TLDR; they are investments in people rather than companies. Formidable, high delta individuals become incredibly impressive over time. Early-stage investing is a way to promote long-term learning and relationship building.
How much capital do you want to deploy?
Currently, I've set aside $6000 USD to invest. This gives me 1-3 shots on net. Monetary return is a nice to have, not a must. I am considering my investments a sunk cost. There are many easier ways to make money (I'm looking at you stock market).
What are your goals if not for investment?
Everything I do is guided by one goal: to surround myself with high integrity, high trajectory people (Linus Lee has a great article on these so-called "sprinters").
Sprinters are people who grow and improve at what they do exponentially, because they use every new project and experience and mistake as a way to improve at the next one. They really just care about figuring out what they want to work on, and then spend all their time getting better at that thing.
Writing angel checks gives me the opportunity to work closely with sprinters. Investing in their companies gives me the opportunity to be deeply involved with their learnings and obstacles. I get to experience the highs and lows alongside the best people I know. If growth compounds over time, the 10 year commitment is more of a blessing that a curse.
I'm more than willing to take chances on young, unproven talent. Many sprinters I know are working on their first companies, and whether or not their companies succeed, I'm happy to bet on them for the long run.
I genuinely believe that interesting people work on interesting problems. Investing is a way to gain exposure to different and unexpected problem spaces. There is so much I don't know about the world and how it works. I learn best through "excited accountability", in which interest in specific topic is fueled by some sort of deliverable. Equity is an exceptional motivator and source of accountability.
What kind of investment terms did you have in mind?
Honestly, at the size of current angel/seed rounds, the amount I can invest makes certain terms like anti-dilution/liquidation preference unimportant. Ideal is a standard valuation capped SAFE. The goal is something clean and simple - I just want to have some small stake in the company (lawyers are expensive!).
There aren't specific terms that I feel are worth negotiating. At the end of the day, the company and founders I am investing in are more important. I'd much rather have a sub-optimal term sheet with a high integrity, high quality founder than amazing terms with a crappy one.
A third party contract with an existing investor (secondary sale of shares at an agreed upon price) is also something I have considered.
How are you investing?
I see who the most impressive people I know would work for. Among students, who can convince exceptional engineers to work together on a project. And have a high rate of growth in self-awareness and self-reflection.
Special thanks to Leo Mehr for inspiring me to write this. His questions were very informative for my thinking.