Chubby Brain_Logo

What is a Super Angel? It’s Complicated

Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

If you are a startup or small business seeking investment for your business, you’ve likely heard the term “Super Angel” as of late.  If you’ve gone through our Funding Recommendation Engine, our algorithm may have suggested a few investors whose descriptions describe them as super angels.  Because of this, we have received a few questions from entrepreneurs about what the term means and how these super angels differ from angel investors and venture capitalists.

Since the term is relatively new, and we couldn’t find a place offering a clear perspective on the question, we thought we’d address it here using the input of prominent people in the startup investment industry.

The definition to-date has been just a bit nebulous.  There are two schools of thought as to what a super angel is.

Super Angel Investors

A Super Angel is a Really Really Active Angel Investor

This is the nebulous definition of a super angel, but one that is quite popular.  Super angels are angel investors who are really active when it comes to making angel investments in young, emerging companies.  They’re so active, in fact, that they’re “super active” is how the logic goes (we think).  It’s also worth noting that super angels in this definition are investing their own money in these companies.

The obvious challenge of this definition is that ‘really active’ is relative.  Do you have to do 6 deals per year to be considered active?  Or do you have to be in the top quartile or decile of angels in terms of deal activity to be a super angel? Layer on top of this that getting and measuring angel data has historically been difficult, and it becomes apparent that super as measured by activity is a messy proposition for angels.  (Creating a list of super venture capitalists, although there is really not such a thing, is easier because data is available)

But putting aside measurement challenges, this definition of super angel requires 3 ingredients:

  1. A Person
  2. Investing Their Own Money
  3. A Lot

Super Angels Have Their Own Funds

This is the other definition that seems to be gaining some traction although it also suffers from “controversy” of its own (more on that below).  Here’s a view on Super Angels courtesy of the Wall Street Journal.

Super angels have professionalized the practice and show some similarities to full-time venture capitalists.

Many super angels have begun adding to their own investments by raising funds from outside investors. Unlike traditional angels, they also take a hands-on role in helping their start-ups. Like most angels, however, they still deal in relatively small sums of money, often investing $25,000 to $250,000 in a start-up.

So per this definition, Super Angels invest like angel investors, i.e., smaller amounts, but do it with not just their money but via external funding they’ve raised.

Elad Gill of Mixer Labs offers more granularity in this answer on Quora where he describes super angels as follows:

Most “super angels” at this point typically have the following characteristics:

  • Small institutional funds (this was not always the case, but is today).  By “small” I mean fund sizes typically in the ~$15 million to ~$70 million range (these numbers are inexact).
  • Investment size. They invest $x00,000 to a million or so in funding in a given round.
  • Board seats.  Many of them *may* take a board seat (and will step down with a “full” venture round where the VCs take over the investor seat)
  • Value add. They often are very good at providing introductions, strategic advice, etc.
  • Upstream of VCs or co-invest in Series A/seed. Super angels are not viewed as directly competitive with VCs (and may often co-invest), although they may sometimes compete with traditional VCs for a seed round.
  • Lead rounds. The super angels often will help pull together a broader syndicate for the entrepreneur if useful.
  • Started off investing their own money, then raised a fund to scale investments. Many super angels started off investing their own money and as their track record grew they raised funds

This definition suffers from fewer limitations than the first definition in that who is a super angel is easier to determine.  If you raise a small fund after investing on your own, you’re a super angel, right?

Not so fast.

You’re Not a Super Angel, You’re a Micro Venture Capital Firm

But once you have a fund, why are you still an angel of any kind – super or not?  This is the opinion of several including Mark Suster of GRP Partners who threw down the gauntlet and recently wrote:

There is no such thing as a super angel, only “micro VCs” - Ron Conway said what I had been preparing to say, “there’s no such thing as a super angel.”  Either you’re an angel or you manage professional funds.  Period.  If you’re an angel you invest your own money and you have nobody to answer to except your spouse.  And you can have ulterior motives like helping people or being involved with “cool stuff.”  If you’re investing other people’s money you’re a professional money manager.  If you invest it in startups you’re a VC professional money manager.  Now we can call you a seed-stage VC or a micro VC.  We can even acknowledge that you might work differently than traditional VCs.  But you’re not an angel.  So I wish this separate definition would go away.  Stop to think about it, why would a super angel act more like an angel than a VC?  A: Only because it’s a nicer branding for entrepreneurs.  That’s all.  You still have a fiduciary responsibility to your investors (LPs) to maximize returns.

In Mark’s view, the term super angel as applied to small funds is more about marketing.  Ron Conway, founding partner of “super angel fund” SV Angel and the individual who many regard as the Godfather of Angel Investing, seems to agree with Suster in substance as he stated at TC Disrupt.  Specifically, Conway commented, “I think Super Angels versus VCs is a bunch of confusion. Super Angels are just small VCs.”

So Now You’re Clear About What a Super Angel Is, Right?

Ok, so the reality is that super angel still doesn’t have a clear definition.  Hopefully the entrepreneurial community will begin to coalesce on a definition that clearly identifies what a super angel is vs. what an “un-super” angel investor is vs. what a micro VC firm is.  In the interim, if you are an entrepreneur going through our Funding Recommendation Engine and you see the term super angel come up in the recommendations, know that these angels are writing checks.  And definitions aside, if you are an entrepreneur seeking funding, this is what you probably ultimately care about.

If you’ve read this far, you definitely should:

You can leave a response, or trackback from your own site.

9 Responses to “What is a Super Angel? It’s Complicated”

  1. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    [...] the “What is a super angel?” question we get from founders going through the Funding Recommendation Engine, the next [...]

