5 types of Angel Investors - Find the right Angel
Do you need finance for your startup? Don’t worry, angel investors are ready to support you.
Angel Investors are all around the world, they can be anything from super professional to complete amateur.
Here we will explain the biggest 5 types of Angel Investors with the goal that you know where to search for great angel investors.
Angel Investors
I recently wrote a detailed article on venture capital, which was very long and complicated because venture capital is very complex. But things are much easier for angel investors and completely different from venture capital.
The angel investors invest their own money and invest anything from $10,000 as far as possible up to $500,000. Mostly in the very early stages of a Startup, obviously in the Angel phase, but also the Seed stage.
What makes Angel investors tricky is that they are all unique. That's why we want to introduce 5 different types of Angel Investors to get some motivation on where you can track down Angel investors.
#1 Super Angels
Super Angels are professional angels who invest a lot, they can have anything from 20 investments to hundreds of investments.
Pros:
- As they do a lot of investments they know what they’re doing and are usually pretty good at investing
- Getting an investment from a super angel is a stamp of approval. For instants super angel Ron Conway was an angel in Facebook, getting an investment from an early Facebook investor is clearly a stamp of approval.
- They’re usually well connected and can help with raising more money later.
Cons:
- They have a lot of investments and therefore they won’t have a lot of time for you as their time is spread out between all their investments.
#2 Friends and Family:
Friends and family invest because they know you, love you, and believe you. This group is sometimes called Friends, Family, and fools because these are not professional investors and can be a bit naive. Always remember that angel investing is very risky and things don’t always go as planned, so only take money from friends and family that they can actually afford to lose. If you are a first-time founder friends and family may be the only way to get an investment.
Pros:
- As they are friends and family there is some built-in trust and therefore easier to get an investment for a first-time founder.
Cons:
- No value add as they rarely know anything about the business or what you are building.
- They are inexperienced as investors and may interfere in the business when they shouldn’t.
#3 Fellow Founder Angel:
There are a lot of successful founders out there that have made a bit of money and are ready to invest some of that into Startups. For them, It is a way to give back and hopefully make some money too. Some of these investors make a profession out of it and become Super Angels.
Pros:
- As founders, they have a good understanding of what it takes to build a business.
Cons:
- Some of them really don’t want to invest, but do it give back and really don’t want to be investors.
#4 Specialty Angel:
Specialty Angels are usually people that have worked in an industry for a long time and see opportunities there. They will invest in Startups that solve the problems that they see in the industry.
Pros:
- They are often well connected in the industry, which can be useful.
- Lots of domain knowledge.
Cons:
- With lots of experience in the industry, the specialty investor may be set in his ways and therefore not agree with a more disruptive strategy for the industry.
#5 Bored & Wealthy Angel:
These are people that are wealthy and bored, could be doctors, dentists, and lawyers, they are often bored with their day job if they have a job and need stories to tell for the cocktail parties. They want some excitement and want to be involved in something exciting.
Pros:
- Some of them have a lot of money and are willing to invest.
Cons:
- Can be high maintenance as they may be very interested in the business without really contributing.
Conclusion
One of the pitfalls here is that whereas a venture capitalist is a professional investor most angel investors are not. An Angel investor is an individual, it is a person, not a fund. They are a crucial part of any Startup and Startup ecosystem.
