Angel investors are known for providing startups with the initial capital needed to get off the ground. However, many angel investors who invest in portfolio startups with a group of angels, take a more hands-on approach and become more involved with the startups in the portfolio. These investors are often referred to as "Archangels" due to their increased involvement and support beyond just providing financial backing and mentoring.
Archangel is a business angel who has a closer relationship with a particular startup, supporting its challenges. Archangel co-creates value for a startup in the portfolio.
Angel investors play a critical role in providing funding and support to startups. However, some angels go above and beyond just providing capital and become more closely involved with the startups they invest in. These angels are known as archangels, and their increased involvement can bring significant benefits to startups.
In this post, we'll take a closer look at the benefits of having archangels in an angel group and how you can be an archangel too.
Archangels typically have a closer relationship with a particular startup in an angel group's portfolio. As a result, they have a deeper understanding of the startup's unique needs, challenges, and opportunities. This deeper understanding allows them to provide more tailored support and guidance that is specific to the startup's situation.
Archangels send frequent reports to the leader of the angel group (the fund manager), updating the progress they have made with the startup. Apart from reporting and asking for help from other angel investors in the group, Archangels use different communication channels to a broader network of contacts and resources that they can leverage on behalf of the startup. This can include other investors, industry experts, potential customers, and strategic partners. By tapping into their network, archangels can help startups build relationships, gain insights, and find new opportunities.
Archangels are often experienced entrepreneurs or executives who have successfully navigated the challenges of building a business. They can bring valuable expertise and experience to the table, sharing their insights and knowledge with the startup team. This can be especially beneficial for startups that are still in the early stages of their development, as they may not have access to the same level of expertise in-house.
Archangels typically take a more active role in startups that are struggling or are in times of crisis. This involvement can include regular check-ins, providing feedback on strategic decisions, and helping to identify areas for improvement. By staying involved, archangels can help hold the startup team accountable for achieving their goals and staying on track. This increased accountability can also provide an added level of motivation and support for the startup team.
Archangels can bring significant benefits to an angel fund beyond just mentoring the startups. With their deeper understanding of the startup's unique needs, access to a broader network, greater expertise and experience, increased accountability and support, and potential for additional investment, archangels can be a valuable asset for any angel group that wants to increase its portfolio valuation over time. If you're an angel investor looking to get more involved with a particular startup in your portfolio, consider becoming an archangel.
Archangel is a term coined by COREangels and mainly applies to COREangels Model. This model involves "A group of angels who invest in portfolio startups where their group is managed by professional fund leaders.
There are 4 important aspects angel investors should consider before becoming archangels:
Building a trusting relationship with the founder of the startup is essential for archangels. Trust is the foundation of any successful business relationship, and it's especially important when it comes to early-stage startups. Founders need to feel comfortable sharing their ideas, concerns, and challenges with their archangel, and they need to trust that the archangel has their best interests in mind.
Make an effort to get to know the founder on a personal level and show genuine interest in the startup's success. Maintaining this relationship throughout your involvement with the startup is also crucial. Regular check-ins, open communication, and a willingness to listen and provide feedback can all help build and maintain a strong, trusting relationship with the founder.
Build a trusting relationship with the founder and maintain it throughout your involvement with the startup.
As an archangel, it's important to let the founder of the startup decide what value you bring to the table. While you may have a wealth of experience and expertise to offer, it's ultimately up to the founder to decide what support and guidance they need from you. Some founders may want more hands-on involvement, while others may prefer a more hands-off approach. It's important to have an open and honest conversation with the founder about their goals and expectations and to let them guide the relationship. By letting the founder decide what value you bring to the startup, you can ensure that you're providing the support and guidance that they need to succeed. And by staying attuned to their evolving needs and priorities, you can continue to provide value throughout your involvement with the startup.
Let the founder decide what value you bring to the startup.
It's important to be available and open to the founder of the startup. While you may have other commitments and responsibilities, it's crucial to make yourself accessible to the founder when they need support or guidance. As a feeder, not a leader, the archangel's role is to provide resources and connections to help the startup succeed, rather than directing the startup's strategy or operations. Being available and open allows the founder to seek out your advice and support when they need it, without feeling like they're being micromanaged or directed. By taking a more collaborative approach and working closely with the founder, archangels can help facilitate the growth and success of the startup. This also allows the founder to retain control over the direction and vision of the startup while benefiting from the expertise and guidance of the archangel.
Archangel is a feeder, not a leader.
Building a supportive relationship with a startup as an Archangel is a unique and rewarding experience. As an Archangel, you have a closer relationship with the startup and play a more active role in supporting its challenges. The goal of this relationship is to co-create value for the startup in your portfolio. This might involve offering your industry expertise, providing guidance and mentorship, connecting the startup with valuable resources, or even rolling up your sleeves and getting involved in day-to-day operations.
The key to success as an Archangel is to approach the relationship with the goal of simply being involved, rather than seeking immediate returns on your investment. By doing so, you can build a strong, supportive relationship with the startup, helping it to overcome challenges and ultimately succeed in its goals.
The goal of this relationship is to co-create value for the startup in your portfolio
In our next post, we will share a step-by-step guide for Archangels and explore some tips on how archangels can have healthy and effective interactions with the startup founders.
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