What Every Angel Investor Wants You to Know

How can you turn a promising idea into an investment magnet that draws the right kind of backers—not just money, but people who help you grow smarter? In What Every Angel Investor Wants You to Know, Brian Cohen (the first investor in Pinterest) and John Kador pull back the curtain on the mysterious world of angel investing and reveal the human psychology, personal relationships, and business fundamentals that make or break a startup's chances. Cohen argues that raising money is never just about money—it’s about raising investors, building long-term partnerships based on trust, mutual learning, and emotional connection.

The book’s central claim is that angel investing is a high-touch, relationship-driven sport. Success depends less on the size of your idea and more on your character, execution, and ability to form “hugging relationships” with investors. Angels don’t simply write checks; they invest in people—founders whose integrity, insight, control, and execution inspire belief. This approach repositions angels not as mere financiers, but as mentors, collaborators, and co-builders of the startup ecosystem.

The Entrepreneur-Angel Relationship

At its core, Cohen wants you to treat angels like family or strategic partners, not vending machines. He calls angel investing a “contact sport”—an intimate process requiring transparency, character, and personal chemistry. Entrepreneurs who approach funding as an emotional and intellectual partnership, rather than transactional deal-making, tap into what angels value most: belief in people. Just as in personal relationships, angels invest in founders they would trust “for the long haul,” including through inevitable stresses and pivots.

Smart Money vs. Dumb Money

Cohen contrasts “smart money”—investors who offer mentorship, networks, and long-term help—with “dumb money,” investors who write checks without providing wisdom or support. Smart money, he insists, is worth waiting for. In his view, desperation to accept any money is toxic. Entrepreneurs must learn to say no to mismatched investors even amid financial pressure. “Investor raising,” as he calls it, is about attracting partners who think like builders, not gamblers.

Values at the Center of Angel Funding

The authors set a high bar for both sides of the table. Angels should invest in people they admire, while founders should only accept money from angels who genuinely believe in their vision. Cohen and Kador describe angel investing as an extension of personal values—optimism, curiosity, mentorship, and stewardship—echoing Cohen’s personal mantra that he invests to help make “a better world for my children.” It’s a moral and emotional framework underpinning sound business logic.

From Raising Money to Raising Investors

This idea flows through every chapter: the healthiest startups are built not only by raising money but by raising investors who share their purpose. Angels bring much more than cash—they bring perspective, discipline, and connections. Cohen likens good investors to guides who provide “outside eyes and ears,” helping founders see blind spots and make wiser decisions when things get chaotic. In turn, founders must do due diligence on angels, just as angels investigate them.

Why This Matters

For you as an aspiring founder, Cohen’s vision reshapes how to think about fundraising: it’s not a transaction but the start of a relationship. The book prepares you to attract—and be—the kind of entrepreneur angels want to back. It shows how honesty, listening, and obsessive execution trump flashy ideas; how startups need both belief and discipline; and how relationships built on integrity and curiosity foster the kind of investment that endures. Ultimately, Cohen contends that smart funding isn’t about getting capital—it’s about earning trust. If you understand that, you’ll not only find investors but lifelong allies in building your dream.

One of Cohen’s most provocative ideas is that entrepreneurs—not investors—are in control. Founders often assume that getting funded means relinquishing power. Cohen flips that narrative: he reminds you that angels only succeed if you do. You choose them, you lead the business, and you determine how far it goes. Quoting his own mantra, he calls founders “the heavy lifters”—they design the product, hire the team, and shape the culture. Angels are enablers, not masters.

Seizing Psychological Control

The book depicts control not as arrogance but as maturity. When you stand confidently in your role, angels feel safer betting on you. Cohen even opens speeches by asking audiences to repeat: “I am in control.” The moment you internalize that truth, you stop being a supplicant and start being a partner. He praises founders who bring their own term sheets to funders—signaling that they know their value. It surprises investors but often speeds deals and earns respect.

The Golden Rule Reversed

Traditionalists quote the “Golden Rule” of investing: “He who has the gold makes the rules.” Cohen turns it upside down. He argues that angels don’t hold power; they hold potential. Founders give that potential meaning through execution. Nothing happens until the entrepreneur moves. This mindset reshapes negotiations: the stronger your vision and clarity, the less intimidating funding conversations become. You are the driver inviting passengers to help steer, not a hitchhiker begging for a ride.

