Seattle Tech Week: Angel Investing Panel Recap

During Seattle Tech Week, the Alliance of Angels brought together leaders from across the region’s startup ecosystem for a candid discussion on angel investing; what it is, how it works, and what both founders and investors need to know. The panel featured Maren Nelson (Alliance of Angels, Life Sciences Co-Chair), John Sechrest (Seattle Angel Conference), and Karin Kidder (E8 Angels), representing three of Seattle’s most active angel networks.

Why Angel Communities Matter

Panelists gave their perspective on going solo or joining angel communities, and why they became an investor.

Maren Nelson emphasized the importance of community: “If you're interested in angel investing, I would highly recommend finding yourself a group that you can talk to, that you can bounce ideas off…you just have a much better chance of being successful.”

John Sechrest called the Seattle Angel Conference “the kindergarten of angel investing,” asserting the group as a training ground where new angels learn by doing and ultimately become lead investors.

Karin Kidder shared how witnessing a female founder’s fundraising struggles drew her to angel investing: “I thought, gosh, I need to be on the other side of the table and create impact by deploying my capital.”

When asked what future innovation they most wished for, answers spanned from personalized cancer treatments to functional carbon nanotubes and even to a “silver bullet” for climate stability. The diversity of answers underscored a core theme: angels don’t just bring capital, they bring curiosity, intrinsic values, and conviction for a cause.

What Angels Need To Know

The panel then dug into what differentiates angel investors from other sources of capital to educate the new investors and entrepreneurs in the crowd.

1. Angel groups are as much about education as capital. Investors sharpen their judgment and gain confidence by evaluating deals together.

2. Angels must meet SEC standards under Reg D 501. As Sechrest reminded the room: “Angel investors are people that invest their own money, are wealthy enough to afford to invest their own money, and not die because they invest money.”

3. Understanding the difference between Angel investments and Venture Capital. Angels invest their own capital and often add hands-on value. VCs deploy other people’s money, which shifts incentives. As John Sechrest put it, “If you are investing in a company and you have no value besides money to give, this is the wrong investment for you.” 

4. Angels choose where to deploy based on passion and curiosity. Unlike fund LPs, they control their own allocations.

5. Despite the “angel” name, this isn’t charity. The only way you make money is when your company exits, and you must trust it will offset all other failed investments.

6. Revenue-based financing and other structures may suit founders uninterested in venture-scale outcomes. Maren Nelson elaborated by saying how “your deal terms constrain what kinds of investors you can have.”

7. Lastly, for founders, you need to tailor your story to the investor type. What resonates with a philanthropic group won’t work for a VC or an angel syndicate.

The bottom line is that Angel investing is about alignment, expertise, and structuring deals that work for both sides.

SAFE vs. Convertible Notes vs. Equity

Founders often ask: What type of financing should I use?

We asked our panelists what they thought, and here is the breakdown of their answers on three types of financing.

SAFEs (Simple Agreement for Future Equity): Fast, flexible, founder-friendly—but can drag on without conversion. Karin Kidder chimed in, saying, “I sometimes refer to a SAFE as a zero-interest loan; money can sit there for years without converting.”

Convertible Notes: Debt that typically accrues interest and converts into equity at the next financing. Again, Karin Kidder put this type of financing simply, saying, “Early on, you could pull your cash out or convert. Now, nearly every note I see converts automatically.”

Equity Rounds: Cleanest alignment, with clear ownership and access to QSBS tax advantages. The downside of legal fees of $20K–$30K can sting at the seed stage.

Our investor panelists stressed that the choice shapes risk and reward. As Maren Nelson put it, “what you want is an investment vehicle that shares the reward and shares the risk—and makes sense for your company.”

For founders, having a lead investor is critical. Again, Maren Nelson hammered this point home, elaborating on how “one of the roles of the lead investor is to help you craft terms that can get funded—and then help fill the round so it actually closes.”

From this section, the takeaways were that SAFEs and notes provide speed and simplicity, but equity, especially priced rounds, offers the clearest long-term alignment and is often ideal for angels. 

Stage, Valuation, and Portfolio Math

Next, the panel turned to how angels evaluate opportunities.

• Early Stage Risk: Pre-seed and seed deals carry the most risk—but also the most upside. “This is the riskiest asset class. Most startups will fail, which means the ones that succeed need to do really, really well.”

  
  

• Valuation Discipline: Angels pass most often due to pricing mismatches. “If the pre-money valuation is set at $25 million for a seed company, it’s just not fundable. The math doesn’t work.”

  
  

• The Power Law: One winner often drives the portfolio. “If you have a portfolio of 20, you should expect 10 to fail, 7 to muddle along, 2 to do okay, and 1 to return the fund.”

• 10x Potential: Every check must have the possibility of a 10x return. 2x or 3x outcomes don’t move the needle.

  
  

• Portfolio Size Matters: Diversification is non-negotiable. “If you’re writing two or three checks, you’re gambling. Once you get to 15, 20, 30 investments, you start to see the math play out.”

  
  

• Alignment with Founders: It’s not about promising unicorns—it’s about solving problems big enough to matter.

Lessons from the Q&A

The session closed with rapid-fire questions from the audience:

• On QSBS: Equity stock can deliver massive tax advantages, but only with the right CPA.

  
  

• On struggling investments: Don’t double down. “If it’s not working, keep your hands in your pocket.”

  
  

• On check size: Start small, diversify, and use groups or syndicates until you gain experience.

  
  

• On timelines: Exits can take 12–16 years. Angel capital is patient capital.

  
  

• On geography: Local groups are powerful, but syndication opens national and global deal flow.

  
  

• On today’s market: Post-COVID, more accredited investors are entering, valuations have reset, and many see this as an opportunistic time to get started.

Final Takeaway

Angel investing is not about quick wins. It’s about patience, portfolio construction, and disciplined valuations, all while backing founders bold enough to chase markets where a 10x return is possible. The best angels don’t work alone; they work in groups, learn continuously, and structure investments that truly move the needle for both startups and investors.