Hello and welcome back to Startup Curious, where we discuss things you should know if you’re thinking about working for or starting a startup.
There are so many names floating around for different kinds of investors, it seems worth it to take the time to discuss some of them, so today, we’re going to talk about angel investors.
Angel investors are usually among the earliest investors in a company. They’re called angel investors because they’re basically providing miracles for companies with very little evidence that they’ll succeed. I actually took a moment to look up the origin and, according to Wikipedia, it originated in theater. Angel investors were those who provided funding to theatrical productions at risk of shutting down. It’s a pretty direct comparison, honestly - every early stage startup is constantly at risk of shutting down.
Just like any other investor, angels are giving you money in exchange for equity. The amount of money they give can vary widely - there are some angel investors who write $5k checks, and others who write $50k checks. The “worth” of angel investors shouldn’t be judged just by check size. Another benefit of raising from any investor is tapping into their network and other resources, and angel investors are no different there. A $5k check could result in intros that are worth much more than the actual money.
One of the distinguishing characteristics of angel investors is that they’re usually investing their own money, whereas other forms of venture capital investors are usually people in charge of investing a collection of other people’s money.
Because angel investors are just dealing with their own money, they have a lot more freedom to invest in whatever they want without having to worry about providing justification to a third party. They could literally invest because they like your shirt that day if they wanted to.
Of course, most angel investors don’t usually make arbitrary decisions like that. However, many angel investors do choose to invest in causes or industries that they personally care about. If you’re not ready for a full seed round, it’s a really good idea to figure out what angel investors might have a personal interest in what you’re working on and try to raise some money from them. They might just provide the miracle you need!
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What are angel investors?