As an angel, what I look for is founder/market fit. Does this entrepreneur have a fire in their belly to solve a problem and a really unique and inspired look at the market they are attacking?
The motivation to angel-invest for me as an active entrepreneur is to build a strong network of founders who can help each other and share commonly applicable experiences.
As an angle and VC, the #1 reason you invest in a company is generate a 3x+ return on at least 45% of the deals. The main reason to " Give back" to the ecosystem is for deal flow.
There are tons of great ideas out there the hardest part is finding a founder who understand s their limitations and is willing to adapt with added leadership the Angles & VC's need to bring in.
Once the startup takes funding the game changes and now they have a fiduciary responsibility. If founders don't understand this change, it will become very interesting.
#1 by far is "People". I invest in startups based on who are the people involved, how skilled they are in their respective roles, how I like them, what their product or service is and if I personally am interested in what they are selling.
#2 by crunching the numbers. They must have a viable revenue stream from paying customers. Too many startups I look at live off their seed round and eat that up and start their A rounds while still in freemium mode. By the time they get that far they had better be producing enough revenue to sustain their day to day operations and use the A round to diversify and expand.
#3 I do my own market research on the market segment and current and future competition. I like companies who are #2 or #3 in their respective market segment. It's a nice comfortable spot to sit and "draft" behind the #1 market leader. When they make a shift you can react by coming up with a revised or better version of the same product or service. Let #1 make the big mistakes.
#4 Lastly, I look at who else has invested in the company or if they participated in one of the many incubation programs out there. I have about a dozen or so angels that I track and about five or six VC firms. If one of my tracked angels or VC's invests I pay attention and most likely follow suit.
#5 I track potential investments by geographic region and general industry segment like this:
Silicon Valley - Big Data
Silicon Beach - Internet of Things
Silicon Desert - Mobile Apps
Silicon Prairie - Aerospace
Silicon Slopes - BioTech
For each category as above I try to track 3 startups in each.