The stories are everywhere…VCs and Angel groups are passe’–the cool kids are raising money from “Super Angels”. Just go talk to a friendly millionaire, and he/she will simply write a check to finance your “A” round. Need a few million? No problem. Oh, and it happens quickly, too. Now where did I leave his phone number…..
Well, maybe. As usual, the truth is a little murkier.
A Board member from one startup told me recently that they had closed an “A” round with a single investor. I was very impressed, since their SaaS platform is what might politely be termed pre-Alpha. The team is strong and the founder has a track record of success, but they are a long way from significant revenue. As I dug into the detail, this “A” round turned out to be a few hundred thousand dollars. It’s a great start and will get the company up and running without pitching 20 VC firms, but it wasn’t the $3-5 million “A” round that I had been imagining.
Their story illustrates a key point–there are not many people who will write a multi-million dollar check for a Dot Com-era company launch. If you really need that much, you need to go to Sand Hill Road or find a friend who has had a huge exit. But if you are launching a lean company, you can get a lot of runway from a low six figure investor. And they are out there.
The second company is in a LA incubator, and just identified a “Super Angel” to lead their next round. He’s putting in a relatively modest amount of money, but is a successful entrepreneur and will actively support their fund-raising. His influence has already brought in several other angel investors.
A number of very active Angel investors work directly with accelerators to identify and invest in promising companies. They get in early, work to grow the company, and then take the company to their Angel group to raise a larger round. The accelerators that create relationships with these seed investors are creating real value for their resident companies.
“Super Angels” come in all shapes and sizes. The ones that can (and will) write a seven-figure check are rare. But there are many who will provide substantial early funds and lend their name to the fund-raising effort. It’s worth seeking them out.