Types of Angels

An Angel is an individual who meets accreditation criteria of the Securities and Exchange Commission. Simplistically, it is a net worth of about a million dollars or $200K in annual income. One declares oneself to be an accredited investor when making an Angel investment. Its primary purpose is to provide legal protection to the entrepreneur from investors seeking redress for failed companies. Functionally, Angels can be described by two endpoints and by extrapolation all other Angels can be described between these endpoints.

Early Seed Stage Angel: This Angel, of which I am one, invests in companies that have an idea, 1 or 2 founders, no revenues, no completed product and no history of success.

Late Stage Angel: This Angel invests in companies that have a complete management team, a completed product, customers with revenues. They act like VCs in the due diligence process. Most Angel groups are late stage angels.

Super Angel (micro VC): These Angels are not technically Angels. They are not investing their own money but investing from micro VC funds of $20 to $60 million dollars. They are very active in the seed stage and behave like true Angels.

Archangel:  “When you need a million or more from an Angel.” This is occasionally a panel topic. This group does not exist.

Faux Angel: These are service providers, intermediaries, investment bankers, and job seekers who masquerade as angels. These generally work on a fee basis on easy to achieve goals e.g. “We get paid upon you receiving a term sheet”. Please check out and verify every Angel you intend to deal with.

Tourist Angel:  These are retired executives usually with golden parachutes or business people in old line industries who have cashed out.  Many are arrogant and full of themselves. They generally come in at market top frenzies to cash in on these easy opportunities. When a large number of them become visible, it generally signals a market crash is imminent.

Unicorn Angel: This Angel has deep domain expertise, rolodex to all the industry executives, extensive Angel and VC networks that will ensure subsequent funding, extensive management capabilities, patience and deep pockets. This mythical figure does not exist.

Flip/Flop Angel: This has been popularized by recent political figures. This is an Angel that becomes an entrepreneur, then an Angel, then an entrepreneur, then …..

Renaissance Angels: These Angels are intellectuals who pursue Angel investing for knowledge and satisfying experiences. Their portfolios are very diverse and eclectic having no discernible patterns. Financial returns are of secondary importance. I know of only one other Renaissance Angel besides myself.