At what stages do Angels invest?

Angels invest at very early stages. 

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They tend to make their initial investments in the “capital gap” between the initial money provided by the founders and their friends and family on the one side and larger institutional VCs on the other. 

Although the exact numbers change with the times and also vary from region to region, think about it this way: the friends and family round is typically going to be something like the first $50-100K to get the company off the ground.

 At this stage the company has a couple founders and a reasonably well-thought-out plan, but has not implemented much of the plan and has tested little to none of it.

The early angel round is likely to be in the $250K-$500K range. At this stage the company may well have a rough “minimum viable product” and may have done some early testing with customers.

 At this early angel stage, it is unusual for a company to have many customers or much revenue – perhaps a paid beta customer or one lighthouse customer who is really interested in the solution and willing to be a very early adopter to test it out.

A later more mainstream angel round is likely to be $500K to as much as $2.5M, and these typically occur at the point where the company is starting to show a little bit of early traction. 

They may not have a repeatable sales model yet, but they have a few customers and are beginning to suspect they know how to sell it. 

This financing round is typically focused on funding a ramp up of sales and marketing investment, in addition to a bit of team build out and maybe some key additional functionality to the product.

Many angels will continue to co-invest in those later rounds. In fact, a majority of experienced angels believe such “follow-on” investing is critical to their returns. 

But at some point most angels peel off.  Unless an angel has an ultra-ultra-high net worth, they cannot afford to put endless cash into high valuation later stage rounds and still achieve an adequately diversified portfolio. 

In addition, angels tend to enjoy and be more interested in the companies at the earlier stage. The teams are more accessible, there are more ways to get involved, help and advise, and things happen more quickly and with more excitement than at the later stages when a company is just trying to grind it out for more growth.

If you’re ready to start investing, head on over to www.startuplanes.com  where they have dozens of deals. Each opportunity has detailed information on traction, team, the product, and more. There’s also a Book a call with CEO section where you can connect with the CEO for an in-depth discussion.