I treated getting an invitation as the win.

It is not.

The invite is the beginning of the work. It simply means you are being given the opportunity to participate in an intentionally fast-moving, high-stakes event. You need systems in place to evaluate every investment without emotion, based on a framework and thesis you developed independently before that invitation arrived.

Getting invited into quality deal flow matters. Access is real. The ability to see deals that most people cannot see is genuinely valuable.

But access by itself does not make you money.

What you do once you are in the room determines the outcome.

Access gets you into the room.

Judgment determines whether you should stay there.

That distinction took me longer to internalize than I would like to admit.

What to Take Away

If you are early in your angel investing journey and you are building access, that is good work. Relationships matter. Reputation matters. Getting to see high-quality deal flow is a real edge.

But do not confuse the infrastructure with the product.

The product is independent conviction about a specific investment at a specific price.

The next time you feel that thing in your chest when the invite arrives, pause before you wire.

Ask the three questions.

Form a view you could defend without referencing anyone else on the cap table.

Then decide.

The goal is not to get invited into every room.

The goal is to become the kind of investor who still thinks clearly once the door opens.

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Most operators who decide to start angel investing make the same assumption on day one.

They think the goal is to source their own deals. Build a reputation. Get inbound. Find the companies before anyone else does. Be the first call a founder makes.

That is the vision. And eventually, for some investors, it becomes the reality.

But it is not where you should start.

Trying to source directly before you have the judgment to evaluate what you are seeing is one of the fastest ways to deploy real capital with very little to show for it.

I learned a version of this the hard way. The lesson is not that sourcing is bad. The lesson is that sourcing is the MBA of angel investing. You do not enroll before you have done the foundational work.

Syndicates are where that foundational work happens.

What Syndicates Actually Are

Before the framework, the mechanics. Most people skip this part. They should not.

A syndicate is a structure that allows a lead investor to pool capital from multiple limited partners to invest in a single deal. Each deal is its own SPV, a “special purpose vehicle,” meaning your capital is legally separated from every other investment the lead makes.

You get a K-1 at tax time, limited information rights in the company, and exposure to a single deal without committing to a blind pool of capital the way a traditional fund requires.

Here is how the economics actually work at the deal level, using an illustrative deal:

Let’s say a Founder raises a $3 million seed round and a tier-one VC firm has decided they will take the majority, say $2 million. They are the price setter. They conducted the deep diligence, negotiated the terms, and set the valuation. There is still $1 Million of the round available and the Founder knows a few different syndicate leads. The Founder would prefer not to have small investors writing $25K checks on the cap table, so they decide they will work with a syndicate to fill part of the round. Often, the GP of the VC Fund knows syndicate leads and may refer one, or the Founder may have one in mind. The syndicate lead negotiates to get a smaller allocation in that same round, often $200,000 to $300,000, because unlike the VC fund they do not have committed capital sitting in a vehicle. Instead they have a network of investors they can invite to evaluate the deal.

The syndicate lead gets the Founder’s commitment that they will be allocated $200,000 and if the lead can quickly fill that allocation, they can come back and ask for an additional $100,000. Now the Syndicate lead has to go to work quickly. They publish a deal memo, open the allocation to their LP network, and collects individual wires, often allowing Accredited Investors to go down to as little as $5,000. Typically this SPV is administered end-to-end using an online platform like AngelList or Sydecar. LP’s are able to invest, starting at $1,000 to $100,000+ per LP, to fill the allocation. The syndicate lead will earn the same basic economics as the VC fund: typically a 2 percent management fee on the SPV and 20 percent carried interest on profits.

The LP puts in capital. The lead puts in judgment, relationships, and access.

That structure matters for three reasons.

First, minimum check sizes are small enough that you can invest across many deals without concentrating risk in any single one. You are building a portfolio, not making a single bet.

Second, you are investing alongside someone who has already underwritten the opportunity, knows the founder, and negotiated the terms. That does not mean the lead is always right. It means you are not operating blind.

Third, every deal memo is a learning document whether you invest or not. Over 20 or 30 memos, you develop real pattern recognition around how experienced investors think about markets, founders, price, and risk.

That education is the actual product.

What Sourcing Actually Requires

Here is what most operators underestimate about building direct deal flow.

Founders worth backing have options. The best early-stage companies do not hustle for capital. Capital comes to them, from accelerators, from tier-one funds, from investors who have spent years building relationships in specific categories.

For a founder to give you access to a round before it is fully subscribed, they need a reason. They need to believe you bring something beyond a wire. Judgment. Network. Operational depth. A track record of being helpful without being intrusive.

That reputation is not built quickly. It is built through reps.

Every deal you evaluate, every founder call you take, every memo you read, every check you write, these build the pattern recognition that eventually becomes the reputation founders call on.

Trying to source directly before that pattern recognition exists means competing against investors who already have it. You will either see the deals nobody else wants, or you will overpay for the ones you do get because you cannot properly evaluate the terms.

Neither outcome is a good use of capital.

The Hidden Curriculum Inside a Good Syndicate

When you invest through a well-run syndicate, you are not just getting deal access. You are getting an education.

Every deal memo a credible lead publishes is a window into how an experienced investor thinks about a market, a founder, a price, and a risk profile. You see the framework they used to get to yes. You see the risks they decided to accept. You see the return math they ran at entry.

