Angel investing should be approached as a form of charity rather than a way to make money, and investors should consider the potential return and value of smaller investments, invest quickly, stay in touch with YC founders, and invest in people even if their idea seems stupid.

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  00:00

  Angel investing is like charity for Michael Seibel, not a way to make money.

  • Most of the course will feature perspectives on investing from outside of YC, but the lessons from YC partners are relevant to investing in startups both inside and outside of YC.
  • Michael Seibel shares his experience with angel investing, stating that he sees it as a form of charity rather than a way to make money.
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  03:14

  Consider the chances of return and potential profit when writing angel investment checks, based on speaker's 50 investments with 1 billion dollar exit and 6 over 50 million dollar valuation.

  • The speaker has made 50 angel investments, with 46 being early stage, and has had one billion dollar exit and six with over a 50 million dollar valuation.
  • When writing angel investment checks, consider the realistic chances of getting a return and how much profit you would make at a billion dollar exit.
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  05:33

  Invest quickly by creating a system to hear pitches, sign paperwork, and wire money, and invest in your friend's startup if you fear missing out on a billion dollar company.

  • To invest quickly, create a system to hear pitches, sign paperwork, and wire money, as being able to write checks quickly is crucial in the investment game.
  • Invest in your friend's startup if you would have FOMO if it became a billion dollar company, and be prepared to move quickly when investing in YC on demo day.
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  07:55

  Investors should stay in touch with YC founders after demo day as the most hyped investments may not be the best ones and good companies often raise money before Series A.

  • You can keep up with the companies launching by reading about them on blogs like TechCrunch and Hacker News.
  • Investors should maintain relationships with YC founders after demo day as good companies often raise money before Series A, and the most hyped investments on demo day are not always the best ones.
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  10:15

  Investors should scale their check size based on the amount of money they have and the potential return, but should also consider the value of making smaller investments to think more critically about their choices.
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  12:26

  Invest in people even if their idea seems stupid, as a truly impactful investor can change the direction of a company, but YC startups should go after many investors as the majority of YC companies will fail and missing out on big companies can be due to being on the fence or being too busy helping other companies.

  • If you have conviction, invest in people even if their idea seems stupid.
  • A truly impactful investor can change the direction of a company, but it's rare, so YC startups should go after many investors.
  • The majority of YC companies will fail and between 20-30% of companies will raise follow-on funding post demo day, and missing out on big companies can be due to being on the fence or being too busy helping other companies.
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  16:44

  Invest smartly by doing your homework, having strong conviction, and choosing good investors who sign paperwork quickly.

  • Being a great investor requires hard work, and while it's possible to be successful without killing yourself, dabbling won't cut it.
  • To increase your chances of getting the next big deal, have a strong conviction and do enough homework, while party rounds are not scary as long as you get good investors who sign paperwork quickly.
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  18:54

  YC's secret to success is their open application process and focus on selecting top talent, while constantly reflecting and improving their program.

  • YC is careful about investing in companies with messy cap tables and low equity, and while large companies may be better at identifying talent, the process of acquisition can introduce many problems, and it's easier for YC to fund companies than for individuals to get to yes.
  • Over-intellectualizing decisions and producing lengthy documents may be a waste of time, as confidence in the process and diminishing returns with analysis should be considered when investing.
  • YC's secret powers are their open application process and belief that networking and raising large amounts of money are less important, and the value of their program lies in the students they select.
  • YC sets a high bar for talent and grades themselves internally by reflecting on their own feelings and implementing programs to help companies raise series A's.
  • Office hours with alumni are important for YC partners to learn about their experiences and improve their program, as they are constantly writing the story along with previous classes.
  • To be an A-plus investor, it's not enough to have a great track record and make a lot of money, as luck plays a significant role in investing.