The Best of the Diligent Observer: 2024 Edition

After personally interviewing 22 active angel investors, VCs, and company operators for the Diligent Observer Podcast in 2024, I’ve started to recognize some patterns.

In this post, I share 6 lessons from these interviews, followed by a breakdown of every episode, organized by the problem you need solved.

Let's dig in.

6 Lessons from 22 Interviews:

1. Focus on the Founder (The Idea Comes Second)

This wasn't just mentioned - it was hammered home in almost every conversation. A stellar team with a decent idea beats a brilliant idea with a mediocre team every time. In the very very early-stage startup world where angels tend to play, adaptability and the grit to just get it done is everything.

1. "If I look back over all my successes and failures, and I've had them both, the team was the more critical factor on the success or quite frankly on the failure… Great businesses become great business because of execution, and execution is a function of the team. Period." (Larry Warnock, Ep. 16)

2. "Lessons learned in venture: you're betting on people." (Curtis Feeny, Ep. 17)

3. "The relentlessness of the entrepreneur is what is most important to me in a deal." (Mike Wilkes, Ep. 18)

2. New Angels: SLOW. DOWN. You don’t know what great looks like.

Founders are often great salespeople. And to a new angel, everything looks amazing. It’s so tempting to jump in headfirst and cut check after check after check. Based on my interviews, that’s a mistake. Slow down. Get some reps. Follow a strategy.

1. "One of the challenges with early angel investors is that whole fear of missing out." (Eric Alfuth, Ep. 2)

2. Don't rush into making investments because when you first get exposed to it, they all look good." (Matt Bell, Ep. 7)

3. “When you're just starting out as an angel or even as a VC, you need to see a lot of deals. If you only see 10 deals, you might think three of them are great. If you see a thousand deals, those initial three might not be so great.” (Phil Jung, Ep. 10)

3. Angel Investing is a Team Sport

Yes, everybody makes their own investment decisions here in angel land. But there is a wonderful ethos and openness within the community. It’s remarkable, especially given the territorialism and politics so common elsewhere in the investing world.

1. “Angel investing is a team sport. There's a lot to learn and you want to work with people that can help you be successful." (Marshall Smith, Ep. 6)

2. “Investing together is just better than investing alone.” (Patrick Farrell, Ep. 11)

3. "Join an angel group. It's like a fraternity for adults… it gives you access to a group of other people to bounce ideas off of and, double check your diligence or at least see what other people are thinking and ask questions." (Igor Belagorudsky, Ep. 14)

4. Portfolio Theory Shouldn’t Just be Theory

Every experienced investor emphasized the importance of building a proper portfolio. The consistent number I kept hearing? 10+ deals to play the odds properly, and more is better.

1. "Our data is showing it takes about 15 to 20 investments to get your first return. I think people do two or three investments because it's somebody they know, or they write a check here or there, then they get discouraged and they stop… You have to kiss a lot of frogs to find a prince." (Margie Bacheler, Ep. 8)

2. "Most of our companies will not make it. That's the reality of venture capital." (Brook Stroud, Ep. 12)

3. "As time has gone on, I have in general, placed smaller bets in terms of dollar value across more companies... my average investment is probably half or maybe even a third of what it was 10 to 15 years ago." (Alden Zecha, Ep. 15)

5. “Value-Add” is More Than a Buzzword

Great angels they bring more than money to the table. They open doors, offer strategic guidance (ONLY in areas where they actually know what they’re talking about), help with fundraising, and generally offer a helping hand. This came up repeatedly in conversations with both investors and entrepreneurs.

1. "Stop thinking about whether you're picking the right deals or not. Become so extraordinarily valuable that the right deals will beg you to come onto their cap table." (Matt Gore, Ep. 1)

2. "I think that's what separates the really great angels from the angels who just write checks, is they really take the time to kind of be mentors and advisors to the founders." (Patrick Farrell, Ep. 11)

3. "Smart money is making much more educated bets... Bring more to the table. So you're looking at your portfolio and saying, What are the needs of each of my companies? Where can I help? Who do I know that could help?" (Mitra Miller, Ep. 19)

6. Get Comfortable Saying "No" with Grace

Reality: most deals aren’t a fit. So learning to tactfully say "no" keeps your resources focused on deals that truly align with your thesis, and prevents burning any bridges.