Patterns start to emerge. You notice which founders the lead consistently backs and why. You notice which markets they avoid. You start forming your own views about whether their thesis is sound and where you disagree. You learn to tell the difference between a memo that reflects honest diligence and one that is a pitch deck dressed up as analysis.

That last skill, separating real diligence from performance, is one of the most valuable things you can develop as an early-stage investor. And you can only develop it by reading enough of both.

You also build a portfolio that produces real feedback. Some deals mark up. Some go sideways. Some take longer than you expected. The emotional experience of watching capital develop, including the markups that inflate your confidence and the write-offs that check your ego, changes how you invest going forward.

You cannot simulate that feedback. You have to live it.

What To Look for in a Syndicate Lead Before You Follow Them

Not all syndicates are created equal. And not all leads deserve your capital or your trust.

Here is what separates a credible lead from a deal aggregator with carry ambitions.

How did they actually source this deal?

This is the first question I ask now. Not who they know. How the deal got to them. The answer separates leads who are in rooms because founders want them there from leads who found something on AngelList and built a carry vehicle around it. Genuine access means the founder gave them allocation. Borrowed access means someone else did them a favor. The distinction matters for every deal that follows.

Does the memo identify what could kill the investment?

Any lead can write about why a company is exciting. The credible ones also write clearly about what could go wrong and why they decided to accept those risks. If a memo reads like a pitch deck, the lead is not doing diligence. They are marketing. Pass on the deal and keep reading their future memos to see if the pattern holds.

How much of their own capital is going in?

If they source a lot of deals, this may not actually matter. It’s possible the lead has syndicated multiple rounds for the same company, so it makes sense that they are not putting in their own personal capital into the deal. However, when you notice that the lead is investing more than the minimum (the minimum on platforms like AngelList is often $1,000), it can signal that the lead has more personal conviction in that specific deal. A meaningful personal check could signal conviction. A small or symbolic one may not actually be a red flag. Nonetheless, ask directly. The willingness to answer clearly is itself the most important signal.

Does their portfolio reflect a thesis or just momentum?

The best leads are building around a specific view of the world. They can tell you why each deal fits that view. Leads who back anything with a strong cap table and a fast close are not building judgment. They are filling carry-generating vehicles, focused on vanity metrics. The difference shows up clearly when markets slow down.

Do they communicate honestly when things go wrong?

This one you can only evaluate over time. But it is the most important signal of all. Anyone can send a good news update. The leads worth following are the ones who tell you clearly when a company is struggling, what changed, and what the path looks like from here. Spin is cheap. Honesty is rare.

Ask about LP swaps Before You Wire

This is the question most new syndicate LPs never think to ask. Syndicate Lead’s never offer up this information without getting prompted by you, the LP. LP’s should ask it on every deal.

Here is the scenario. You invest $25,000 into a seed round through a syndicate. Five years later, that company is a genuine outlier. Your $25,000 is now worth $1.25 million. You might have followed along as the company publicly announced their Series A, B, C and D rounds. News outlets are hinting that an IPO might be a few years out. You want to take $1 million off the table before the IPO. The company has raised multiple rounds since your original investment, but the syndicate lead may not have gotten access to those follow-on rounds. The shares still sit inside the original SPV.

Will the syndicate lead facilitate a secondary transaction so you can sell?

Some will. Some will not. And the reason they will not is usually not principled. It is operational. They see it as a headache. They are focused on deploying into new deals and building AUM, and a secondary transaction for a single LP feels like a distraction from that work.

Here is why that thinking is short-sighted on their part.

When you sell $1 million of your position, representing roughly $975,000 in profit on your original check, the syndicate lead collects 20 percent of that profit in carried interest. That is approximately $195,000 in cash paid to the Syndicate lead immediately for facilitating one transaction. You would get $780,000 ($975,000 minus the $195,000 carry paid to the syndicate lead), and in most cases the buyer agrees to keep the syndicate lead’s remaining carried interest in the deal going forward, so they preserve their upside on whatever is left.

Refusing to facilitate that transaction is leaving real money on the table. Ask anyway, because not every lead has done this math, and some simply have not built the infrastructure to execute it.

The broader question matters beyond just this scenario. When you invest deal by deal through SPVs, you are essentially acting as your own fund manager. You decide the portfolio. You decide the concentration. You decide when to take risk off the table. That autonomy is a large part of why deal-by-deal investing is attractive in the first place.

A syndicate lead who controls your liquidity decisions undermines that autonomy.

What to ask before you commit capital to any syndicate:

Will you facilitate LP secondary transactions if a deal performs well before IPO?

What happens to my shares at IPO or acquisition? Will you transfer them directly to my brokerage account, or will you manage the distribution and send me cash?

On the second question, neither approach is inherently wrong. Some leads transfer shares directly and you decide when to sell. Others liquidate on your behalf and distribute cash. What matters is that you know which one you are agreeing to before you wire. The whole point of this structure is that you maintain the decision-making authority a fund LP surrenders.

A lead who cannot answer these questions clearly either has not thought through their operational model or does not want you thinking about it.

Both are reasons to ask again.

When you are actually ready to source directly

There is no fixed timeline. But there are clear indicators.

You are ready to source directly when you can form an independent view on a deal without relying on the cap table or the lead’s memo to tell you what to think.

You are ready when you have a specific thesis about a market or category that gives you a genuine reason to be in certain deals ahead of generalist investors.

