Who are the best investors for an early-stage startup?

by | Oct 2023 | Early-Stage Capital

I saw someone from the venture world comment recently that:

“Angel investors are a waste of time”.

They said this, I think, because many angels don’t have enough money to move the needle for most startups. I’m actually in that category myself. My typical cheque size is $10,000.

For me, that number makes sense. When I started investing my own money, I knew I needed to diversify. Since then, I’ve made more than fifty direct investments – the smallest being GBP 250 via UK crowdfunding site, Crowdcube, and the largest being USD 75,000 into music tech business, Jupiter Labs, which sadly closed down when the founder passed away.

I’ve spoken with other angels about this. One of them, who I expect has more money than me (he’s friendly with Richard Branson), laughed out loud when I told him my cheque size:

$10,000?! What difference is THAT going to make to anyone?

I don’t disagree in some ways. It’s not a huge amount of money. But I also know that thousands of startups depend on investors like me for their first cheques. I honestly believe angels are the lifeblood of the startup ecosystem. Without them, most founders would never get started.

That’s why it was great to read in Tech Crunch a while back that Hustle Fund has unleashed more than 1500 new angel investors in the last ~2yrs. Collectively those new angels have “invested $23 million via special purpose vehicles (SPVs) into 65 deals”.

Now that’s meaningful.

Once again the US are leading the world in their approach to startups and innovation (although I was pleased to read that Hustle Fund’s third largest hub after SF and NYC is my former home, Singapore).

Another US company doing similar things is Sweater. And I spoke recently to the team at Odin, in the UK, who help angels to build and manage syndicates, with minimal hassle and cost.

Eric Bahn quote on angel investors

If you’re an early-stage founder, be careful not to be misled by some of the rhetoric in the startup ecosystem. There are a lot of people promoting their own services, and others who make noise and say controversial things purely to get noticed or stay relevant. Take all advice with a pinch of skepticism, including mine!

My affinity to angel investors, however, is from first-hand experience. The first round I raised for my three startups were $500K, $250K and $700K – all of which came from angel investors. Those companies definitely wouldn’t have existed without angels.

The more people who become angels, the better. Without them, we’d have fewer deals for VCs and other later-stage investors to pick from, not to mention less innovation and progress for society.

If you’d like to get into angel investing but don’t know how, here are some more links to check out:

If you’re a founder looking for startup funding, try to find angels who have invested before or, even better, angels who recently had an exit (try using tools like Crunchbase, Pitchbook, or the UK’s Companies House to do this).

Angel investing is great fun and can deliver life-changing money. Here’s another article I’ve written about my personal experiences from the last 12+ years of doing it.

Happy investing!

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– Featured bike image by Mohamed Hassan from Pixabay.

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