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The term ‘super angel’ emerged in the early 2010s to describe a new class of angel investors. These individuals are usually former entrepreneurs with a high net worth and strong networks that invest their own money into early-stage startups. The concept of a super angel falls somewhere between that of an angel investor and a traditional venture capitalist.
Unlike angel investors, who can invest as little as $1,000, super angels typically invest between $250,000 and $500,000 on average and/or across a more extensive portfolio. Since most super angels have previously built companies of their own, they tend to take on a more active role in supporting the growth of their investments. While angel investors may make more passive investments, investing is usually the primary focus of a super angel's profession.
"The conventional wisdom, which some say has fallen by the wayside as older firms have matured, is that returns are better when VC firms are entrepreneurial — nimble, forward-looking, well-connected, and armed with an appetite for risk."
While super angels invest a majority of their own money others may go on to raise micro funds similar to a traditional VC. These funds fall below $50 million in size and are typically raised from other high-net-worth individuals and family offices.
Mirco-VC Funds:
The rise of super angels was initially fueled by the first generation of successful tech entrepreneurs who achieved success in companies such as PayPal and Google. As these individuals accumulated wealth, many decided to invest back into the next wave of startups, drawn by the potential of high returns in early-stage investing. Unlike traditional VCs, which have an 8 to 12-year lifecycle in which they enter and exit investments, some super angels make routine exists within four years or less.
"While angels count on passing the companies they invest in up the food chain to conventional VCs, super angels routinely bypass the big firms. Instead, they will let their entrepreneurs sell to a large company like Google, Facebook, eBay, or Microsoft after the start-up has proven their concept works but before they have developed a clear market (which often requires bigger cash infusions)."
However, the investment lifecycle for super angels can take a number of paths. Given the right company, some will choose to pass on a portfolio company to a venture fund for later-stage funding which is great for generating quality deal flow. In summary, super angels are typically “making a lot of small bets, hanging on to a few of the most promising, and quickly selling the rest for a modest sum.” By taking a faster approach, super angels can support early-stage startups while maintaining the potential for significant returns.
Although a diverse portfolio can help to spread investments and offset risk, providing individual mentorship per portfolio company can be extremely time-consuming. Additionally, investing personal money into companies at such early developmental stages brings higher risk due to the uncertainty of their success.
Since super angels are often investing in multiple companies, there is a limit to both the financial and individual resources each startup can access. While initial investments are valuable, startups will have to manage follow-on funding as they scale. It’s also important to confirm alignment between the startup and super angel pre-investment. Scoping out any potential risk such as investments with competitors can help mitigate conflict early on.
Ben invested in 30 companies and was the first investor and founding advisor to quip, Caraway & Arber before each had its name.
Mike has invested in several companies, including Twitter, Twitch.tv, Clover Health, Okta, Outreach, ngmoco, Chegg, Bazaarvoice, and Demandforce.
Chris is known for his early-stage investments in technology companies like Twitter, Uber, Instagram, Twilio, Stripe, and Kickstarter.
Joanne has backed over 100 companies with some of her most notable investments including Full Harvest, Lately, HowGood, and Clutter.
Aydin is well-known as an early backer of several iconic companies including Adyen, Shopify, Pluralsight, Credit Karma, Fitbit, Rovio, Meraki, Guardant Health, and Soundhound.
Rebecca leads an early-stage investment in LendingClub, which turned into the largest US technology IPO of 2014. Other successful early bets include Luminar and Doximity.
Ron made early investments in companies such as Google, PayPal, Facebook, Twitter, Tumblr, and Airbnb.
Caterina co-founded the photo-sharing site Flickr, which sold to Yahoo, before co-founding Hunch, which sold to eBay. Fake has backed Kickstarter and Etsy, among tens of others.
Jeff has helped numerous companies reach successful outcomes, including Fitbit, Sendgrid, Eventbrite, Postmates, Mint, Wildfire, and Poshmark.
Interested in learning more about super angels? Check out these additional readings.