Redefining Angel Investing: Why it Might Not Be Your Golden Ticket
For decades, the prevailing wisdom has been for startups to secure seed funding from angel investors before turning to venture capitalists. The idea is that angels, taking the biggest risk, should invest in the earliest stages of a company, potentially reaping the biggest rewards. However, this narrative has inadvertently led to a situation where angel investing is often stuck in a cycle focused on pre-seed to series A deals.
Forbes said this about angel investing “ Angel investors prefer to get involved in the early stage of a company, at the “seed” or “angel” funding phase. That could mean the angel invests when the company exists only as an idea, or it could come when a business is already up and running.” As someone who has spent over a decade in the angel and VC world, I’ve witnessed firsthand the challenges this narrative presents.
The Dilemma of Due Diligence
Due diligence, the meticulous process of examining a company’s inner workings, can be a stumbling block for angel investors. It’s the crucial audit that helps investors determine if a company is worth their investment. However, due diligence can be time-consuming and often requires joining multiple angel groups to gain access to both deal flow and assistance with the process.
While larger angel groups may have dedicated teams for due diligence, many groups are run by volunteers, leaving gaps in the process. This lack of streamlined due diligence can make angel investing a daunting task for individual investors.
Bridging the Gap: A Vision for Change
As I ventured into supporting Female Founders in raising capital, I observed cracks in the system. Startups struggled to find angel investors, while angels found it challenging to connect with the right companies. Moreover, top-tier funds leading series A through series D rounds sought additional investors but hesitated to accept smaller angel checks. — Lauren Kane, Executive Director of GHWIN
The call for change in the venture world is loud and clear — angel investing is missing the mark, and it’s time for something different.
Redefining Angel Investing
What could this change look like for angel investors?
- A Supportive Community: Imagine a virtual space where like-minded individuals gather, share experiences, and collectively grow as investors. A community that meets you where you are and helps you achieve your investment goals.
- Top-Tier Deal Flow: Access to curated deal flow from proven top-tier funds with a track record of success. This ensures that angels get the best opportunities, aligning with their interests and preferences.
- Later Stage Access: Break free from the narrative that pigeonholes angel investors into early-stage deals. Gain access to opportunities ranging from pre-seed through series D, empowering investors to explore a broader range of deal stage.
- Curated Deal Flow: No more sifting through vague opportunities. Specify your preferences and receive tailored deal flow. Whether it’s series A companies in the health and wellness space with BIPOC founders, specificity is key.
- Expert Guidance: Have technical questions about a potential investment? Picture having experts at your fingertips. This hive mind approach fosters a sense of community and ensures that investors can make informed decisions.
- Collective Investment: Join forces with like-minded investors to have a louder voice on a company’s cap table. By collectively advocating for investor rights, angels can protect their interests and contribute to a stronger ecosystem.
By providing angels with these tools and pathways to success, the Global Health & Wellness Investor Network (GHWIN) is changing the game. This transformative approach ensures that angel investing becomes more accessible, transparent, and rewarding for those who play a pivotal role in shaping the future of innovative startups.
