So, if you’re an angel investor, you’ll get way more bang for your buck and make a real impact if you stick to startups in industries you actually know. David S. Rose’s book, Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups, totally backs this up. Here’s why:
1. You’ll be a due diligence rockstar
If you know your stuff, you can totally sniff out whether a startup’s for real. You get market trends and competition, so you’ll see the good stuff and the red flags that newbies miss. Rose says you’ll spot bad assumptions and regulatory headaches way faster, which means you’ll make smarter calls.
2. You bring more to the table than just cash
When you know the industry, you can mentor, give killer advice, and hook them up with awesome connections. Rose says you can use your network to get partnerships or more funding, which helps the startup blow up and you make more money.
3. You’ll dodge a lot of bullets
Knowing the industry means you’ll see problems coming – like tech changes or supply chain issues – so you won’t make dumb mistakes. Rose says you won’t fall for the hype, and you’ll focus on startups with solid plans.
4. You’ll make decisions like a boss
If you’re investing in something you know, you’ll trust your gut more and make confident choices. Rose says, “Stick to what you know,” because it helps you make tough calls without freaking out.
5. You’ll time your exits perfectly
When you know the industry, you’ll know when to bail out or when to push for an acquisition or IPO. Rose says you’ll predict exits better because you understand the market and who might want to buy the startup, so you’ll make the most money.
In sum, If you invest in startups you actually understand, you’ll make smarter choices, help them a ton, avoid big risks, and make way more money. Like The Gust Guide says, sticking to what you know is the key to winning and helping innovation happen.
