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The Best of the Diligent Observer: 2025 Edition
5 lessons from interviewing 30+ angels, fund managers, and ecosystem builders.
Andrew Kazlow
December 31, 2025 • Reading Time: 8 minutes
Happy New Year’s Eve!
After interviewing over 30 active angel investors, operators, and sector experts for the Diligent Observer Podcast this year, 5 takeaways stood out to me:
Don’t Skip the Follow-On Round
The Financial Model is Founder Diligence
System > Enthusiasm
Resilience > Pedigree
Angel Investors are in the Slow Cooker Business
While I couldn’t fit the nuggets from every guest into this post, I'm grateful to each one who took the time to share their hard-won lessons with me. Check out the full library here.
Let's dig in.
P.S. Check out last year’s “best of” post here.
5 Lessons from 30+ Interviews
1. Don’t Skip the Follow-On Round
Pre-Seed is expensive. Series A/B is cheap.
This was the insight from the 2025 Angel Funders Report that blew my mind most. In 2021, the valuation gap between Pre-Seed and Series B was $28M. Last year? $9M - a 68% reduction.
This means an investor could realistically, for example, pay $10M for pre-seed risk OR pay $19M for dramatically reduced Series B risk.
Many angels I talk to immediately toss out Series A and B stuff because “they only do seed / pre-seed”.
Don't.
Angels are saying: “When I look at option A, which is this brand new company with a ton of risks on the table, and option B, which is only 10% more costly and I get all those risks off the table, I'll just wait and do the second round or the third round.”
Want more? Check out my full conversation with John 👇
2. The Financial Model is Founder Diligence
The financial model is a window into how a founder thinks.
Early-stage projections are 100% guesses. So it’s not helpful to evaluate for accuracy. Instead, evaluate for thinking.
What margins do they expect in two years? How will inventory levels scale? What's the plan for reducing customer acquisition costs over time? Most importantly: do the “educated guesses” make sense to you?
When a founder claims they'll "be profitable in one year because it's going to go viral on social," that's a very helpful signal for how they’re thinking about growth.
Open the spreadsheet, understand the assumptions, and ask yourself: do I believe this founder has a realistic grasp on how their business will actually work?
"We know that these founders are developing a forecast that is really all guesses. But what I like to look at are the assumptions being made. That tells me how the founder thinks. The financial model is also founder diligence."
Want more? Check out my full conversation with Katie 👇
3. System > Enthusiasm
Founders are awesome.
The passion, the vision, the energy. It's infectious. Interacting with these crazy people building world-shaking stuff is a huge part of why I love my job.
Wade Myers, who’s made 100+ angel investments and seen 20,000+ pitches over the years, put it beautifully: “I tend to like every founder I meet.”
But without a systematic approach to serve as a guardrail, that natural optimism can become a liability. The solution isn't to eliminate emotion, it's to build thoughtful boundaries within which that emotion can thrive.
"I tend to like every founder I meet. And you kind of want to cheer them on. If I didn't have a way to quantify and score, I would tend to like every deal and then later regret going, oh man, why did I rush into that?"
Want more? Check out my full conversation with Wade 👇
4. Resilience > Pedigree
The founders who succeed often aren't the ones with the shiniest resumes. They're the ones who've been tested and proven they won't quit when things get hard.
Brett Calhoun's framing stuck with me: "strengthened by struggle."
His team at Redbud VC doesn't care if you went to Harvard or worked at Google. They're looking for evidence that this person has done hard things before. Collegiate athlete? Military background? Overcame significant personal adversity?
These signals often matter more than pedigree.
"We're looking for entrepreneurs who showcase what we like to call 'strengthened by struggle': certain characteristics that would lead you to believe this person would be a good operator."
Want more? Check out my full conversation with Brett 👇
5. Angel Investors are in the Slow Cooker Business
Even if a portfolio is destined to return 5-6x, odds are it will barely be above 1x after the first five years. The winners take longer to cook, while losers tend to flash fry and shut down (or exit at low multiples) in less than five years.
This is the #1 most important lesson to make sure new angels understand: it’s gonna take a minute to see returns. Make sure you’re committed to deploying this capital for at least 5-10 years (or more).
"If you're angel investing, you have to make a concerted effort to expect it all to go to zero. And if you're okay with that, make the investment. This is a 7-10 year exit timeline. It's a slow-moving beast."
Want more? Check out my full conversation with Alycia 👇
BONUS: In Nuclear, Focus on Separating Hype from Reality
Earlier this year, I spent 6 episodes going deep on angel investing in nuclear energy with my first “Deep Dive series”. I found a sector full of both compelling narratives and cautionary tales. The experts consistently urged investors to look past the hype.
"Investors like hearing the word 'innovative.' Be careful with that word when it comes to nuclear. If they're telling you it's going to be cheap, they either don't understand what they're doing or they're not being real with you." (Emmet Penney, Deep Dive Ep. 4)
"Fusion attracts outsized investment compared to fission, yet has never demonstrated the ability to build actual power plants." (Tighe Smith, Deep Dive Ep. 5)
"Be careful. Many of these SMR companies are science projects masquerading as commercial products." (Chris Keefer, Deep Dive Ep. 6)
ICYMI: check out the full Nuclear Energy Investing Playbook: An Angel’s Guide.
Looking Ahead to 2026
As we close out 2025, these lessons point toward an angel investing landscape that rewards systems over gut feel, substance over pedigree, and patience over quick wins.
Thanks to every guest who joined me on the podcast this year, and to you for tuning in along the way.
Here's to seeing what most miss in 2026.
Happy New Year,
-Andrew
P.S. If you enjoyed this post, could you do me a quick favor? Hit the "like" button or leave a comment with your thoughts. It may not seem like much, but it really helps me out a ton.
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