Bill Lee has become one of the angel investors to watch, and one who's managed to get into some pretty hot deals that are getting seemingly rich valuations. This month, he plans on investing in a start-up that's being valued at $1 billion.

The well-connected-entrepreneur-turned-investor has invested in about 30 companies, such as Tesla Motors (Lee made his investment back in 2002/2003 well before Tesla went public), Hootsuite, Tweetdeck (which was acquired by Twitter for a reported $50 million), and Zaarly. Lee invested $100,000 in Zaarly's seed round, before the company received a $100 million valuation in its latest round.

In this interview, Lee, whose typical investment is $25,000 to $500k in a round that's about $1 million in aggregate, says he has two criteria for investing. Firstly, he invests in the entrepreneur. Secondly, the start-up must have some network effect among his portfolio of companies, meaning the product has to see demand from the other start-ups. If it gets traction among his start-up companies, then the product must be worth investing in.