Are Super Angels Taking Over the World of Angel Investing?
With all this excitement about Super Angels investing in Silicon Valley startup ventures, are they beginning to dominate, dare I suggest, take over the world of angel investing? Or, even the world of seed/startup stage investing?
Maybe in their own minds, they are. But Chris Yeh points out that Super Angels are doing about 200 deals per year. Let’s be generous…perhaps they are doing 500 seed/startup deals per year in the US. Despite my sensitivity towards the inflated egos of our Super Angels, according to both Scott Shane and Jeff Sohl, US angel investors are funding roughly 50,000 companies per year, about 25,000 at the seed/startup stage of development. Whoa…that means that Super Angels are funding less than 2% of US angel deals (Chris Yeh estimates only 0.5%). What is all this hubbub about, anyway?
I can tell you. Silicon Valley is an important center for entrepreneurial activity in the world…and Super Angels have been very disruptive there. The valuation of seed/startup deals in the US is down almost everywhere in the US, except in Silicon Valley and Boston. According to my sources, competition from Super Angels is driving prices higher for angels investing in Valley startups. Is that good for the entrepreneurial ecosystem? I doubt it. Higher valuations reduce investor returns. Reduced returns drive investors out of the market. (Ask our VC friends!) Fewer investors in startup ventures cannot be good for our economy.
It’s a GREAT time to be an angel. Find a group and jump in!