The Trick to Spying on The World's Top Angel Investors

By Wayne Mulligan, on Friday, October 4, 2013

You’ve heard us say it time and time again: when it comes to early-stage investing, it pays to be a follower!

On Wednesday, Matt showed you how to follow Venture Capitalists into equity crowdfunding deals »

That’s a super smart strategy for finding high-quality investments that brand name “VCs” are putting money into. At the moment, however, those deals are still few and far between.

The most active investors on crowdfunding platforms are angel investors. As opposed to VCs, who invest capital on behalf of their limited partners, angels invest their own money into deals, and usually do so in earlier, smaller rounds of fundraising.  There are about 462 venture capital firms in the US; compare that to 250,000 active angel investors.

If you followed these angels, you’d see a huge amount of investment opportunities.

But that raises a question: without the “brand name” of a big Venture Capital fund, like Union Square Ventures or Benchmark, how do you know which angel investors are worth following?

Today I wanted to share a simple trick we use to find (and follow) some of the most successful angels – folks who’ve invested in companies like Instagram, which sold for $1 billion, or Twitter, which just filed to go public.

The One Tool to Rule Them All

The “trick” I’m referring to actually starts with a “tool.” It’s a website: www.CrunchBase.com

If I had to pick one service (aside from Crowdability) that every crowdfunding investor should use religiously, it’s CrunchBase. As the name implies, it’s a massive database of information on early-stage financings, hiring’s/firing’s and mergers & acquisitions.

If I need to look up anything about an early-stage business – whether I’m trying to find out who its CEO is or how much capital they’ve raised – chances are I can find the information on CrunchBase.

But the best thing about CrunchBase is that in addition to giving you valuable information about a company, it also gives you valuable information about that company’s investors.

Pick a Deal, Any Deal

Let’s walk through an example together…

Last week, Matt wrote about a company called Fab.com. Fab recently raised a massive round of financing at a billion-dollar valuation.

If I were interested in finding out who invested in Fab’s angel round, I’d start my search on CrunchBase. I’d simply type “Fab” into the search box at the top of the CrunchBase homepage and then select “Fab.com / Company” from the drop-down menu that appears.

You can jump directly to that page here »

Once you land on the Fab.com company page, you’ll see a lot of information. I encourage you to explore it all, but for our purposes we’re just looking for information on early Fab.com investors.

For that data, we’ll simply scroll down the page and stop once we see the “Funding” section on the left-hand side.

Within the funding section you’ll quickly see that Fab has raised several rounds of financing. Since we’re looking for early investors, let’s just pay attention to the round titled: “Angel.”

There are a handful of names listed here. Some are institutions, like “The Washington Post,” others are individuals. We want to focus on the individuals.

Follow the Leader

For now, I’ll pick one name, but you should go through this process for all of the names listed for a given company.

Let’s choose “Lars Hinrichs.”

When you click on Lars’s name, you land on his personal CrunchBase page »

Here you’ll see some information about Lars. But most importantly, you’ll see that he’s a successful entrepreneur and angel investor.

He’s taken a company public and is actively making investments in early-stage businesses. This is important because it gives you an idea of whether or not Lars is someone you’d even want to follow.

Imagine if Fab were his only investment, ever? Not much of a track record to bet on.

Now that we know Lars is a “leader” worth following, we can take the final step and go find him on AngelList »

Once on Lars’ AngelList page, you’ll see some of the other investments he’s made, and if you’re a registered AngelList user, you can “Follow” Lars.

When you follow someone on AngelList you’re notified every time they make a new investment. This is how you can stay on top of your favorite – and ideally, very successful – early-stage investors.

Rinse & Repeat

As I mentioned earlier, you’ll want to repeat this process for several of the individuals listed on a company’s CrunchBase page.

You’ll also want to repeat it for several companies.

We generally choose companies in sectors we’re interested in, and that we know have been performing well. If we can find several angels that have been consistently putting money into successful investments, we usually feel comfortable “following” them on AngelList.

So between CrunchBase and AngelList, you should be able to keep tabs on – and most importantly, get investment ideas from – some of the top angel investors in the market.

Best Regards,
Wayne Mulligan

Founder
Crowdability.com

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Tags: Equity Crowdfunding Angel Investing Early-stage Early-stage Investing Angellist

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