Examples from the Field

Cohen recounts his own experiences watching confident founders lead angels fearlessly. Tom Patterson, founder of Tommy John underwear, famously asked Cohen, “Why should I take money from you?” That question thrilled Cohen—it proved Patterson understood his own power and wanted the right investor, not just any one. Cohen became a loyal, hands-on backer. Patterson’s control and integrity helped propel Tommy John from a home experiment to multimillion-dollar brand, showing how ownership attracts commensurate partnership.

Turning Control into Partnership

Control doesn’t mean isolation. Cohen encourages founders to yield authority strategically—inviting collaboration while staying centered in their vision. Angels invest more enthusiastically when they can contribute to a strong, disciplined founder. For you, the takeaway is simple: act as if your startup already belongs to you fully. That mindset will inspire investors to join your journey, not dictate it. (Compare this to Ben Horowitz’s The Hard Thing About Hard Things, which also champions founders as resilient decision-makers.)

Every successful startup begins with belief—but that belief only matters if it transforms into flawless execution. Cohen presents a powerful formula: Belief + Execution = Success. He insists that ideas are cheap; it’s disciplined follow-through that converts belief into measurable results. Angels invest less in concepts than in people who can convert those concepts into working products, paying customers, and steady growth.

Belief Defined

Cohen challenges you to articulate your belief system, not just your business plan. Why do you believe your idea matters? What problem have you recognized that others ignore? He asks probing questions: “Have you identified a human behavior that needs change?” “Can you execute on this belief?” Belief isn’t wishful thinking—it’s insight anchored in human truth. Angels sense that conviction in every word of your presentation, like a musical riff repeating through a song.

Execution Matters More Than Vision

Cohen admires “Big Hairy Beliefs” but warns against founders obsessed with visionary talk while neglecting execution. He urges you to roll up your sleeves and master dirty details—cash flow, burn rate, and customer acquisition costs. During angel conferences, he observed how investors dismantle naïve pitches by asking: “What’s your unit cost?” “What’s the lifetime value of a customer?” Founders who answer confidently project credibility. Execution validates belief.

Case Study: Tommy John

The most memorable example is Tom Patterson’s reinvention of men’s underwear. His simple belief—that men’s undershirts were badly designed—became an obsession. Patterson prototyped his design using fabric from a dry-cleaning tailor, tested it with friends, gathered feedback, and iterated rapidly. His passion met data, his testing showed demand, and his storytelling made angels listen. Cohen invested because Patterson proved belief with execution. It’s now a multimillion-dollar brand sold in high-end stores, showing belief transformed into sustainable business.

Avoiding the “Big Idea Trap”

Cohen argues that profitability doesn’t always equate to fundability. Restaurants or retail shops may earn profits but lack scalability—what angels call “growth capital readiness.” Many startups fail when they assume vision alone will secure funding. Investors fund momentum. Your takeaway: start with belief, prove it through tiny wins, scale it through execution, and talk less about changing the world until you’ve changed one small corner of it. (This echoes Eric Ries’ The Lean Startup, which also prizes iterative action over visionary monologues.)

Cohen introduces one of his most useful distinctions: investor raising versus money raising. Money raising is transactional—you’re hunting for checks. Investor raising is transformational—you’re cultivating allies. Smart founders, he writes, focus on raising investors who add wisdom and connectivity long after the wire transfer clears. It’s not about collecting cash; it’s about building relationships that multiply value.

Choosing Smart Investors

Not all angels are equal. Cohen warns against “shark angels” who exploit founders and “angel brokers” who charge for introductions. Real angels are builders and mentors, not short-term speculators. You must be brave enough to turn down money that doesn't align with your values. This courage signals maturity and professionalism—a critical filter angels use to identify sincere entrepreneurs.

The 9-Year Marriage

Cohen likens the founder-investor relationship to marriage. “Can you see yourself being in bed with your investor for nine years?” The average startup takes nearly a decade to reach a liquidity event, so investor compatibility is paramount. Instead of courting whoever shows interest, you should imagine the long-term journey. Angels who stay committed during hard years bring far more than capital—they become counselors, recruiters, and connectors.