You are ready when founders in your network are calling you because of what you have done for other founders, not because you have capital available.

You are ready when you can walk away from a deal that genuinely excites you because the price does not work, and feel clear about that decision rather than anxious.

Most investors who try to source directly before these conditions exist end up with one of two problems. They cannot see good deals at fair prices because they have not earned that access yet. Or they can see deals but cannot evaluate them well enough to separate the ones worth taking from the ones worth passing.

Syndicates solve both problems simultaneously. You see real deals at real terms underwritten by someone with real relationships. And you develop the judgment to eventually not need them.

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The actual goal

The goal of investing through syndicates early is not to stay in syndicates forever.

The goal is to build enough pattern recognition, enough portfolio experience, and enough relationships to eventually show up in deal flow as someone worth having on a cap table.

That transition happens differently for everyone. Some investors stay primarily LP in syndicates and build excellent portfolios that way. Others use syndicate investing as a two or three year foundation before beginning to source directly in a specific category.

Neither path is wrong.

What is wrong is skipping the foundation entirely because sourcing your own deals sounds more like what a real investor does.

Real investors make good decisions.

The infrastructure you use to see deals is just the path to the decision.

The decision itself is where the judgment lives.

And judgment is the only thing in this business that actually compounds.

Three years. 200-plus investments. $2.2 million deployed, $8.8 million in portfolio value. The returns matter. But the judgment built along the way is the asset that lasts. That is what this publication is about. Thanks for tuning into the Angel Investor’s Journal.

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The wire hit my bank account on January 3, 2023.

Three years of work had just converted into liquidity. Seven firms merged without outside capital. A $33 million recapitalization. Six entrepreneurs who believed in the vision got their first meaningful exit. I had negotiated to cash out sixty percent and roll forty percent into the new entity.

I was now the CEO of the combined company.

And during evenings and weekends, I started exploring what would become a serious intellectual hobby: understanding how to identify the founders and technologies that would reshape industries before the rest of the world recognized them.

After five liquidity events and years in the trenches as an operator, I found myself increasingly drawn to understanding capital allocation from the investor’s perspective. Not as a distraction from my CEO duties, but as an intellectual pursuit that I knew would eventually become more than just a hobby.

Not because I was done operating. I have always been an operator. I will always be an operator. Building companies is what I know how to do.

But a different question had started taking shape during my off hours, one that fascinated me enough to dedicate personal time to exploring it:

how do you evaluate founders and emerging technologies with the kind of discipline that produces consistent returns?

That question became the foundation for how, over the subsequent 3 years, I would create a system for evaluating deals that combined evaluating the best Founders, developing a model that would produce asymmetric returns with much higher probabilities of achieving extremely high returns and my overall philosophy on managing a portfolio (many of which, the pillars of my philosophy are contrary to what most VCs have written about before me).

Rippling became the first real expression of that emerging hobby, as it was my first Angel Investment.

Why Rippling

By early 2023, I had been watching Rippling execute for several years.

The company had moved well beyond comparisons to its predecessor. They had expanded from HR and benefits into payroll, IT management, device management, and app provisioning. The product vision had grown more ambitious: Rippling wanted to become the single system of record for every employee-related workflow inside a company.

That vision made sense to me as an operator.

I had lived through the pain of managing multiple disjointed systems. One platform for payroll. Another for benefits. Another for IT provisioning. Another for device management. Another for app access. Every time we hired someone, we had to touch five or six different systems. Every time someone left, we had to remember to revoke access across multiple platforms. The administrative overhead was enormous, and the security risk from forgotten deprovisioning was real.

Rippling was attacking that fragmentation directly.

But what convinced me the company had genuine momentum was not the product vision. Product visions are easy. Execution is hard.

What convinced me was the customer feedback I was hearing from other operators in my network, former clients and even employers that were still using us for their benefits consulting but Rippling was doing their payroll and HRIS.

People who had implemented Rippling talked about it differently than they talked about other software. They described it as transformative rather than incremental. They said it eliminated entire categories of administrative work rather than just making existing work slightly faster. They talked about their internal operations teams being able to focus on strategic work instead of drowning in provisioning and deprovisioning tasks.

That kind of customer intensity matters.

I also believed the market timing was right. Remote work and distributed teams had exploded during the pandemic. Companies were managing employees across multiple states and countries. The compliance complexity had increased dramatically. The need for a unified system that could handle multi-jurisdictional payroll, benefits, and IT management had become much more urgent.

Rippling was in the right market at the right time with the right product and a founder who had already learned hard lessons about sustainable business models.

The company had also raised capital from some of the best investors in technology: Founders Fund, Sequoia, Kleiner Perkins, Bedrock Capital. That backing mattered to me. Not because I was outsourcing my judgment to brand-name venture capitalists, but because I knew those firms had done extensive diligence on the technology, the market, the competitive landscape, and the unit economics.

Their participation gave me confidence that the risks I was worried about had been thoroughly examined by people with more pattern recognition than I had at that stage.

The valuation was high by historical standards. Rippling was raising at a multi-billion dollar valuation. The days of getting into a Parker Conrad company at a seed-stage entry point were long gone.

But I was not trying to buy the cheapest possible shares. I was trying to buy exposure to a founder I believed would build something enormous, in a market I understood deeply, with a business model that had already proven durable.

That combination felt worth the entry price.