1. "I think at the end of the day, you can be really analytical in evaluating an angel deal… and the temptation in a lot of cases is to go with your heart." (John Jeffers, Ep. 5)

2. "It's better to pass than do a bad deal. We can wait. We have 10 years. We don't have to deploy it all this month." (Larry Warnock, Ep. 16)

3. "How you treat somebody today does matter in the future... You don't know what this person is going to be doing in 10, 20 years... if you treat those people with respect and maintain that relationship, I think it pays dividends far in the future." (Patrick Sweeney, Ep. 20)

I hope you enjoyed these takeaways.

Now, here’s a breakdown of every episode produced in 2024 organized by the problem you need solved.

I want to master the fundamentals of early-stage investing

1. Developing a macro perspective and systematic approach to improving investment decisions. (Eric Alfuth, Principal at Caymont Ventures and President of the Houston Angel Network)

2. Financial due diligence techniques and identifying critical red flags in startup financials. (John Samore III, former federal fraud investigator and Founder of Forensic Strategic Solutions)

3. Explaining due diligence, term sheets, and portfolio strategy. (Dr. Margaret Bacheler, Director of Educational Initiatives at the Angel Capital Association)

4. Identifying promising startups, evaluating startup tech development strategy, and leveraging angel group membership effectively. (Igor Belagorudsky, serial entrepreneur, active angel investor, and Co-founder of FastCTO)

5. The "Three T's" framework: TAM, technology, and team. (Larry Warnock, three-time founder and Founding Partner at Ring Ventures)

6. Lessons from Fortune 150 board board governance, market cycles, and technology trends to watch. (Curtis Feeny, Senior Advisor at Peterson Partners)

7. The role of government funding, balancing emotional and analytical aspects of deal evaluation, and deal evaluation strategy. (Mike Wilkes, Manager of McKinney Economic Development Corporation's Innovation Fund)

8. The importance of founder relentlessness, innovation in Houston, and the "Poker" vs "Roulette" strategy. (Mitra Miller, Vice-President at The Houston Angel Network)

9. Startup success predictors, recent evolutions in VC hiring, and the criticality of founder empathy. (Patrick Sweeney, Principal at Elevate Ventures and former quantitative economist)

I want to make better industry-specific bets

1. SportsTech: Evaluating opportunities at the intersection of sports, media, and technology. (Geoffrey Cheng, Investment Manager at Comcast SportsTech)

2. Energy Transition: Navigating the energy transition and evolving regulatory landscape. (John Jeffers, Co-founder of Revolution Turbine Technologies)

3. WealthTech: WealthTech startup evaluation framework and industry trends. (Marshall Smith, Managing Director of First Rate Ventures)

4. Medical Devices (Cardiovascular): Market sizing, the difficulties of inventor/entrepreneur journey, and understanding exit pathways in medical devices. (Dr. John Criscione, Professor of Biomedical Engineering and CTO for CorInnova)

5. Impact & Faith-Driven Investing: Impact investing: what it means, and how to do it well. (Phil Jung, Partner at Sovereign's Capital)

6. Consumer & B2B SaaS: Consumer retail and B2B SaaS evaluation across growth stages. (Brook Stroud, Principal at Alumni Ventures)

7. AI: Vertical AI strategy, the evolution of machine intelligence, and why World Cup 2026 is a massive opportunity. (Dan Sinawat, Founder of AI CONNEX)

8. Payments: The evolution of B2B payments, cross-border innovation, and building through market turbulence. (Blair Jeffery, President/COO at ConnexPay)

I want to build or participate in an effective angel community

1. Building mission-driven investor communities and the criticality of long-term relationships. (Patrick Farrell, Co-Founder & Executive Director of Potomac Angel Capital)

2. Cross-border investing and angel network growth strategies. (Sebastian Garzon, Executive Director at the Alamo Angels)

3. Optimizing syndicate participation, diligencing the diligence, and how to optimize the structure of an angel community. (Alden Zecha, Managing Director of SideCar Angels)

I want to better evaluate founder stories and pitch decks

1. Identifying great compelling startup storytelling and evaluating a team’s sales ability. (Matt Gore, Partner at OPTIO and pitch deck specialist)

2. The importance of authentic storytelling and how to evaluate a startup’s go-to-market strategy. (Matt Bell, Co-founder of MessageUp and Strategic Piece)

Thanks for reading - happy holidays, and I’ll see you in 2025.

-Andrew

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About Me

I cultivate flourishing.

I'm also the CEO of PitchFact, where our mission is to cultivate flourishing specifically through efficient and collaborative early-stage diligence. I'm a proud husband, grateful father, and honest friend. My love languages include brisket, bourbon, and a handwritten note.