Short and sweet article on the realities of angel investing. The outlook is not exactly pretty.

Here are some titbits:

For new investors to come in and wipe out early investors just because the market was in their favor was painful. It felt like opportunistic resets that enriched later investors at the expense of early supporters (not to mention early employees).

It’s also worth noting I’ve made more money building companies than I have investing in them. Some of that is luck, but founding a company provides something angel investing doesn’t: the ability to directly influence outcomes.

When you account for the opportunity cost of capital, the extreme time horizon, the macro risks, and the possibility of having your ownership severely diluted, the potential returns need to be astronomical to justify the investment.

Also here’s a link to another article by the same author that shares the numbers on how much she’s made from angel investing.

Here’s a preview:

Yesterday, I got an email from the law firm of a company I invested in 10+ years ago that has raised $100M+. The company is getting acquired, and they want me to sign some docs.

Unfortunately, my shares have been diluted over time and converted from preferred to common. While a VC who backed them just a few years ago will make money from this acquisition, I will get $0. Zero .

It’s not just that early investors often get the short end of the stick while later-stage VCs reshape the cap table to their advantage. It’s that we are often forgotten and get this news from lawyers and not the CEO.