Before Rippling, There Was Zenefits

Anyone who operated in insurance or HR tech from 2013 to 2016 remembers Zenefits.

They were not just another competitor.

They were a category-defining threat.

When Zenefits announced their Series A in 2013, I was running my first insurance agency. We sold employee benefits to mid-market companies. We had relationships with carriers. We had a sales team. We had renewals. We had a business model that worked.

And then Zenefits showed up “offering” the same thing as a benefits broker, and included a payroll/HR/Benefits Administration platform that most employers were paying for—completely free, the story went viral. For the smaller fully insured employer, it was a no brainer. Thankfully our clients were nearly all self insured, and Zenefits was not targeting self insured employers. I never lost a client to Zenefits model.

However, lots of my industry allies did. Zenefits offered “permanently” free benefits software in exchange for becoming the broker of record on the underlying insurance policies.

The first time a prospect told me they were going with Zenefits because the software was free, I remember thinking: “That’s not a sustainable business model.”

I was wrong about the timeline, but I was right about the diagnosis.

Zenefits was not building a software company. They were building a lead generation engine disguised as software. The model worked as long as growth was the only metric that mattered. But the moment the market demanded proof of durability, the model began to fracture.

Elite venture firms had poured hundreds of millions into the company. Customers lined up. The media celebrated them. Recruits wanted in. Revenue exploded from zero to over $100 million in under two years.

But the foundation was unstable.

Offering software for free in perpetuity meant Zenefits had no pricing power. Promising customers “free forever” eliminates the ability to capture value from the product itself. The entire economic model depended on insurance commissions, which meant Zenefits was fundamentally an insurance broker with a better front-end interface but lacked the sophistication brokers needed if they were to win market share in the 500+ employee space.

That realization changed how I thought about competitive threats.

The venture signal mattered enormously. When Tier 1 funds back a company, the market notices. Customers notice. Enterprise buyers often use institutional backing as a proxy for credibility and staying power. Zenefits had Andreessen Horowitz. That meant something.

But signal without a durable business model only buys time.

I also learned that raising too much capital too quickly can warp decision-making. Zenefits became overcapitalized at extreme valuations before the business model had fully matured. That created pressure to maintain impossible growth rates, which eventually incentivized shortcuts around regulatory compliance.

The company optimized for speed over durability.

And then the entire thing unraveled.

By 2016, Zenefits was in regulatory crisis. Parker Conrad resigned. The company had to rebuild. The valuation collapsed. Investors took massive markdowns.

I watched it happen from the operator side of the table.

But I also watched what happened next.

Parker Conrad’s Second Act

In 2016, Parker Conrad started Rippling.

The insight was brilliant.

Instead of trying to eliminate the broker channel, Rippling incorporated brokers into its go-to-market motion. Instead of treating distribution as the enemy, Rippling made distribution a partner.

That was a massive strategic correction.

And it showed me something I now look for constantly as an investor:

Exceptional founders evolve.

Failure does not disqualify great founders. In many cases, it sharpens them. The best founders extract the right lessons from failure without becoming paralyzed by it. They separate the strategic mistakes from the execution mistakes. They understand what to keep and what to abandon.

Parker Conrad kept the product ambition. He kept the category vision. He kept the belief that HR infrastructure could be radically simplified.

But he changed the business model. He changed the pricing strategy. He changed the relationship with distribution.

By the time Rippling raised its Series D, the company had proven something Zenefits never quite achieved: a scalable, repeatable, profitable go-to-market motion that worked with the ecosystem instead of against it.

That is why I wanted exposure to Rippling.

Not because the company was perfect. No early-stage or growth-stage company is perfect.

But because I believed Parker Conrad had become a different caliber of founder the second time around. And I believed the market he was attacking—HR infrastructure—was enormous, fragmented, and long overdue for consolidation.

Writing My First Check

When the $33 million recap closed, I began exploring secondary platforms for Rippling shares during my personal time.

I found a seller within a week. An early employee looking to derisk. The shares were priced at a discount to the most recent primary round valuation, but still expensive by any normal standard. Rippling was a Series D company, not a seed-stage startup. The upside profile would be compressed relative to an earlier entry point.

But I was not trying to maximize multiple on invested capital with my first check.

I was trying to learn how to evaluate founders, markets, pricing, and private-market structures in real time with real money at risk. This was an educational investment as much as a financial one. I wanted to understand what it felt like to deploy capital, to underwrite someone else’s execution, to wait years for feedback on whether my judgment was sound.

I allocated roughly ten percent of my liquid capital into the position.

That felt significant enough to focus my attention, but not so large that a total loss would be catastrophic.

The investment became the beginning of what would evolve from an intellectual hobby into a systematic approach to capital allocation.

Building a System

As I began investing more actively in 2023 and 2024, following my successful transition from the CEO role, I realized something humbling:

Being a successful operator does not automatically make you a great investor.

Operating and allocating are completely different disciplines.

Building companies taught me how to recruit talent, scale revenue, navigate competitive markets, build culture, and manage execution risk.

But investing required a different framework entirely.

As an operator, I was trained to ask: “Can this problem be fixed?”

As an investor, I had to learn to ask: “Can this founder fix this problem without me?”

That distinction changed everything.

I could not rely on my ability to intervene. I could not rely on my ability to course-correct strategy or replace weak team members or rebuild broken sales motions. I had no board seat. I had no control. I had no information rights beyond what the company chose to share.

