Invest in what you know
Most angel investors have at some time owned and run their own business in a specific industry. It is important to invest in things you feel comfortable with. However, it is also important to have an open mind and review opportunities that have the same underlying principles, but may be in an area of business that you are unfamiliar with. If you are a good business manager, then you should be able to make a qualified decision based on the viability of any attractive business model.
Are you investing in the person or the company?
Remember, most small businesses grow by the driving force and inspiration of the founder/owner. Get to know the owner of the business. You must feel at ease with who they are and how they do business.
High risk equals high returns
Every business investment opportunity is unique and some offer greater rewards and risks than others. The nature of angel investing is, by definition, high risk. Since you will likely be presented with several opportunities from this website, look for deals you feel comfortable with and remember, ROI can be much higher than with traditional investments.
Look for passion and vision
An entrepreneur without passion and vision is on the road to failure. Entrepreneurs need these attributes to be successful while you need to recognize it in order to seize an opportunity when you see it.
Take your time with due diligence
Always complete your own research and investigation on any investment proposal. Business plans can be packed full of numbers and data and appear very appealing but sometimes the data is unrealistic. It is ultimately your responsibility to ensure reasonability.
Always think Win/Win
If any party in a deal starts to get greedy, it is bound to fail. People want to have honest partners that have the companies best interest at heart. Whether it is the initial investment negotiation or the operation of the company, always try to find a deal that is great for both sides.
Make sure your deal is in writing
Always have your lawyer prepare or review the investment/shareholder agreement and clearly outline what your responsibilities are to the business. Nothing is worse than resentment building because of what the Entrepreneur "thought" you were to contribute to a deal.