By Carol TiceOnce upon a time, there were venture capitalists and there were angel investors, and it was easy to tell them apart. VCs funded big-money deals, and angels brought only tiny, seed-funding amounts.
That's all been changing in recent years, though, with the rise of angel syndicates. Thanks in part to the Internet and ease of communication, many angel funds are banding together to fund startups. An example was the $1.2 million angel-funding round scored last fall by San Francisco-based Optimizely. The funders were 21 individual angels including movie star Ashton Kutcher.
Which raises the question of whether a company should be seeking VC or angel funding. In a recent column, famed VC Fred Wilson opined that if your product is not yet out on the market, VC funding is inappropriate, as there is too much risk. It's more of a situation for angel investors.
How do angel syndicates come together? Some funds have formed informal alliances with each other and often provide funding to each others' deals. The Internet is also enabling angel syndicates with project-management software such as AngelSoft. With AngelSoft, angels can submit their deal to the platform and let other angels take a look.
Changes in how VCs invest have also spurred the creation of angel syndicates. Entrepreneur Jordan Cooper wrote recently in his blog:
Often, you only need to know one angel to get a deal rolling with a syndicate -- if the angels like the offer, they'll contact other angels and solicit them to get involved in the syndicate and help fund the deal.
Is your company looking for angel funding, or maybe venture capital? Leave a comment and tell us about it.
Photo via stock.xchng user ilco
That's all been changing in recent years, though, with the rise of angel syndicates. Thanks in part to the Internet and ease of communication, many angel funds are banding together to fund startups. An example was the $1.2 million angel-funding round scored last fall by San Francisco-based Optimizely. The funders were 21 individual angels including movie star Ashton Kutcher.
Which raises the question of whether a company should be seeking VC or angel funding. In a recent column, famed VC Fred Wilson opined that if your product is not yet out on the market, VC funding is inappropriate, as there is too much risk. It's more of a situation for angel investors.
How do angel syndicates come together? Some funds have formed informal alliances with each other and often provide funding to each others' deals. The Internet is also enabling angel syndicates with project-management software such as AngelSoft. With AngelSoft, angels can submit their deal to the platform and let other angels take a look.
Changes in how VCs invest have also spurred the creation of angel syndicates. Entrepreneur Jordan Cooper wrote recently in his blog:
"Large venture capital firms are issuing term sheets committing to invest between $500K and $1.5M in early stage companies, and then offloading anywhere from $100K-$500K of the round to professional angels and seed funds."So you can find angels getting involved in a round that involves VC firms, too. The lines are blurring between the two categories.
Often, you only need to know one angel to get a deal rolling with a syndicate -- if the angels like the offer, they'll contact other angels and solicit them to get involved in the syndicate and help fund the deal.
Is your company looking for angel funding, or maybe venture capital? Leave a comment and tell us about it.
Photo via stock.xchng user ilco
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