How I Evaluate Angel Investments

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Last week, I wrote about angel investing as a portfolio strategy, not a bet.

This week, I want to explain how I decide which companies are even worth considering in the first place.

I’m not trying to predict winners.
I’m trying to answer two questions, in order:

1. Why should this company be interesting at all?

2. Given that reason, can it survive long enough to matter?

Most frameworks start with execution and work backward.
I start with structure.

Step 1: Structural Permission to Win

A company is only interesting to me if it has a non-competitive advantage — a structural reason it can access value that is not evenly available to others.

This has nothing to do with being “better.”
It’s about being allowed to do something others can’t easily replicate.

In practice, structural permission usually comes from one of four places:

• Access advantage
  The company can reach customers, data, or distribution that competitors cannot quickly or cheaply obtain.

• Economic advantage
  The company can operate profitably or at a cost structure others cannot sustain.

• Switching or lock-in advantage
  Once adopted, inertia works in the company’s favor. Leaving is meaningfully painful.

• Permission or constraint advantage
  Rules, regulation, trust, or time create barriers that execution alone cannot bypass.

A company does not need all of these.
One is enough.

If none are present, competition will eventually erase returns, no matter how good the team is.

Step 2: Proof of Life

Once a structural advantage exists, I look for evidence that the business actually works.

This is not theoretical.

I want to see:

• real customers

• real usage

• real outcomes

• rational unit economics

Ideas don’t survive.
Working systems do.

Step 3: Survivability

Only after the first two steps do I focus on execution risk.

Here I’m asking:

• Is there a regulatory or structural kill switch?

• Does the company have enough time (capital + discipline) to learn?

• Can the founders adapt under uncertainty?

This isn’t about perfection.
It’s about avoiding obvious causes of death.

The Point

I don’t look for reasons a company might win someday.

I look for:

1. a structural reason it should win

2. proof it already creates value

3. no clear reason it dies before scaling

Everything else is noise.

That’s how I think about angel investing.

If this way of thinking resonates, I’m continuing to build a small network where we share opportunities that meet this bar. There’s no obligation to invest — just exposure if something is interesting. Reply and I’ll loop you in.

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