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Angels: A Love Story


(A Love Story About Money – Giving & Getting)

This is an angel.

This is an investor.

Angel to Angel InvestorsAngel Investor - it’s someone totally comfortable with being called an angel

Put them together and what have you got??

Yeah…ok, well…pretty much still the dude to the right.

BUT that means a dude (ahem, or dudette) with lots of cash. Lots of cash. And a successful business or two under his belt. Or lots of cash and a real interest in playing startup roulette. Either way it’s someone totally comfortable with being called an angel – who’s got lots of cash for YOUR startup. If you’re lucky.

But how do I get lucky?

a) Hey man, we’re not that kind of girl.
b) Oh, oh–right. You’re being on-topic. Well then, read on my friend, for this is your Angel 101.

Coming at you in EASY-TO-FOLLOW™ list form:

Fun fact. (and one we had no idea about until researching this article): “Angels” used to refer exclusively to investors in Broadway shows…but they’ve come a long way baby [jazz hands/pause for tomatoes to be thrown due to Catskills comedy].

Quick definition. Of course angel investors are now far better known for their contributions to startups. They are high net-worth folks who invest their own funds in exchange for equity shares, taking true startups—like, where “the office” is also known as “Mom’s garage”— to that magical sweet spot of signing a lease, buying a ping pong table, and hosting baby’s first meetup.

Angel vs VC – discuss. According to Growthink, the difference comes down to 4 key points:

1. The amount of money invested.
2. The professionalism of the investor.
3. Whose money is being invested.
4. Whether the investor takes a seat on your board or not.

Leaning in an angel way, the answers are: comparably less, can vary wildly, theirs, and usually not.

How much. Angels typically invest what is referred to as Seed Capital, which means they’re your first stop on the big boy investment highway. Angelic cash lives in the $25k-1M neighborhood, with the most popular range being $300-500k.

So not quite the green and blue block on Monopoly, more like the red and yellow. [And to that I say, “Marvin? Gardens? Marvin Gardens!” for the others out there also afflicted with that one McDonald’s commercial from God knows how long ago. You know who you are and you know you read that with the perfect inflection…]

Who are they. Right, so who are these people so open to opening their wallets to unknown kids? Well, Nextview Ventures break it out into 10 handy categories:

1. The Super Angel: One angel, many investments.
2. The Domain Angel: One angel, with an interest in…one industry.
3. The Previous-Colleague Angel: A shared past with a real belief in a shared future.
4. The Friends & Family Angel: The easiest – and therefore often the first – pitch.
5. The Grouped Angels: Angels of a feather…mm-hmm…flocking together to co-invest.
6. The Fellow-Entrepreneur Angel: The ones who’ve been there, will take a risk…and even lend a hand.
7. The “True Believer” Angel: Ah, the most angelic out there – if your story sells them, they may just write a check…signed with hope.
8. The Financial Angel: The total opposite, run by research and calculations, processed to build a portfolio.
9. The “Sport Fisherman” Angel: These folks just have so much money, tossing some out here or there doesn’t hurt…and hey, could just help [the rich get richer].
10. …and finally, The Foolish Angel: Sure, they have no clue, but they’ve got the bank account.

Why are they. Wow, that’s a lot of angels. Yes, yes it is. OK, and WHY are they willing to risk their very own cash? TechCrunch did the math, we’ll just report it → because the going return is 2.5x the investment.

Mind you, 90% of that return comes from 10% of the companies selling. Like we said—roulette; but man it feels good when it hits. (Just ask this guy.)

How do I get one. …and what do you need to get them on board? According to Tim Huntley, an angel investor who sold his own company for $170M, in order to make it to the cook-off, you must have:

1. a small but obtainable niche market.
2. a credible roadmap, which means more than a “big idea.”
3. a TEAM.

The odds of creating a successful startup are much higher with multiple founders. These co-founders need to have a solid history of working together, and they need to have complementary skills.

4. …and you should be able to answer these 3 questions:
a) Who is your customer?
b) What is their problem?
c) How are you solving that problem?

…and how do you prove you’ve got these things all in your grasp? All together, cheerleaders-referenced-in-an-earlier-article: WITH! YOUR! PITCH! DECK! (Ah, full circle.)

An interesting note. According to Business Insider (and a tip of the hat for the article titled, “How to Find an Angel Without Going Through Hell”):

Angels like to “touch and feel” their investments, so they are generally only interested in local opportunities. It won’t help your case or your workload to do an email blast and follow-up with 60,000 members around the world.

Where do I get one. Let’s be honest – angels are not easy to come by. BUT, lucky for us, startup folks will always build new sites or compile detailed lists for other startup folks who need the things that startup folks need. Put another way, check out the links below. These offer a good springboard to acquiring the necessary wings and halo accouterments…which could then lead to getting acquired. (Fingers crossed…face-up pennies collected…rain dance done.)

  1. AngelList
  2. Business Insider
  3. CB Insights
  4. Forbes
  5. FundingPost (NY angels)
  6. FundingPost (CA angels)
  7. Gust