I had to underwrite the founder’s ability to execute without my involvement.

That forced me to become much more disciplined about founder evaluation.

I also realized I should not pretend I had institutional-quality underwriting capabilities on day one. I did not have decades of venture pattern recognition. I did not have a team of analysts running diligence. I did not have proprietary data on market sizing or competitive dynamics.

So I built a system that leveraged institutional judgment instead of trying to replace it.

I became an LP in several venture funds that also operated syndicates and SPVs. That gave me access to deal flow. But more importantly, it gave me access to signal.

I developed a rule early:

I wanted every investment to include Tier 1 venture participation.

Not because elite firms are always right. They are not.

But because Tier 1 venture firms perform enormous amounts of diligence before leading rounds: technical underwriting, founder reference calls, market validation, customer interviews, competitive analysis, revenue quality assessment, IP review.

Partnering alongside institutional conviction dramatically increased my probability of success while I was still building my own pattern recognition.

At the same time, I began developing strong conviction around a small number of technological shifts that I believed would fundamentally reshape the global economy over the next decade:

Frontier AI models and applications. Compute infrastructure and data center economics. Robotics and embodied intelligence. Dual-use defense technology. Space infrastructure and satellite constellations.

I wanted concentrated exposure to those themes, not diversified exposure to everything.

Within eighteen months, I had invested in companies like Anthropic, xAI, SpaceX, Cerebras, Impulse Space, Perplexity, and Figure AI.

Some of those investments have already produced extraordinary unrealized returns.

But this publication is not about celebrating markups.

It is about understanding how capital should be allocated into exceptional founders operating inside asymmetric technological shifts.

What I Have Learned

Over the last three years, my investment portfolio has grown from approximately $2.2 million deployed to roughly $8.8 million in value while generating an estimated internal rate of return in the mid-50s.

Those outcomes did not come from luck.

They came from developing conviction around a few core principles:

• There are no great companies, only great founders. The company is an expression of the founder’s judgment, speed, recruiting ability, and resilience.

• If the founder is exceptional, the company can evolve. If the founder is not, no amount of capital or advice will save it.

• Talent density is the ultimate moat. In technology markets, the quality of the team compounds faster than almost any other variable.

• The best founders do not just hire well. They create environments where exceptional people want to stay and recruit other exceptional people.

• The best founders change your understanding of the market. They do not just pitch you a product. They reorganize how you see an entire category. After a great founder call, you should leave thinking about the market differently than you did before the conversation started.

• Capital should migrate toward the highest-conviction opportunities. Diversification protects you from being wrong. Concentration allows you to be right in a way that matters. I would rather own meaningful positions in ten companies I truly believe in than small positions in one hundred companies I barely understand.

• Access is not alpha. Getting invited into a deal is not the same as having a thesis. The better the deal looks, the easier it is to stop thinking. The real work is separating social proof from substance.

This publication will document that journey.

Not as someone who claims to have all the answers.

But as a founder who became obsessed with learning how to allocate capital into the people and technologies building the future.

Welcome to The Angel Investor’s Journal.

In 2023, I walked into angel investing convinced I had an edge.

I had built companies from scratch. Acquired businesses. Raised capital from people who said no twenty times before they said yes. Made payroll when I had no business making payroll. Signed personal guarantees that kept me up at night. Sat across from buyers, sellers, lenders, lawyers, founders, and investors in rooms where real money and real consequences were on the table.

I knew what it felt like to have my name on something.

So when I started deploying capital seriously into startups, I assumed my background was a weapon. Operators know things. We’ve seen the movie. We recognize the patterns.

I was right about that.

What I was wrong about was thinking it was enough.

What Operators Know — and What They Miss

My operator instincts worked. I could read a founder in a way that pure financial investors often cannot. I could spot a fake sales pipeline. I could feel the difference between a team that had actually talked to customers and one that was running on assumptions. I could hear weak GTM thinking underneath a polished pitch. I knew what real hiring judgment looked and sounded like, and I knew when someone was avoiding a hard question rather than answering it.

That pattern recognition is real. It is earned. And it matters.

But being right about the business is only part of the equation.

You also have to be right about price. Timing. Ownership. Dilution. Exit path. Founder endurance through five years of punishment they cannot see coming. And whether you actually have access to the deals that matter.

I was not starting from zero on the business side. But on the investing side — the actual craft of underwriting private-market outcomes — I was a beginner. And the market does not give you a grade right away. That is what makes it dangerous.

Access Gets You Into the Room. Judgment Determines Whether You Should Stay.

Everyone in this asset class talks about access. Hot deals. Proprietary deal flow. Getting invited into the right rounds. And yes, access matters. It matters a lot at the early stage, where the best opportunities are often filled before they are announced.

But I learned something quickly: access is not alpha by itself.

The real test is what you do once you get invited in. Because the same social dynamics that create access — the warm intro, the impressive founder, the oversubscribed round, the operator you respect writing a check — also create pressure to move fast and think less.

I have been in rooms where I knew within twenty minutes that I should not write a check. And I wrote one anyway. Not because the business was compelling. Because the room was.

That is the trap. Access without judgment is just expensive FOMO with a better zip code.

The Hardest Part Is the Feedback Loop

I have met a lot of GPs who run funds. The pattern I keep seeing: smaller funds, run by investors with real judgment and real discipline, often outperform larger ones. The edge is not AUM. It is decision quality compounded over time.