  2. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    [grin] Welcome to the nebulous, ever-shifting landscape of angeldom. I think you’ve done an excellent job of recapping the current bidding in the angel definition game. But I believe that there’s one additional factor you didn’t mention that may actually be even more important, and that’s the visibility/connections of the angel in question.

    Before the recent burst of activity of SAs like Aydin, Roger, Josh, Dave, et al raising funds (and, for what it’s worth, I agree with Mark and Ron about funds being funds, period) the “Super Angel” moniker was generally used to refer to high profile investors who had big name recognition and good industry contacts. If they also did a lot of deals, invested large amounts of money, led rounds themselves, and provided hands-on value (usually PR and introductions) for their companies, that was just icing on the cake.

    But the fact is that some of the better-known Supes actually were/are writing pretty small checks ($25-$50K), doing relatively few deals (in some cases fewer than 5-6 a year) and not being involved much after the investment. With the changing landscape and rise of the seed funds, however (started initially by Josh Kopelman and Howard Morgan at First Round Capital coming up from the bottom, and funds like CRV and DFJ coming down from the top) the lines are getting pretty blurry and the players are routinely shifting categories. It’s hard to call Reid Hoffman a super angel now that he’s a full-fledged VC with his own seed fund…but what do you do about the 75+ companies he’s already invested in personally?

    All in all, the definitions don’t mean much, but the result is a great one for entrepreneurs. There has been a rapid acceleration in the number of seed deals getting done around the country (and globally, for that matter; were you aware that Angelsoft now supports angel groups in over 60 countries?), at the same time that the cost of starting a technologically-leveraged business has been dropping drastically.

    My guess (and hope!) is that this trend is going to continue for the foreseeable future, and I consider this a Good Thing.

  3. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    David – Thanks for reading and for the comment. It’s great to have the candid perspectives of an angel investor like yourself.

    A few questions we’d love to get your thoughts on:

    1. Care to disclose the Super Angels who are writing small checks and doing few deals, i.e. those acting less than “super”?
    2. Do you think designating any angel investor as a “super angel” makes sense? Or as per Mark Suster and Ron Conway’s suggestion, if it’s your own money, you’re an angel investor and if it’s someone else’s money, you’re a fund?
    3. If super angel as a designation makes sense, what definition would you use?

    Your final point is a great one. Entrepreneurs only stand to benefit from this boom in investors although we do hear from them that it is overwhelming. The ever-increasing choices are the reason we launched the Funding Recommendation Engine to help entrepreneurs make sense of and identify investors who match their business based on their actual funding history.

    Thanks again for commenting. Look forward to your thoughts on the above.

  4. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    Nah, I’m not getting into this particular shoving match. That’s why you see me answering here, and not on TC or the blogs of any of the participants [grin]. But my point is that there is absolutely NOTHING WRONG with writing small checks, and that in my opinion, as long as an investor is writing ANY check, the value that he or she brings to the table is completely in the eye of the entrepreneur. And if said entrepreneur believes that taking a $10K check from a a nationally-known name who can introduce you to other, bigger check writers (or customers, or strategic partners) is a good thing, that’s perfectly fine!

    I’m not a big fan of the term Super Angel because I’m not sure it serves any useful purpose. If we eliminate the microVCs from the category the way Mark Suster, Ron Conway and I all would, that takes out probably 90% of the so-called supes (including Josh Kopelman, Aydin Senkut, Jeff Clavier, Mike Maples, Reid Hoffman, Dave McClure, Roger Ehrenberg, Josh Kushner, Paul Allen, etc. etc.

    The remainder, the ones actually investing their own funds, are probably best described with terms such as “active” if they do lots of deals, “deep pocketed” if they write large checks, “well connected” if they can introduce you to good people, “well known” if they have high name recognition, “smart money” if they are great strategic advisors, “experienced” if they’re willing and able to lead a round, etc. I guess that someone who scores high in many or most of the above categories could legitimately be described as an all-around Super Angel…but anyone who fits that definition is probably already figuring out how to raise a fund! So perhaps it’s a catch 22 :-)

    Coming back to the ‘real’ angels (and not those with funds), the average active angel investor member of a legitimate US angel group has done roughly 10 deals, and averages one or two new ones a year, with an average initial check of about $25K. My guess is that there are probably 25,000 of those in the US. At the ends of the angel spectrum are the one-off angels, who somehow found themselves doing one, or perhaps two, equity deals, and the estimates are that there are probably 250,000 of those. Finally, the top end of the market is occupied by the ActiveDeepPocketedWellConnectedWellKnownSmartMoneyExperienced folks you’d like to call Super Angels, and depending on where you draw the line, they have probably each done between 25 and 125 deals, and there could be anywhere between 250 and 2500 of them.

    Does that answer the question? :-)

  5. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    David – Another thoughtful response so thanks. Although we of course do wish you’d name names :)

    Hopefully your comments engender some additional informed perspectives/debate from others in the community over time.

  6. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    [...] we’d asked What is a Super Angel? and then profiled 14 “super angels” (aka micro venture capital firms) and what [...]

  7. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    What is a Super Angel? It’s Complicated…

    If you are a startup or small business seeking investment for your business, you’ve likely heard the term “Super Angel” as of late. If you’ve gone through our Funding Recommendation Engine, our algorithm may have suggested a few investors whose descrip…

  8. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    [...] weeks ago, we’d asked “What is a Super Angel Investor?” trying to provide a bit of clarity to startups, entrepreneurs and ourselves as to what this [...]

  9. Warning: Illegal string offset 'keywords_time' in /home/chubbybrain/public_html/blog/wp-content/plugins/internal_link_building.php_/internal_link_building.php on line 103

    [...] has been much noise recently about who’s the better investor: the newly minted Super Angels, or the traditional venture capitalists of Sand Hill [...]

Leave a Reply