Learnings Shared by a Failed Angel Investor!
Ketan (name changed) lost over ₹30 Lacs ($36+K) by committing the most egregious mistakes (covered below) that most emerging angel investors make.
1. Chasing "Sexy" Industries
I was lured by the glamour of trending sectors, neglecting solid opportunities in "boring" industries. This herd mentality led me to invest in over-saturated markets at inflated valuations.
2. FOMO-Driven Investing
Instead of objective decision-making, I was emotionally attached to certain ideas and founders, leading to biased judgements. Other times I invested because other top investors were investing too.
3. Poor Post-Investment Involvement
I was simply throwing cash at startups but didn’t help them with mentorship, networks, and strategic guidance. I was a hands-off investor.
4. No Concrete Plan For Exits
I never had a clear exit plan. My hope was that the startup would eventually do well, so I didn’t help my portfolio companies facilitate M&A, follow-on rounds, or IPOs.
5. Echo Chamber Investing
I relied too heavily on my tight-knit networks leading to group think, causing me to miss diverse perspectives and reinforcing biases in my investment choices.
6. Ego-Driven Decisions
I wanted bragging rights to boost my social status so I could tell my friends that I’ve invested in so many startups, rather than genuinely assessing a startup's potential for success.