The problem with angel investing is that you do not get scored for years. You make a decision today. In today’s era of AI and Space Tech where you can see paper gains of 1500% in 12 months, it can give you the confidence to think you were right. However, in traditional angel investing you can still experience substantial down rounds before liquidity comes. In between, your brain fills in the gap with a story that makes you feel smarter than you probably are.

That is where emotional discipline becomes the actual skill. In subsequent articles I will talk about the secondary markets as a liquidity valve that can enable you to manage your private portfolio like a pseudo-public equity portfolio.

I have felt FOMO. I have backed founders because I wanted to be associated with momentum, not because I had genuine conviction in the outcome. I have passed on deals and spent six months hoping they would fail so I would feel better about the decision (I’m not proud of that feeling, but I’m being candid). I have invested in companies that looked great on paper for eighteen months before they quietly fell apart.

The feedback loop is long enough for your ego to lie to you. The discipline is not in picking winners. It is in building a process that functions when your instincts are telling you to chase.

The Best Founders Do Not Just Pitch You

I want to be direct about something: I have sat through a lot of pitches. Polished decks. Tight financials. Well-rehearsed narratives. Most of that gets my attention for about two minutes before I move on.

The founders who actually stop me are not the ones with the best slides. They are the ones who change the temperature in the room.

Notice I said temperature, not optics. You can manufacture confidence. You cannot manufacture the feeling of someone who genuinely cannot imagine doing anything else with their life.

The questions I want to hear a founder answer are specific: Why does this company need to be built right now? Why are you the best person in the world to do it? Not as rhetoric. As a real accounting of why they exist in this moment, in this market, with this problem.

The founders who answer those questions with clarity and urgency — not bravado, not polish, but actual conviction — tend to have something else underneath it. Obsession. Speed. Coachability without fragility. Standards that are unreasonable by most people’s definition. A strange gravity that makes other talented people want to work for them even when they have options.

The best founders do not just pitch you. They reorganize how you think about the market. You walk out of the room seeing the opportunity differently than you walked in.

That is the tell.

Process Is Not the Strategy. It Is How You Survive Long Enough to Have One.

In venture, the math is brutal and simple: a handful of investments drive the return. The rest are tuition. You need the portfolio to be big enough, and the position sizing to be disciplined enough, that you survive long enough to benefit from the few that actually work.

I have watched angels — smart, experienced, well-networked angels — blow themselves up before their best companies had time to mature. Not because their judgment was bad. Because their process was not built to handle the emotional weight of the asset class.

Position sizing matters. Reserve management matters. Not treating every hot deal like a generational opportunity matters. Understanding that social proof is a signal and not a substitute for judgment matters.

In venture, a few decisions drive the return. But a hundred smaller decisions determine whether you survive long enough to benefit from them.

Build the process first. The strategy compounds on top of it.

Capital Opens the First Door. Reputation Opens the Next Ten.

When I look at what has actually grown since 2023, the answer is not just the portfolio value.

The real asset is the reputation.

Founder trust, built slowly, by giving honest feedback when I passed and useful input when I invested. LP trust, earned by being consistent about what I said I was going to do and then doing it. Other investor trust, built by making fast, clear decisions and not wasting people’s time. Showing up when I said I would. Answering the call when a founder was in trouble at 11pm on a Tuesday, not just when things were going well.

Capital gets you into the first conversation. Reputation determines how many more you get invited to.

This is the part of angel investing that does not show up on a return spreadsheet but that drives the return spreadsheet more than most people want to admit.

The Next Version of This

The last three years taught me how to think like an investor. I didn’t just turn $2.2 Million into $8.8 Million on paper. In 75% of those scenarios I already liquidated and booked my gains. (Look for the series called “Investing through Secondary Markets”)

What I learned: how to read a founder, how to price risk, how to hold a position without ego, how to build reputation with people who are watching everything you do even when you think they are not.

The next chapter is teaching me something different. How to communicate like a public-company executive. How to operate inside structures that have governance, transparency requirements, and scrutiny that private markets never demanded.

Private markets reward speed. Public markets punish ambiguity. I am learning how to keep the first without getting hurt by the second.

That is the transition I am in. I will keep documenting my journey as a Public Company Executive as well as my journey into Undewriting/Portfolio Allocation as an Angel Investor.

I built a $14M ARR roll-up. I walked away with $1.

That’s not a typo.

I rolled $2.5M of my own money into the deal. We completed 12 acquisitions. Scaled to $14M in ARR. From the outside, it looked like a win.

Inside, it was a masterclass in getting structurally outmaneuvered.

Not because the business failed. Because I didn’t understand the game we were playing.

The Part No One Tells You About Roll-ups

Roll-ups are seductive. The pitch is simple:

      •     Buy at 4–6x EBITDA

      •     Combine and improve margins

      •     Sell at 10–12x

It looks like math. It’s not. It’s structure.

Here’s what actually happened:

I was the Founder and CEO of an insurance brokerage holding company. I convinced 7 other entrepreneurs to consolidate their agencies into one platform. Took two years to align everyone, then another year to close financing with a PE firm and execute 9 simultaneous transactions plus a parent company recap.

Average multiple paid: 9.5x EBITDA.Exit multiple: 12x EBITDA.

