Angel Investment Criteria: Ranked High to Low

1. The Founding Team (Highest Weight)

• Relevant domain expertise and industry experience
• Complementary co-founders (technical + business skills)
• Coachability and self-awareness
• Prior entrepreneurial track record
• Passion and commitment (full-time dedication)
• Integrity and trustworthiness

"Bet on the jockey, not the horse" is the dominant angel philosophy. A great team can pivot a weak idea; a weak team will fail even with a great idea.

2. Market Size and Opportunity

• TAM (Total Addressable Market) of $1B+ for most investors
• A fast-growing or underserved market
• Timing - why is now the right moment?
• Clear evidence the problem is real and widespread

3. Product / Solution and Innovation

• Does the product clearly solve the problem?
• Is it a painkiller (must-have) vs. a vitamin (nice-to-have)?
• Degree of innovation or differentiation
• Stage of development (prototype, MVP, launched)
• IP, patents, or proprietary technology

4. Traction and Validation

• Early revenue or signed LOIs (Letters of Intent)
• User growth metrics and retention
• Pilot customers or paying beta users
• Customer testimonials or case studies
• Product-market fit signals

5. Business Model and Revenue Potential

• Is there a clear path to making money?
• Scalability of the revenue model (SaaS, marketplace, etc.)
• Unit economics: LTV (lifetime value) vs. CAC (customer acquisition cost)
• Gross margins and path to profitability
• Recurring revenue vs. one-time sales

6. Competitive Advantage / Moat

• What makes this defensible against competitors?
• Network effects, switching costs, data advantages
• Proprietary technology or exclusive partnerships
• Brand strength or unique distribution channel
• Barriers to entry for new competitors

7. Scalability

• Can the business grow rapidly without a proportional cost increase?
• Geographic or vertical expansion potential
• Technology infrastructure that scales
• Team and operational capacity to scale

8. Valuation and Deal Terms

• Is the pre-money valuation reasonable relative to stage/traction?
• Type of instrument: SAFE, convertible note, priced equity round
• Dilution expectations and cap table structure
• Pro-rata rights, board seats, information rights
• Investor-friendly terms without being overly restrictive

9. Exit Potential

• Realistic paths to liquidity: acquisition, IPO, secondary sale
• Comparable exits in the sector (comps)
• Strategic acquirers who might be interested
• Expected timeline to exit (typically 5-10 years for angels)
• Potential return multiple (angels typically target 10x-30x on winners)

10. Personal Fit / Passion of the Investor (Lowest, but Real)

• Does the angel have domain expertise to add value beyond capital?
• Personal interest or belief in the space
• Ability to open doors, make intros, or provide mentorship
• Alignment of values between investor and founder

Summary Table