Previously, we’ve featured several books that can provide direction for readers as they learn more about the burgeoning field of angel investment. As more people seek to become investors in a competitive world, many are discovering how to develop and navigate their strategies along the way.
Many of the following books provide the fundamentals needed to learn about and start a career in angel investing. Each offers unique research, perspectives, and insights that each reader can benefit from. Here are five books that are helpful resources for anyone learning to become an angel investor:
Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups
By David S. Rose
The founder of Gust, a global platform that funds organized angel investing, David S. Rose, offers an entertaining and comprehensive guide that takes readers through every step of the angel investment process. The book is illustrated with stories from over 90 companies in which Rose has invested during his career as one of the world’s most active angel investors. Weaved throughout the book are instructions on launching an investment career, how to find and evaluate investments and how to pursue them and earn lucrative returns. Rose offers fundamental strategies on building a reputation as a wise investor to implementing smart exit deals.
Rose also details the advantages of joining an angel group, explains how seed and VC funds can help support investor resources, and reveals how regulatory changes and online tools have made startup investing accessible to millions of Americans. The book is noteworthy for how it teaches investors to carefully select and manage investments, establish a long-term goal, and approach angel investing as a serious part of an alternative asset portfolio, all the while establishing oneself as an integral part of exciting business opportunities.
Investing in the Next Big Thing
By Joseph Hogue
In Investing is the Next Big Thing, Joseph Hogue shows how one investment has been the secret of the wealthy for over 80 years. Accounting for nearly a fifth of the wealth for million-dollar investors and nearly four-times the return compared to stocks, Hogue details how investing wasn’t accessible to anyone with less than a million dollars, according to government regulations for eight decades. In 2016, that changed when investing in startup companies became open to anyone interested.
Hogue notes risks are high for startup investors, but gains in startup investing can be spectacular. He uses the example of Peter Thiel’s 2004 $500,000 investment in Facebook as its first outside investor. While many people weren’t able to invest in the social media giant until it went public in 2012, Thiel had already made $1.7 billion for a 340,000% return on his investment.
This inspiring read welcomes you into the world of startup investing and equity crowdfunding. This book centers around a proven methodology that Hogue developed over the years as a venture capital analyst to avoid risks in startup funding. The author is upfront about the research and strategic planning involved on your part. Among the valuable tools, Hogue offers a checklist helping readers save time on valuation. He also showcases the process used to value startup companies for venture capital firms, including researching the market and understanding deals. He also offers three different valuation methods used with every deal that provides more certainty.
Angel Investing by the Numbers: Valuation, Capitalization, Portfolio Construction and Startup Economies
By Hambleton Lord, Christopher Mirabile
This in-depth guide is written by two of Boston’s most active and experienced angel investors. It’s a helpful handbook and desk reference for both investors and entrepreneurs looking to understand angel investing’s financial aspects. The authors discuss what investors should know about the financial mechanics of early-stage investing, including valuation, how it affects returns, and how the companies within a portfolio collaborate to drive your overall results.
Important resources within the book include: How to read and understand a Capitalization Table; How to place a proper value on an early-stage company with a limited track record; The various financial pathways leading to a successful exit for companies and angel investors; and How to build a portfolio that will improve the chance of successful returns. The book also highlights the underlying financial math in a top-tier angel portfolio and how to buy a restricted stock that minimizes taxes and optimize financial outcomes.
A solid knowledge of valuations, exit paths and portfolio construction will help readers get to a solid understanding of the field. After investing in startups for a combined 25+ years and 100+ companies, the authors have learned these lessons the difficult way and fully highlight the need to master these essential topics.
Startup Wealth: How the Best Angel Investors Make Money in Startups
By Josh Maher
In recent years, startup investors have captured 20 to 40 percent or higher in returns. Whether new investors are interested in early-stage companies, raising capital for their startup, or simply curious to learn angel investment strategies, this book unpacks the mystery surrounding startup capital. Startup Wealth features impeccable insights, and a trove of engaging interviews with 23 of the country’s best early- stage investors in Google, Invisalign, Uber, Twilio, Localytics, and other prosperous (or not so successful) companies.
In these interviews and real-world case studies, readers will discover how an impressive IPO can result in early investors earning pennies on the dollar — or a 10x+ return. Readers will also learn how the best investors think, identify companies, negotiate terms and partner with founders and other investors. In all, this book incorporates many practical approaches and shows novice angel investors that you can still achieve high gains even after failures. It’s sure to provide insight to those looking to make better investments, select inspired investors or secure early-stage capital.
The Investing King
By Ross D. Blakenship, Eugene H. Chung
Another full-rounded book that considers the investment and startup ecosystem, the book is catered to angel investors, entrepreneurs, venture capitalists, and anyone who wants to learn more about investing or building a business empire. Whether you’ve ever considered investing in a company, establishing your own business, or want to know about founder stories that changed history, this book is an enthralling read.
In The Investing King, the authors discover striking similarities between investment failures and billion-dollar “unicorns” and IPOs and offer insights on their insider thoughts and proprietary formula. Blankenship takes entrepreneurs and investors on a critical journey on raising big-time funds for a startup and how to best structure the business in legal, financial and operational ways. He also offers advice on achieving the highest valuations, the importance of earning profitability in less than a year and how to spot the next billion-dollar startup. It also includes a list of red flags and caveats to recognize before you begin your investment journey. As a bonus, the book also offers negotiation tips and secrets to building a household name as an angel investor, venture capitalist or entrepreneur.