Lately, the rise of so-called Super Angels – mostly successful entrepreneurs who first became traditional angels (e.g. investing only their own capital) that are migrating to managing pools of capital contributed by themselves and other successful entrepreneurs interested in early stage venture investing – has been getting a lot of attention. Some people – mostly institutional VCs – are worried about Super Angels encroaching on their turf. Others – mostly early stage entrepreneurs – are more or less pleased to have a new source of early stage capital willing and able to invest smaller chunks of capital than their larger more traditional institutional VC relatives. Which is the more convincing take?
In my view, the Super Angels are indeed filling a funding gap for early stage deals that don’t need millions of dollars to get off the ground. But they are doing it in a way that is far from original, and certainly not a threat to the larger VC community. Indeed, from what I have seen, Super Angels like Ron Conway are not just filling a funding gap that larger funds can’t efficiently fill, they are doing it with a model – a group of individuals (family money) trusting another individual to manage their early stage venture investing – that sounds a lot like the venture capital business circa 1970, doesn’t it? What will be interesting to see is if this new breed of “family and friends” early stage venture capital funds stays true to their roots or, like their ancestors in the early days of venture capital, themselves evolve over time into a new generation of bigger and better(?) VC megafunds.