Business Angels (BA)

This category contains private persons who invest part of their wealth into startups. There is a broad spectrum of business angels – from the middle manager of a bank who does a USD 20k investment into a startup every few years up to the Chinese unicorn founder who invests into dozens of startups and supports them actively on their growth path. Having said this, business angels are typically relevant in (pre-) seed rounds, in the range of USD 100k to USD 2m.

Pros

Business angels can be the most helpful supporters to build your startup – even more helpful than the most renowned VC. In fact, the abundance of savvy business angels may be the key reason that ecosystems such as Silicon Valley or Shenzhen have become so successful. Think about it: Do you think having Mark Zuckerberg as a private investor in your seed round would help you find other investors in later rounds? Attract great talent? Open doors to strategic partners? Exactly.

Cons

Equally as business angels can be the most helpful investors, they can be the worst. They can be choleric, take irrational decisions in future rounds, get involved on an operational level or make your life as CEO difficult in other ways.

Recommendation

Getting business angels into your company in early rounds is a big “go”. However, it is crucial to make your own due diligence on them – and don’t be afraid to say no if you have a bad gut feeling. Getting the round oversubscribed is crucial to do this. This website is all about getting there.