From an interview with Dr. Ian Sobieski, Managing Director of the Band of Angels conducted by the Young Venture Capital Society
“First venture funds are structurally unable to feed seed-stage start-ups. Every venture fund will do a few start-up deals at the sub-500K investment level, but the partnership structure is just not well suited to making investment decisions and mentoring a large number of seed-stage companies. Angels are exactly the opposite. Angels are very well suited for doing a lot of small deals. Any one angel might steal one deal, but you have so many people involved in the angel group that you’re able to get an aggregate coverage that’s much bigger than a similarly sized venture partnership that might be made up of just a few partners.
But, angel groups are not particularly well suited for doing large investments that require large amounts of capital to be aggregated together. So everyone has a place in the food chain. And the angels’ unique competitive advantages are most evident at the seed-stage of the food chain. That’s where angels add value by providing capital, and then they provide the same kind of value at that stage in the food chain that VC’s provide later on. They provide, in addition to their capital, mentorship for the entrepreneur in building his business from the seed-stage to the later stage.”
Leave a Reply