Each shareholder rolled 25–40% of their proceeds into equity.

We all got wiped.

The game is the capital stack

Here’s what most operators miss about “standard” PE structures:

What they tell you:

      •     1x liquidation preference

      •     Management fees to support the portfolio company

      •     Ongoing returns distributed from operations

What it actually means:

Before you see a dollar:

      •     They get your annual cashflow which doesnotenable investment in R & D

      •     They get their full capital back via liquidation preference

      •     They get paid management fees along the way

      •     You don’t get paid anything until all of the above is satisfied

If things go well, they win.If things go great, they win more.If things go sideways, they can still win.

Your only chance to win is if everything goes right.

Where it broke

48 months in, I got sick. I was required to step down as CEO.

Control shifted. Then two things happened that I didn’t see coming:

1. The proceeds didn’t flow the way we expected

The firm sold off acquisitions I had done. Instead of distributing cash pro rata, they “allocated the cash to satisfy their preference.”

This sounds reasonable. We didn’t fight it in the operating agreement.

But the culmination of decisions were all made with one priority: maximize PE returns. Not ours.

2. The “valuation” wasn’t what we thought it was

When they bought back our equity, it was based on an independent appraisal.

The operating agreement required mutual agreement on the appraisal firm.

Why it didn’t matter:

The PE firm hired their own firm. When we got the notice of intent to repurchase, it came via email with the appraisal attached. No contact with anyone. No visibility into financials.

I reached out to the founders of companies we’d acquired. I learned that several had been sold without our input. Some for cash. Some to related parties (other platforms owned by the same PE firm) in all-stock deals at below-market multiples.

I tried to exercise my right to request an independent valuation.

My attorney drafted the response. We disagreed with the valuation.

The reply: I had to exercise that right within 30 days of receiving the notice.

By the time I understood what was happening, the window had closed.

The Trap

By the time you realize the game, the outcome is already determined.

We were all looking at old financials. No disclosure on sale prices. The remaining entity was sold to another platform in the same portfolio as an all-stock transaction.

Our position: common shareholders. No voting rights on asset sales.

The clause was buried. If you disagree with the repurchase valuation, you must follow a specific process within 30 days of notice. Several of us turned down the offer and requested the independent appraisal.

General Counsel’s response: you missed the window.

We had no way to calculate pro forma EBITDA. We all lost everything.

Not because we violated the agreement.Not because of poor performance.Not because the enterprise value didn’t grow.

Because we didn’t understand how powerless we would be based on where we sat in the capital stack.

The $2.5M lesson

You can build real value and still not capture any of it.

Ownership percentage is a vanity metric.
Position in the capital stack is what matters.

Everything else is downstream of that.

Why this is more dangerous today

Roll-ups were built in a different environment. Cheap capital made average execution look good.

Today:

      •     Debt is expensive

      •     Buyers are disciplined

      •     Exit multiples are uncertain

Financial engineering used to carry the model. Now it exposes it.

Where roll-ups actually fail

Not in deal sourcing. Not in closing.

In integration.

After a few acquisitions:

      •     Systems don’t align

      •     Reporting becomes inconsistent

      •     Culture fractures

      •     Operators leave

      •     Customers feel the seams

Instead of scale, you get complexity.Instead of leverage, you get drag.

Most roll-ups don’t fail because of bad deals. They fail because the combined business becomes weaker.

The biggest trap: multiple arbitrage

Everyone says: “I’m buying at 5x and selling at 10x.”

That only works if:

      •     Multiples hold

      •     The business actually improves

      •     The next buyer believes the story

Today, none of those are guaranteed.

Which means you’re not in control of your exit.

What actually works now

Roll-ups can still work. But only if there’s a real edge:

      •     Distribution advantage

      •     Pricing power

      •     Technology leverage (increasingly AI)

Without one of these, scale doesn’t create value. It creates friction.

The shift I made

After this, I changed how I invest.

I focus on:

      •     Clean capital structures

      •     Aligned incentives

      •     Situations where downside is protected, not assumed away

I spend more time underwriting who gets paid first, not just how big the outcome could be.

That changed everything about how I allocate capital.

As a Founder, I could fix problems. As an Angel Investor, I had to learn how to underwrite people who could fix problems without me.

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This is speaking from my lived experience.

There’s a very specific feeling that hits your chest when you see a beautiful woman and think, “I should go introduce myself.”

Your heart rate spikes.

Your brain starts narrating.

What if she rejects me?

What if I say something dumb?

What if she thinks I’m not enough?

That feeling isn’t about her.

It’s about validation.

Now here’s the part nobody tells founders:

You feel the exact same thing when you introduce yourself to a high-value prospect.

You spot the ideal client. Big logo. Strong brand. Serious budget.

And suddenly you’re not the confident CEO anymore.

You’re 17 again, wondering if you’re cool enough.

After starting five companies and successfully scaling and selling them, I can tell you this:

The emotional pattern is identical.

And most founders lose because they don’t understand that.

The Hidden Psychology of Sales

When I’m selling B2B, especially in businesses where the product doesn’t sell itself, the reality is simple:

They’re buying you.

Your judgment.

Your energy.

Your conviction.

Your leadership.

