I’ve been an angel investor for quite a few years, and I have come across lots of different kinds of angels. Here’s my first stab at trying to classify them !
Many angels are like me – senior citizens, who want to be a mentor, and share their wisdom, experience, and some of their spare income with youngsters, so we can help them to grow. We are happy to trying to coach the next generation, to help them to become successful (and hopefully not lose too much of our money in the process).
Others are HNIs, who want to invest in startups because these allow them to diversify their investments. Startup are an uncorrelated asset class, and will hopefully allow them to maximise their ROI, if they are able to pick the right startups to back.
Others become angels because they have a social conscience. They pick companies which have social impact, and will back social entrepreneurs because of the potential good which they can do, because they want to make the world a better place.
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Some are “seat of the pants” investors, who fall in love with the founder or his idea, and are happy to give him money to back him. They can often be very undisciplined about the way they do this because they do not follow a structured process.
Some are ex-entrepreneurs, who have sold their own companies successfully, and don’t want to work in the trenches anymore. They are happy to share their hard-earned experience and expertise with the next generation , to help them become successful as well.
A few are “brand-name” angels, who are wooed by founders, because even a token investment from them gives their startup a lot of credibility. They are happy to help the startup ecosystem grow.
Some investors love technology, and are keen on seeing how it can be leveraged to disrupt the status quo. They back entrepreneurs who want to do cutting edge stuff, which no one else has done before. They want to be seen as being different from the rest of the world – as being funders who back innovators who think “out of the box”. They are happy to take outsize bets, because they want to fund the next generation of companies which will improve the way we live.
Many are piggy-backers, who are happy to invest their money simply because their friends (who they think are smarter than them) are doing so. They are typically part of a syndicate or a network , and are happy to add their contribution to the pool of funds which can help startups to grow.
And finally you have the newbies, who want to become angels, because it’s become fashionable, and they think it’s a cool way of getting rich quick!