You’ve been pouring everything into your startup.
Is spreading some money into other people’s startups actually smart - or just expensive FOMO?
Let’s start with the thing nobody wants to say out loud: If your startup fails, angel investing in other startups will not save you. It will not cushion the blow. It will not offset the loss.
Angel investing is the same asset class as your startup equity – illiquid, high-risk, long-horizon, most-likely-going-to-zero. Spreading a few thousand dollars across three or four other early-stage companies isn’t diversification in any meaningful financial planning sense of the word. It’s just more of the same bet.
So if protecting your financial position is why you’re thinking about angel investing, I need to redirect you pretty firmly.
The actual diversification move is a home deposit
I know that sounds boring. It is boring. But boring is often right.
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If you’ve been grinding for years on your startup and you’ve accumulated enough cash to put a deposit on your first home or an investment property, that is your single most important financial move right now.
Property is a different asset class from your startup equity. It generates a different kind of value. It’s (relatively) liquid. And in Australia, owner-occupier property has a track record that startup equity, by definition, can’t match.
Buying your first home doesn’t mean you’ve given up on the startup dream. It means you’ve done something most founders never manage to do: you’ve pulled some value out of the startup grind and parked it somewhere that compounds differently.
That’s what diversification actually looks like for someone in your position.
Your superannuation is the other thing. If you’ve been paying yourself a proper salary through the startup, your super is ticking along. If you haven’t been – because you’ve been living lean to extend the runway - then you’ve been funding your company partly by raiding your future self.
Worth knowing. Worth starting to fix.
It’s real money, but you may not have been telling yourself this.
The case for angel investing as a founder
The real reasons to start angel investing while you’re still a founder are not financial. Or at least not primarily financial. It’s for strategic reasons.
When you write your first small cheque into another startup, you cross the table. Suddenly you’re on the other side of the pitch. You’re reading a deck and asking questions like:
- “Is this actually a business or just a product?”
- “Does this team have what it takes?”
- “What would need to be true for this to return 20x?”
These are questions that make you a sharper founder, because they’re exactly the questions being asked about you every time you pitch.
You also get access.
The angel investing world is a network of networks, and once you’re in it – even with small cheques – you start getting invited to rooms you weren’t in before. Founders who angel invest early tend to find that their own fundraising gets easier over time, partly because they’re now peers with investors rather than just supplicants.
And there’s the pattern recognition piece. Every deal you see, every pitch you evaluate, every founder you back (or pass on) teaches you something about the shape of good startups and bad ones. That education compounds. It makes you better at running your own company. It makes you better at avoiding the mistakes you see other founders making from the outside.
And if successful investing requires an edge, it’s possible that as an experienced startup operator, your own experience and skill make you better at judging early-stage startup investments than someone with less hands-on experience (which is most angel investors).
None of this shows up on a balance sheet. But it’s genuinely valuable.
When it makes sense to start angel investing, and how?
Not before you’ve sorted your financial basics … That means: emergency fund, home deposit (or a clear plan for it), super on track. If those aren’t in order, angel investing is a luxury you’re not quite ready for – regardless of how exciting the deals look.
Once you’re past that point, the rule is simple: Only invest money you can afford to lose entirely. Not money you can afford to lose some of. All of it. Because with early-stage startups, losing all of it isn’t the worst case — it’s the base case for most of your portfolio.
Start small. You don’t need to write $25K cheques. Most Australian syndicates — including M8 — let you in for much less than that. You might be able to spread $25k across four to five startups, or back three now and reserve a little to invest in a follow-on round for the best-performing one later.
A syndicate is the right starting point because you’re pooling with other investors, you get the benefit of someone else doing the heavy lifting on deal flow, due diligence and negotiating favourable terms, and you’re not going it alone on a decision you don’t yet have the pattern recognition to make confidently.
Don’t try to win by picking the next Atlassian* on your first cheque. That’s not how this works. Build a portfolio over time – a small, thoughtful portfolio of companies where you genuinely understand the problem they’re solving and where you can actually add value beyond the capital. If you can’t answer, “Why would this founder want me specifically on their cap table?”, that’s worth sitting with before you write the cheque.
At the end of the day
The real question isn’t whether to angel invest. It’s what you’re trying to get from it?
If your answer is: “Financial protection from my startup failing” – that’s not it, and you should redirect that thinking toward your home deposit and your super.
If the answer is: “I want to learn how to evaluate startups, build a network on the investor side of the table, and start developing the skills to eventually do more of this” - welcome aboard.
That’s a legitimate, valuable, and achievable goal. The financial upside might come too, eventually. But the learning starts from the first cheque.
Get your financial house in order first. Then write small cheques into companies you genuinely believe in, through a syndicate, and treat every deal as a masterclass in the thing you’re already spending your life on.
That’s how you start. Everything else is just refinement.
*You might be thinking, “The next Atlassian? That’s a terrible investm their stock is tanking right now (April 2026) but you’d be thinking wrong. If you were lucky enough to be holding $5k in Atlassian stock pre-IPO and had sold it at the end of the first day’s trading it would have netted you about $70k. If you’d held it until the peak around October 2021 it would have been worth well over $1 million.
- Alan Jones is a pitch coach, founder coach, and angel investor at M8 Ventures which operates the M8 Syndicate on the Aussie Angels platform.
