The best way is : 1 find someone you know who started a startup in your area, Or ask a founder during an interview or during a meet up or directly on LinkedIn.
Spend 30min to 1h with them and ask about their pre-seed and seed round there is a 99% chance that Business angels were included in these rounds. Explain that you want to invest and if they would be kind enough to introduce you to the smallest investor in its cap table.
Now… you’re done it’s just a matter of network.
Explain to the investor… and she/he will redirect you etc etc etc.
Ask for his/her WhatsApp to keep chatting and stay in touch in case they see a deal in your area of expertise. Now it’s a matter of reputation : what do you bring to a startup.
If you do a bit of pro bono in your area of expertise to a founder in exchange of network it will be even better. They will likely recommend you to other founder during their seed or preseed.
It’s all about network.
I mention that because the best startups are in a position to get more than money from investors.
If all you have is money, you're looking for early startups that are reasonably likely to succeed but don't need more than money.
As several have mentioned, co-working spaces or pitch events can also be a place to find deal flow. Oftentimes you'll find less experienced entrepreneurs with less formed ideas at these events. As an investor this presents a great opportunity to provide value beyond capital, but may also raise concerns as to the entrepreneur's capabilities.
My greatest finds to date have come when I'm looking in a specific industry or at a specific problem statement. I'm a bit later stage than what you're looking for (Series A - small Series C), so I look for companies with a website (so they can actually reach customers) and search for news releases or any PR they've done. At that point its pretty easy to have an intro conversation and determine whether or not it's something worth pursuing.
Regardless, it takes a lot of conversations to find the right investment candidates.
Some notes, based purely on my own experience (YMMV):
* There is a large amount of variance, and basically people with ideas that won't work or decision-making / management practices that won't fly haven't yet been weeded out of the market. So it might be worth thinking that you'd be happy if you had a hit rate of less than 1 out of 10 or 1 out of 15-20.
* I wouldn't tell anyone that you are looking to invest when you initially meet them, because you'll immediately cause an incentive problem. Instead, by working on a side project, or something, you could get to know other founders as a secret shopper / peer.
* The reason the early stage startups haven't received major funding yet is due to several factors. I believe the most compelling one is that the founders aren't good at making themselves seem "investor friendly." (Assuming the concept and execution show promise, there is positive signal, etc.) On a more general note, if you are going to "assess the person" over other factors, working along side them might be a good way to assess them.
What I'm saying is that being proactive might be a great way to find what you are looking for; which from what you write... by the time you "hear" about them it will be "too late."
There are sites like wefunder.com for the average American, but these are the investments that traditional investors passed on, so most of them aren't great.
Fig.co looked good for games, but has gone bad, since Tim Schafer joined Microsoft.
It might also be worth not going for the professors but people a bit further down the leader.
- Founders Club