Why Dozens Of Angel Investors Are The Hot New Trend

The UK startup Lawhive has 31 sole proprietors and two institutional investors – 11 times more than the investors already working at the startup when it raised $2 million in April.

“It was like having a panel of the best senior advisors in the world also Happened to invest in the company,” says founder and CEO Pierre Brunner.

Angel investors in Lawhive include Bloom & Wild CEO Aron Gelbard and co-founders of fintech soonicorn Primer. Proner has made an Airtable that lists each owner’s areas of expertise so they know exactly who they can reach for what.

And he’s not the only European founder who has tons of angels on his table.

If you had no more angel investors than wedding guests, would you miss the opportunity?

Early stage founders in the most important centers of Europe are increasingly bringing in many, if not dozens, of start-up operators and founders as investors thanks to a new generation of tech platforms.

These companies facilitate the consolidation of small investors into a single check – also known as a Special Purpose Vehicle (SPV) – and significantly reduce the hassles of management and costs associated with attracting additional investors.

It’s a big change in strategy: in the past, founders generally tried to limit the numbers of investors.

“People were wary about having too many people at the cover table, and bold investors were strongly advised not to. I think part of that was because the moderator was getting too many signatures,” says Hector Mason, partner at VC Episode 1 Ventures.

“But it is overlooked that, in fact, those people at the cap table can be of value to you and that value may actually outweigh the official’s burden.”

The founders say that “value” can include introductions to potential clients and investors or simply advice regarding the day-to-day running of the business. Marius Heep, co-founder of Junto in Berlin, the B2B skills-raising platform, told Sifted that It has more than 50 angel investorswhich he hopes will help the company reach potential clients and coaches in fast-growing technology companies.

New technology platforms allow for many angel investors

One such platform is Odin. Helps angel investors invest as a group or syndicate; It says that there are approximately 10-15 angels who invest together in every single deal on its platform. Another popular platform is Vauban, that was Purchased by US fintech Carta Earlier this year.

Use Junto Bunch – a similar platform, triggering a 7.3 million euros founding round last month From Cherry Ventures – To take investment from more than 50 angels. And in a highly descriptive move, use Bunch Bunch to leverage investment from over 25 Angels around the world.

Grouping angels together isn’t just good for startups. It also makes it possible for angels who can’t write five- or six-digit checks to invest in funding rounds, opening the way to a much larger group of people — including founders and operators who haven’t yet made significant cash. Odin says the average ticket size on his platform is £3,000.

“I’m not a retired founder so investments are between £5,000 and £10,000? I would only be able to get one or two a year. And I knew I needed to make 20 for it to really make sense. [given the risk profile of startup investments]Anthony Kolias, a London-based businessman who is now investing with other angels using Odin says.

Collias had a flow of deals from his network, and his friends had the money to invest angel, but he wasn’t able to combine these two together until Odin made it possible with lower fees and by allowing smaller individual checks. Now, his syndicate invests around £20,000 on average per deal, with individuals contributing between £1,000 and £15,000 each. He says the group expects to close five to 10 deals a year.

The Stage, a UK-based demo day that puts early stage startups before enterprising investors, is also using Odin’s program to bring angel investors into its deals for as little as £1,000, says Mason from Episode 1, who also runs The Stage. One company, EV-charging company Bonnet, raised investment from 29 test-day attendees last year and has continued to grow €5 million from Lightspeed, GV, 20VC and APX.

Photo of Bonnet founders, Elliot Macabo (left) and Patrick Reich (right).
Bonnet founders, Elliot Macabo (left) and Patrick Reich

But what do the angels get out of it?

One such individual investor in Bonnet was Harry Nightingall, a product manager at Expedia who has been investing in startups since raising £10 in a crowdfunding campaign on Crowdcube in 2011.

Unlike crowdfunding, where you might be one of thousands of investors, he says doing angel investing gives him a way to learn and give back — with product advice, for example.

Collias are also part of it for learning. “I know what’s going on in the founder’s business, and some of the dynamics within the market that I’m not involved in,” he says. “I think it’s a really good 50% personal investment strategy, 50% fun and interesting and a way to build a network.”

Others feel it is a way to support diverse early-stage founders who may not have access to investor networks or information.

“I spend a lot of time with the founders of a pre-existing organization doing presentations, making lists of people they should talk to in order to increase their first round of funding and help them think through their business model,” says Natasha Jones, an investor at Octopus Ventures and an investor Angel on the side.

She started investing as an angel about a year and a half ago – although her day job as a VC means she can only support companies that wouldn’t be a good fit for her team at Octopus.

“I also want to help them understand the lens through which they will be valued by investors in the future,” she adds.

The increasing ease of investing as a group and pooling smaller checks is also bringing more diversified investors into angel investing. Andy Ayim runs Angel Investing School, a program for training new angel investors. He recently brought together a group of eight black angel investors in the UK to support a company called Ava Estell, a direct-to-consumer skincare company founded by Ghanaian entrepreneur Yau Okiere. It raised 126,000 pounds from the SPV formed by the Angels.

Ayim says he brought the investor group together “with just a few messages or WhatsApp messages to new and experienced angel investors” in his network. He adds that the special purpose company “personalizes” the investment, allowing founders to tap into the Angel Network and forge close relationships with angels.

“It also really changes this power dynamic,” he says. “The founder is someone who has taken the leap of faith and financial risk. We have a privilege to support them if they let us. Rather than reversing that dynamic where the founder feels they need to invest. [and are privileged to receive it]. ”

Eleanor Warnock is Sifted’s Deputy Editor and host Sift podcast. She tweets from Tweet embed

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