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What size of checks — at a minimum — does an Angel have to write to be impactful…?
I know that many of us are working on side projects — but I also see a lot of folks building full fledged companies. And a number of those companies are likely going after venture capital.
If you're considering or actively pursuing Angel funding, I'm really curious as to how much capital a single Angel needs to provide in order to have a definitive and beneficial impact on the trajectory of your company.
Thanks in advance for your insight and thoughts!
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ari newman
25-100k are meaningful angel / pre-seed checks and yet it all depends on how you show up for the company. I've seen plenty of cases where the bigger check writer helps less than the smaller one, both at the angel level and venture fund level!
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if all you need is capital there is plenty of that floating around. you are probably better off bringing on strategic angels that provide value outside of just capital even if that means a smaller check size.
@mootpt Thanks, Jay! While we don't have the "plenty of capital floating around" benefit in our community, I love the insights on strategic Angels.
@turoczy I guess what I meant to say was there seems to be an influx of new investors, myself included. I am sure investing has always been fairly competitive, but I am seeing folks fight for allocations over the past few months. Also seems like since everyone has been/gone remote this past year, the flood gates have been opened for folks making investments outside their market (i.e money in SF investing in ATX/etc).
@mootpt "there's plenty floating around"? Yes, perhaps, we had a few investor talks, not many, but they were always a bit irritating for us. We felt no different than talking to a bank or tax authority. Here we are in Germany, and I heard investment experts call this region "toxic." Investment in the United States is perhaps more open and easier. Is it just floating around or is it also landing anywhere?
Need to decouple money from advice, especially at the super-early stage. Money gets you runway, but without the right direction, the company will still not take off. Some folks without ability to invest can add a ton of value, and we're just judging their contribution by the size of the check, we'll just optimize for the money part.
@timz_flowers Just a single Angel. Curious about what folks feel about an individual, rather than a syndicate or Angel group.
1st... GREAT question, Rick!
the size should be.... enough? LOL but the most impactful check I ever saw was in Japan. Young founder was losing faith and this angel wrote a check for 500K yen (~$5K US) for no equity. Kid IPO'ed 4 years later. (The angel did invest a bit later.) Others here have already made the point that angels can also bring contacts and context. Rick, you;ve seen what shitty mentor can do, eh? (And just being there emotionally can be a lifesaver - we have a great founder here who is being sued by her co-founder. All we can do is be there for her. )
Angels are supposed to be some of the earliest if not the first backers of a company. And early on even a tiny amount can make a difference. If founders are doing it right then they're super-tight on spending to extend runway. So if say spending mere $500 on something would be great but is a prohibitively large expense, then an angel check helping with the same would be impactful.
Yes $500 may be an hourly rate for some, but the arithmetic is different with founders. Again if they are doing it right there likely is zero energy left at the end of the day, every single day. Not speaking of the hidden cost of splitting focus.
50-100k should be enough for a saas project to show what it is capable of. Further investments need to be earned)
@rosssaris Just to clarify, are you saying that capital needs to come from a single Angel or that that is the *total* amount of funding an early stage SaaS product should need…?
Angel investing is investing time, network, values, and capital. There's an impact from each of those 4 concepts because founders need all of the above.
With my founder cap on: If angels want to invest less than $50k its most impactful if they decide after the 2nd meeting. Time = money