Smart Money in Action

Examples abound. Cohen’s collaboration with Keen IO’s Dan Kador illustrates “smart money” perfectly. Kador chose investors who could answer nuanced technical questions and weren’t simply financiers. Their feedback improved product development and accelerated fundraising. Similarly, Jeffrey Pulver—the angel behind Twitter—embodies investor raising. He invests “in people first, ideas second.” He believes in empowering entrepreneurs who will pivot rapidly and learn relentlessly—a philosophy echoing Silicon Valley’s resilience culture.

Guides, Not Just Funders

Cohen identifies five advantages smart angels add: mentoring, truth access, recruiting help, future financing advocacy, and relationship building. These outside perspectives prevent founders from drinking their own Kool-Aid. For you, investor raising means building allies who’ll fight for your company when nobody else will. Choose angels who challenge and complement your vision—the ones who not only believe in your product but in your growth as a leader.

Cohen calls pitching a “shark that has to keep moving.” Your presentation must flow logically, emotionally, and relentlessly forward—never static or bloated. Angels see thousands of decks; what stops them in their tracks is clarity, brevity, and soul. If you can make them feel belief and mastery within the first 45 seconds, you win their attention.

Conciseness is Confidence

Your pitch isn’t a thesis or a sales spiel—it’s a human conversation. Cohen quotes David Rose’s presentation framework: grab attention in 30–60 seconds, set context, flow from management to market, product, business model, traction, and funding need. Each section should build emotional and intellectual trust. Angels don’t just invest in slides; they invest in how you connect the dots.

Clarity and Flow

Cohen insists that every slide answers the next question before angels ask it. The pitch becomes a dialogue of anticipation. Tell them what you’ll do, why it matters, and how you’ll execute. Include emotionally intelligent “signage” to guide them (“I’ll spend five minutes on the product, then explain the market”). This approach turns tension into trust. Practice until your delivery is crisp but natural—no reading slides, no filler jargon.

Human Connection

Cohen loves pitches that start and end with authentic stories. Some of the most powerful examples include Shake Shack founders discussing customer problems or Tom Patterson telling his undershirt epiphany. Angels are emotional creatures. Humor, humility, and curiosity are magnetic. He warns against false urgency (“We’re closing in three days!”) or gimmicks. Instead, demonstrate steady confidence. You’re seeking a partnership, not a one-night stand.

Avoiding Turnoffs

Cohen lists classic mistakes: exaggeration (“revolutionary”), sloppiness, inconsistent numbers, arguing with cofounders, keeping a day job, and treating angels like customers. The golden rule: make it easy for investors to believe. “Permission to believe,” he writes, is your true goal—not coercion or hype. When belief flows, funding follows. (Compare this philosophy to Steve Jobs’ presentation ethos, where simplicity and emotional clarity drive persuasion.)

Cohen challenges founders to rethink due diligence—not as a threat but as a discovery process. Every angel worth their salt verifies startups through financials, legal documents, customer references, and team interviews. But Cohen goes further: the best angels practice “do diligence”—a proactive, human inquiry that uncovers reasons to invest enthusiastically, not just reasons to avoid risk.

The Discovery Mindset

Instead of fearing due diligence, Cohen urges you to embrace it. Preparation saves months of frustration. David S. Rose preemptively compiles all documents—team bios, intellectual property, capitalization tables—into one binder before investor meetings. This transparency reassures angels that you’re organized and mature. Volunteering negative information (like unresolved IP disputes) demonstrates honesty, turning potential weaknesses into trust-building opportunities.

Integrity as the Core Metric

For Cohen, due diligence ultimately measures integrity. He has been burned by charismatic founders who lacked ethics. Angels, he says, assess how you handle money, honor commitments, and treat partners. He confirms educational credentials, reviews debt history, and asks how founders behave when nobody’s watching. Past behavior predicts future performance more reliably than any business plan.

Regional Cultures and Efficiency

Cohen compares East Coast “spreadsheet due diligence” with West Coast “gut-based decision-making.” Silicon Valley angels often invest quickly, relying on intuition. East Coast angels scrutinize details longer. The balance lies in doing enough verification to mitigate risk without overanalyzing. “Analysis paralysis,” he warns, kills deals faster than bad spreadsheets. He reminds founders that due diligence is reciprocal: founders must check investor backgrounds, too.

