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It is common to see investors grouped together as angel investors, venture capitalists and so on. Yet there are important nuances within each one. Here at Bure Valley Group, we provide a network for angel investors to access exclusive investment opportunities – so we’ve come to recognise some of the unique types of angel investor over time. In this article, we share seven of the most prominent and how these can impact an investment style.
This content is mainly for a bit of fun – but we hope you also find it insightful. Find out more about our EIS and other investment opportunities by visiting our portfolio page here. To enquire regarding our latest projects and funding, you can reach us via:
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#1 The mega angel
The defining trait of this angel investor is the huge volume of startup investment he/she engages in. This can be a strength and a weakness. On the one hand, it allows more diversification over a range of startups in different sectors, industries and markets – protecting the overall value of the portfolio if one (or more) of them fails. On the other hand, this approach can lead to the investor becoming too “thinly spread”, making it difficult to focus appropriately on each one.
#2 The dominion angel
This angel type is often witnessed on Dragon’s Den, where a dragon withdraws from a startup’s pitch due to a lack of interest in their sector/industry. A dominion angel, therefore, typically likes to focus his/her startup investments within a specific vertical – perhaps one that they build their own careers in (e.g. fashion or tech).
#3 The familiar angel
For a startup, quite often the first investors come in the form of friends and family. These can be a great source of funding as there can be a strong pre-existing relationship between investors and founders, allowing them to work constructively together. However, startup directors need to be careful not to allow these investors to exert unwelcome influence, advice or interjections.
#4 The devotee angel
These angel investors can be very difficult to find. Yet they can be gold dust to startup founders when identified. Simply put, these investors hear the startup’s vision or story and instantly get excited about it – believing the narrative and wanting to get involved. Perhaps its an ethical or environmental cause which resonates strongly with their values, whilst holding out promising investment returns. This type of investor can be a huge boost and source of moral support for a startup founder. However, his/her excitement can sometimes carry over into a lack of critical eye which is needed to help grow the business to success.
#5 The lone-wolf angel
Many investors who focus on early-stage companies like to use fund managers who build up a portfolio for them – taking out a lot of the leg work. Others, however, like to slowly, carefully and diligently build up a range of startup investments via a portfolio allocation model. The main focus is investment return. The advantage here for startup founders is that getting their approval is a huge thumbs-up for their business model, giving confidence to other interested investors that the startup is built on strong foundations. However, this type of angel can show little interest in the business once the investment is made.
#6 The entertainment angel
The majority of angel investors take their startup investments seriously – allocating significant portions of their wealth into early-stage businesses to access exciting returns. A minority, on the other hand, comprise super-wealthy individuals who commit large sums into startup investments – which represent a tiny fraction of their overall net worth. This is mainly done for a bit of fun, so they can talk about their interesting startup investments at dinner parties. These angel investors can be helpful for a startup founder if they can offer some much-needed funds, as well as useful connections which could open up business opportunities later. However, the danger is that this type of investor shows little concern for their investment return and so fails to adequately assist the founder(s) in growing the company.
#7 The fellow-founder angel
Entrepreneurs tend to comprise certain personality types which are not common in the rest of the working population, employed in a job. As such, entrepreneurs can often easily relate to each other and network quickly – forming a kind of unspoken solidarity. For those with large sums ready to invest, as such, they can often be the first people who are ready to take a leap of faith in another founder’s startup idea. Their status as peers can also lead them to be willing to help quickly. However, this angel investor may not hold large sums due to their own business commitments, and may not offer the level of constructive criticism needed to help a founder.
Conclusion & invitation
Which type of angel investor are you? Perhaps you see yourself very clearly in one of them, or a little bit in two or more. It could even be that you might describe yourself differently as an angel investor. We’d love to hear about it!
Interested in finding out more about the exciting startup projects we have on offer to investors here at Bure Valley Group? Get in touch today to start a conversation with our team and discuss some of the great investment memorandums we have available here:
+44 160 334 0827