Angel investing, from fundamentals to term sheets, explained from the ground up.

A new and authoritative guide for beginners and seasoned investors, as well as founders raising an angel round.

  • 300-page online book
  • Digital access to this title in the Holloway Reader
  • Downloadable PDF for personal offline use
Length: 300 pages
Edition: e1.0.0
Last Updated: 2021-02-01
Language: English
ISBN (Holloway.com):
978-1-952120-04-6
ISBN (print):
978-1-952120-20-6

Angel Investing

Start to Finish

by Joe WallinPete Baltaxe

Angel Investing: Start to Finish is the most comprehensive practical and legal guide written to help investors and entrepreneurs avoid making expensive mistakes.

Angel investing can be fun, financially rewarding, and socially impactful. But it can also be a costly endeavor in terms of money, time, and missed opportunities. Through the successes, failures, and collective experience of the authors you’ll learn how to navigate the angel investment process to maximize your chances of success and manage downside risks as an investor or entrepreneur.

You’ll learn how:

  • Lead investors evaluate deals
  • Lawyers think through term sheets
  • To keep perspective through losses and triumphs

This book will also be of use to founders raising an angel round, who will be wise to learn how decisions are made on the other side of the table. No matter where you’re starting from, this book will give you the context to become a savvier thinker, a better negotiator, and a positive member of the angel investing and startup communities.

Rachel JepsenEditor
About the Authors
Joe Wallin
Joe Wallin is a Seattle-based corporate lawyer who represents startups, investors and lenders in startups, founders, and executives. Joe has been working in the early-stage company space since the late 1990s. He is a member of the Angel Capital Association’s public policy advisory council, where he is actively involved in trying to make the law better for investors and founders. Joe has written for The Wall Street Journal, PandoDaily, GeekWire, and Xconomy, and blogs at The Startup Law Blog.
Pete Baltaxe
Pete Baltaxe has played many roles in the startup ecosystem. As a serial entrepreneur, he raised over $25M in seed financing and venture capital, and had two successful exits, an acquisition for 2Market and an IPO for RedEnvelope. He has advised startups on fundraising and product strategy, both individually and as part of accelerators like Techstars. Pete has also been an angel investor for ten years. As an executive in many startups over his 25-year career, Pete has seen first-hand how startups succeed and fail. He has felt the angst of the shortening cash runway and the thrill of the successful exit!

Featured Reviews

Angel investing is not easy, nor is it for the faint of heart! Unlike buying shares in a publicly traded company or real estate, angel investments in startups are illiquid and not easy to value. The deal terms matter a great deal; mistakes in terms can make the difference between a successful investment and one where the company might be successful, but your investment is not. The authors not only explore the legal matters in this book, but also give many angel investors a framework to think about both individual deals and a long-term portfolio approach. They provide options for many complex issues that confront angels and help you decide what is important in a deal.
Dan Rosen (Chair of the Alliance of Angels)
When both sides approach fundraising with transparency, empathy and respect, outcomes are better for everyone. Angel Investing, Start to Finish gives you the knowledge and tools to achieve more successful investor-investee relationships. My advice to everyone who is new to investing, fundraising, advising, or a combination of all: take this book and make it your cheat sheet.
Leslie Feinzaig (Founder & CEO, Female Founders Alliance)
Joe and Pete have put together a very comprehensive, modern, relevant work on angel investment. This is the book I wish I'd had 10 years ago. It's all the bits and pieces of angel investment perfectly structured for angel and entrepreneur consumption. The details on terms and term sheets are particularly focused and critical. A must-read for anyone involved in early-stage investment.
Burton Miller (cofounder, Startup206, Bliip Networks, and Roost)
This book is an excellent review of angel investing. It is complete and thorough so that, even after 10 years as an active angel investor, I learned some insights. It is clearly written and the links provide easy references so that it is perfect for a novice angel investor.
Dan Delmar (Chief Mentor and Board Director of the Harvard Business School Alumni Angels of New York)
The deeper I get into this book, the more valuable it is. What a great resource!
David Huether (PCH Group)

Table of Contents

Part I
Angel Investing Overview
Startup Fundraising and the Road to Liquidity
The Process of an Angel Investment
Fundraising and Securities Law
Part II
Finding and Evaluating Deals
Evaluating Opportunities
Business Due Diligence for Angel Investments
Legal Due Diligence for Angel Investments
Retaining a Lawyer
Part III
Financings and Term Sheets
Convertible Debt
Preferred Stock
Other Investment Vehicles
General Investment Terms
Part IV
Valuation, Ownership, and Dilution
Company Setup and Initial Ownership
Dilution From Selling Priced Shares to Investors
Dilution and Conversion
Dilution From the Departure of a Founder
Part V
Corporate Structure and Tax Issues
What Angels Need to Know About Business Entities and Taxes
Tax Credits and Losses
Part VI
Staying Engaged
Boards and Advisory Roles
What To Do When One of Your Startups Is Struggling
Common Wisdoms and Painful Lessons
Final Thoughts
Appendices
Appendix A: Example Documents
Appendix B: C Corps, LLCs, and S Corps

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Does this sound like you?

As a former entrepreneur, I’ve learned a lot about how companies work and the startup community has given me so much. Now I want to give back as an angel investor. Where do I start?
What’s the difference between a managing director, partner, venture partner, principal, associate, or an analyst in a VC firm? Who should I be talking to?
I know a lot of great founders I’d love to help out, but I’m not sure I know enough about negotiating term sheets or what to look for in a company’s prospects.
I’m providing a company’s first outside investment, and I’ll be joining the board of directors. What protections should I be negotiating, and how can I prepare to help the company as they grow?
I’ve made a few angel investments, and now I’d like to become a lead investor. What do I need to know to help myself prepare?
I’m a founder raising my first round of angel investment. What do angels look for in a company, and how can I pitch them to make my company an appealing candidate?

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