Do Diligence as Belief Testing

“Do diligence” turns analysis into enthusiasm. It answers the angel’s inner question: “Can I believe in these people?” Every investor looks for what Cohen calls “permission to believe.” By preparing meticulously and engaging sincerely, you help them find it. (This mirrors the “discovery selling” mindset described by Neil Rackham in SPIN Selling, where depth of inquiry creates conviction rather than pressure.)

In Chapter 12, Cohen introduces his distinctive term “teammanship”—the art and atmosphere of how founders work together. He insists that angels invest in teams, not ideas. A technically brilliant concept means little without group chemistry, shared purpose, and adaptive leadership. “The right team led by the right leader can do the impossible,” he writes.

Ten Indicators of Team Quality

Cohen’s checklist includes: existence of a real team (not just one founder with hired staff), consistent story, leadership clarity, focus on execution, resilience, humor, conflict resolution skills, financial literacy, and shared vision. Angels study how team members interact offstage—tone, body language, mutual respect—before investing. “Assume the microphones are always on,” he warns, recounting stories of entrepreneurs sabotaging impressions through careless remarks in hallways.

Resilience and Humor

Startups face relentless setbacks. Cohen defines resilience as the ability to turn defeat into strength, comparing it to muscles rebuilding after stress. Humor signals adaptability—a founder who can laugh under pressure often leads teams that rebound better. He values leaders who turn obstacles into opportunities, echoing principles from Shawn Achor’s The Happiness Advantage about optimism as a predictor of success.

Leadership and Calling

True leaders treat their startups as callings, not jobs. Angel investors instinctively recognize purpose-driven founders who view their work as meaningful, not just profitable. Cohen looks for teams that aim both to build wealth and to serve customers authentically. A sense of calling transforms enterprises into communities with shared identity—a force multiplier for enduring success.

Conflict Management

Disagreement isn’t dangerous; avoidance is. Cohen sees open conflict as a healthy byproduct of passionate collaboration. Founders must handle disputes transparently, not defensively. Angels tune into emotional maturity—how teams listen, compromise, and laugh through stress. If humor and respect are present, even heated debates can strengthen alignment. That synergy, he calls “the melody between founders.”

Every startup should plan its endgame from day one. Cohen insists that an exit strategy isn’t an afterthought—it’s baked into the business model. Angels earn returns only when startups exit, so clarity about how the company will create liquidity reassures investors and keeps founders disciplined. “The two sweetest words to an angel’s ears,” he reminds, “are liquidity event.”

Designing the Exit Early

Cohen disarms entrepreneurs who bristle at talking about exits too soon. He argues that planning for acquisition or IPO aligns founders and investors, optimizing valuation and shortening timelines. Citing angel Basil Peters, he notes most startups today sell within two to three years—like YouTube’s $1.6 billion sale to Google or Instagram’s $1 billion acquisition by Facebook. The goal isn’t longevity but intelligent timing.

The Acqui-Hire and Other Exits

Cohen explains the rise of acqui-hire deals—acquisitions driven by talent, not product. While modest in returns ($2–6 million range), they preserve dignity and continuity for struggling startups. Sometimes, big companies buy teams to accelerate internal innovation. He sees acqui-hires as “soft exits,” preferable to bankruptcy though less lucrative for angels. Strategic foresight helps founders position for these outcomes.

Timing and Psychology

Ironically, Cohen warns that success can kill exits. The best time to sell is often when a company is rising, not at its peak. Waiting too long risks market changes or valuation declines. Angels want founders who understand this rhythm—sell on momentum, not nostalgia. He highlights entrepreneurs who predefine target buyers, valuation ranges, and time horizons (“Sell for $15M in four years”) as models of clarity.

Exit as Business Discipline

When startups run each day as if preparing for sale, they maintain transparency, audited accounts, and strong governance. These habits enhance credibility long before negotiations. For you, the insight is practical: always frame your growth as a bridge to liquidity. Angels fund journeys, not destinations. A clear exit gives everyone something tangible to believe in—and aligns business passion with financial realism.