Here’s what my sales process has looked like across five companies:

1. Introduce myself

2. Discover what matters to the prospect

3. Share something vulnerable

4. Ask key questions about their business challenges

5. Find common ground

6. Establish how I can create value

7. Meet with multiple buying influences

8. Go head to head with the incumbent

9. Develop proposals

10. Negotiate

11. Finalize

12. Win or lose

That process can take months.

But here’s the real question:

What if you could figure out in the first interaction whether this is even the right client for you?

The Founder Mistake: Needing the “Yes”

When you approach a woman hoping she validates you, she feels it.

When you approach a prospect needing the deal, they feel that too.

Neediness kills leverage.

The moment you “need” the outcome, you lose control of the frame.

Early in my career, I hated rejection. Every no felt personal. Every loss felt like a referendum on my intelligence.

Now?

A fast rejection is the best gift a prospect can give me.

Because sales is a numbers game.

If you’re cold calling.

If you’re networking.

If you’re building from zero.

The goal isn’t to avoid rejection.

The goal is to accelerate it.

Why Rejection Saves Time (In Business and in Dating)

Imagine spending six months chasing a client who was never aligned.

Or worse: winning them purely on price.

If you’ve ever sold a deal on price alone, you already know how that story ends.

You’ll lose them on price too.

The same is true in relationships.

If someone chooses you for the wrong reasons, they’ll leave you for the wrong reasons.

Alignment matters more than attraction.

Fit matters more than flattery.

Shared values matter more than surface-level chemistry.

In business, it’s energy alignment.

Do they respect how you think?

Do they value your insight?

Do they trust your conviction?

If the answer isn’t yes early on, it rarely becomes yes later.

The Shift That Changes Everything

The moment you stop trying to “win” everyone…

You start qualifying instead of convincing.

You stop pitching.

You start evaluating.

Is this someone I actually want to build with?

That frame changes your posture immediately.

You’re no longer auditioning.

You’re assessing.

And ironically, that’s when your close rate improves.

Confidence comes from optionality.

Optionality comes from volume.

Volume comes from not being afraid of rejection.

Founder Dating Rule #1: Never Settle

Don’t settle for a client who drains you.

Don’t settle for one who only cares about price.

Don’t settle for one who doesn’t respect your expertise.

If you feel misalignment in the first few conversations, believe it.

Your ideal client should feel like momentum, not friction.

Just like your ideal partner.

The right fit feels easy.

The wrong fit feels like persuasion.

If you’re persuading too hard, you’re probably forcing something that shouldn’t exist.

The Ultimate Founder Mindset

Rejection is not a verdict.

It’s filtration.

Every fast no moves you closer to the right yes.

When you internalize that, two things happen:

1. You stop fearing outreach.

2. You start attracting better opportunities.

Because now you’re not operating from scarcity.

You’re operating from standards.

And standards change everything.

If you’re building right now and feeling that nervous energy before a big call, a big intro, a big ask…

Good.

That means you care.

Just remember:

You’re not there to be chosen.

You’re there to decide.

And the faster someone tells you no, the faster you find the person who should have said yes.

If this resonates, I’m curious:

What’s a rejection that turned out to be the best thing that ever happened to you?

In January, I died.

Not metaphorically. My heart stopped for 132 seconds. My kidneys, liver, lungs, and heart failed. The odds of survival? Nine percent. My family said their goodbyes. The hospital prepared for the worst. I was in a medically induced coma for six weeks. Four surgeries. ECMO. Tracheostomy. Rehab. I had to learn how to talk, eat, walk, and function again from zero.

And yet—I lived.

Scarcity Shows Up First

When you’re hooked up to machines and fighting for breath, your mind doesn’t race toward dreams or ambition. It panics. It grasps. You think about time—what you’ve lost, what you may never see again.

In scarcity, all you see is what’s missing. Missed moments with my kids. Regret over calls not made. Companies not built. Words not said.

Scarcity is loud. It’s emotional. It’s designed for survival.

But abundance—it whispers.

The Quiet Return

In recovery, everything slowed. There were no calendars to manage or deals to close. There was only now. I found joy in the smallest wins—lifting a leg, forming a sentence, brushing my teeth. Gratitude wasn’t aspirational—it was biological.

And that’s when it hit me: Abundance doesn’t come after success. It comes before.

Abundance is the belief that this moment is enough. That you are enough. That there’s more ahead—not because you’ve earned it, but because you’re alive to receive it.

What Abundance Actually Looks Like

• It’s saying “I get to” instead of “I have to.”

• It’s mentoring someone without expectation.

• It’s holding your kids for 30 seconds longer—even when emails are waiting.

• It’s building a company from a place of impact, not just EBITDA.

• It’s trusting that what’s meant for you won’t miss you.

I used to chase abundance like it was a prize. Today, I try to live like it’s my posture.

The Battle Clarified My Why

Coming out of the coma wasn’t just a second chance. It was a reintroduction to myself. The real me. The one beneath the layers of title, pressure, and performance.

Now, as I decide what’s next—whether it’s building, investing, advising, or just being—I know one thing with certainty: abundance is the lens through which I want to see everything.

And I want to help others find that lens before life forces it upon them.

So, If You’re Reading This…

You’re breathing. You’re upright. You’re in the game.

That alone is abundant.

And if you need help shifting from survival to expansion, let’s talk.

Because the real flex isn’t what you’ve achieved.

It’s the peace you bring with you when the world starts spinning, and it’s knowing that you have so much to be grateful for.

Until next time,

Zain Hasan