Managing Startups: Best Blog Posts

Chapter 46. A Choir of Angel Investors Sing Different Parts

David Beisel

We at NextView Ventures often invest in a startup’s first round alongside other funds; either seed-stage-focused ones like ourselves or larger traditional firms. Just as often, however, we’re investing alongside individual angel investors who are participating in the round as well. Angel investors come in many shapes and sizes, however. And it’s not always easy to recognize the pros and cons of taking money from individual investors, or even how to seek them out in the first place. Addressing both of those issues requires a view about motivations: that is, why someone would want to put their hard-earned cash into a risky early-stage startup in the first place. Along those lines, the world of individual angel investors is easier for entrepreneurs to navigate when they can recognize the categories that those investors fall into based on their incentives and actions. The choir of angel investors out there is comprised of a number of players that sing different parts:

The Super Angel

Much has been written about this category, so I won’t belabor the description beyond saying that the defining characteristic is the large number of investments that the Super Angel makes. Pros of taking his angel money are the feeder system to venture financing of the next round and the vast network of portfolio CEOs that can be tapped into for connections and help. Cons of an investment from a Super Angel include potential lack of “value-add” ...