I’ve been frequently asked lately who are considered Austin Angel Investors and though we’ve explored later stage, institutional venture capital in Austin, Texas, I realized I hadn’t put much thought to those whom really stands out as a traditional Angel investor. The distinction matters, and the question an important one, as raising capital requires that you engage with the right sources of funding, at the right stage, with the appropriate measure of progress and potential.
Critical in Austin, to answer this question, is that “Angel” be defined. We’re a nascent investment community (yes, a lot is invested and groups like Central Texas Angel Network are among the largest in the country but…) as traditional venture capital firms aren’t as established as on the coasts. What that means and what’s important to appreciate is that traditional definitions are a bit mixed up as everyone works to fulfill demand and opportunity; private equity firms often participate as venture capital firms, VC firms exists that behave more like angels, and angels or incubators say they are VCs (which technically is accurate) though they’re funding more like friends and family.
Point being, those distinctions matter tremendously as in a healthy and mature startup ecosystem, each source of capital plays an important role with distinct expectations relative to the stage, amount, and purpose of the investment.
So what is an Angel investor?
I think the definition from( ) and an important perspective from ( ).
Paraphrasing from Investopedia
Angel investors provide more favorable terms compared to others since they usually invest in the entrepreneur starting the business rather than the viability of the business. Angel investors are focused on helping startups take their first steps, rather than the possible profit they may get from the business. Essentially, angel investors are the opposite of. “angel” came from the Broadway theater, when wealthy individuals gave money to propel theatrical productions. Angel investors typically use their own money, unlike venture capitalists who take care of pooled money from many other investors and place them in a strategically managed fund.
Wealthfront CEO, Andy Rachleff adds, as you can read in his article, “most people who expect to make money as angel investors are fooling themselves.”
So, ask what the expectations are of those with whom you’re dealing.
Are they financially sound enough to be participating directly in the start of a business with zero expectation of return? Are they, like the angels of the theater, essentially patrons, both financially able and personally interested in helping you start? Lastly, can they substantially support that start? $25k checks are essentially friends and family contributions and not sufficient to start a substantial new, risky, venture; yes, that is “angel investment” but let’s discern that if someone isn’t willing, able, and excited to write a $100k check, they probably don’t meet the other qualifications. So…
Who are the critical Austin Angel Investors? Start with:
- Tom Ball
- Michael Dell
- Rony Kahan
- Pat Condon
- Andrew Busey
- Dan Graham
- Brett Hurt
- Cotter Cunningham
- Sam Decker
- Clayton Christopher