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What You Need to Know About Angel Investors

Last updated: August 22, 2022
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Startups need funding to get their ideas off the ground. While innovation and great products are important, without funding ideas don’t have enough support to grow and flourish. That said, startups have come up with solutions to get the funding they need. One of those methods? Connecting with angel investors.


If you’re considering angel investors as a funding source, you’re in the right place. We’re going to take you through everything you need to know about angel investors. We’ll cover what they are, how to find them, and show you some famous angel investors.


Read on to learn more below.


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    What is an Angel Investor?

    Angel investors are individuals or groups who invest in startups with their personal resources. While angel investors provide financial assistance, they will also mentor founders and help with staffing. Angel investors have a vested interest in the success of a startup company to get a return on their investment.


    In most cases, angel investors invest in companies for equity in the company. When the startup grows in value, investors choose to keep their money in the startup or they will convert it to equity and remove it from the company. Depending on the startup and the investor, the investment strategy often changes.


    When do Angel Investors Invest in Startups?

    Angel investors invest in startups before venture capitalists and larger firms. It’s common for angel investors to invest in startups during the seed round of funding.


    A seed round of funding is a round of fundraising where startups secure capital to forge a working business plan, market products, and launch a product. Some angel investors will also invest in the pre-seed round of funding. However, investments in the pre-seed rounds are rarer.


    How Much Do Angel Investors Invest in Startups?

    Angel investors typically invest between $50,000 and $250,000 into startups companies. For example, popular angel investors like Keith Rabois and Dave Morin invest up to $50,000 and $250,000 into startups.


    Still, some angel investors will invest more. For example, Jeff Clavier invests up to $6 million into startups. Overall, the amount angel investors invest depends on the company and how much extra capital they have.


    What’s the Difference Between Angel Investors and Venture Capitalists?

    The difference between angel investors and venture capitalists is that angel investors aren’t affiliated with investment firms. On the other hand, venture capitalists are a part of a larger firm that pools money to invest in new companies. There’s more paperwork and red tape when working with venture capitalists because of this reason.


    Ultimately, that’s the main difference between angel investors and venture capitalists.


    Who are Some of the Best Angel Investors?

    The best angel investor depends on your startup and how much funding you need. However, some angel investors have a better record than others. We list some of the most popular angel investors below.

    • Jeff Clavier
    • Dave Morin
    • Keith Rabois
    • Ron Conway
    • David Lee

    Jeff Clavier

    Jeff Clavier is the founder of SoftTech VC, which is a venture capital firm. His firm invests in startups but Clavier is also known for personally investing in startups that interest him.


    Clavier invests in startups liberally and invests up to $6 million. He’s invested in 20 startups to date and continues to invest in innovative startups with refreshing ideas. The categories Claiver invests in include e-commerce and online monetization.


    Dave Morin

    Dave Morin is another famous angel investor. Morin is the founder of a firm he calls Path, which helps people with mobile networking. Path also connects people with investors, professionals, and even freelancers.


    Personally, Morin invests in pre-seed round startup companies. His average investment is $50,000 and he invests in social media, sports, crypto, and beverages.


    Keith Rabois

    Keith Rabois is one of the wealthiest angel investors around. Rabois invested $250,000 into more than 50 startups and manages to earn great returns each time. While Rabois is not perfect in his ventures, companies he invests in are often successful.


    Rabois is also affiliated with Khosla Investments, which is a venture capital firm. So, Rabois also has other angel investors he likes to invest with. Rabois’ favorite industries include education, IT, loyalty programs, and sports. He also invests in big companies like LinkedIn, PayPal, and DoorDash.


    Ron Conway

    Ron Conway invests up to $50,000 in startups he invests in. Conway has a lot of success as an angel investor and frequently invests in strong companies before others. For example, Conway invested in Google and PayPal when the companies were in their early development stages.


    Conway also works with a firm he created that he calls Angel Investors LP. The firm is known for pooling money from several angel investors to make venture capital arrangements. Therefore, Conway is an angel Investor and venture capitalist. His favorite industries are technology, search engines, and data collection.


    David Lee

    David Lee is one of the most prominent angel investors around. While he invests amounts of $250,000 into startups personally, Lee also owns a venture capital firm. His firm, SV Angel, invests much larger amounts into startups. In fact, SV Angel is listed on BusinessInsider as one of the top 50 people to invest with.


    When it comes to his investment strategy, David Lee is diverse. He likes to invest in technology, e-commerce, consumer internet, big data, and analytics. Lee’s known for investing in startups during the early funding rounds and later funding rounds.


    How Do You Connect with Angel Investors?

    Connecting with investors is challenging, especially angel investors. The good news is that online angel networks make the process easy. Networks like AngelMatch have compiled data and information on some of the most popular angel investors in the industry. You don’t need a network and you don’t need a lot of capital to get started.


    The other ways to connect with angel investors include networking through social media, going to in-person meetings, and sending proposals to companies directly.


    Connect with Angel Investors Today

    Angel investors are a startup company’s best friend. An angel investor often invests before venture capitalists and you’ll raise more money with angel investors when compared to crowdfunding or bootstrapping.


    Unfortunately, it’s not always as simple as reaching out to an investor and securing funding. The good news is that connecting with angel investors is easy with platforms like AngelMatch. AngelMatch gives you relevant and up-to-date information about some of the most well-known angel investors.