This is the first post of the “Welcome to Post on Wednesdays!” blog post in Startup Iceland. This post is a follow up post by Ashwin Bhambri and I think he has a point on trying to bring awareness, attention and glamour to the early stage investors. I am seriously thinking of including an award show as part of Startup Iceland 2013… what do you all think?
Isn’t Angel Investing underrated or more so undervalued? The impact it can have on the global economy today is under estimated, as almost every third startup or small business requires to raise pre-revenue finance that banks or other organized institutions would typically not fund. Seed / angel investing is the only alternative left to the entrepreneur.
Angel investing is underrated simply because as a concept it is underutilized. There are just not enough proactive angel investors or money in angel / seed asset class for this activity to be considered mainstream or a serious factor in the building of economies.
Nevertheless, the potential of angel / seed financing and the overall impact it can create is colossal. If Peter Thiel had not to take a chance on Facebook it may not be the Facebook we all know today. Time and time again, those investors who took a leap of faith and invested in Angel rounds dramatically changed the course of history for many rockstar companies today starting from Google to Facebook to Twitter.
To be fair, Investing is also about capitalism and the simple theory if one does not see a return one will not invest applies. Arriving at an ROI from a pre-revenue start-up is not exactly pragmatic and an angel investor takes a huge risk here – What makes them invest is
a. They like the startup team, want to help and give back in the process
b. Their gut feel prevails over logic and tells them to go with a start-up.
Investors who repeatedly make angel / seed investments build the startup ecosystem and should be honoured with recognition and accolades for their contribution. There should be an attempt to glamorize angel investing and this could be the rocket fuel that catalysts more investors to join the angel bandwagon and can lead to more investment activity.
How do we do this? For starters there can be the Grammy and/or Oscar equivalent for investors or the Angel & Seed Investor Awards where active investors making investments are nominated and awarded, as investors are the early heroes of any startup ecosystem.
Glamour is also an amazing communication medium to a large audience and could convert traditional investors who typically invest in established listed companies to become angel investors.
Iceland could be the world’s accelerator of this initiative as the time & environment is optimum. Thus far I have not come across any Investor Awards event that is mainstream and it’s about time someone takes the initiative and makes it happen. If it fails it fails, if it succeeds it could do for the rise of angel investing what y-Combinator did for the rise of startup accelerators and that’s definitely a risk worth taking
- A New Angel Investing Strategy (askthevc.com)
- This Is What An Angel Investor Looks Like – Kelly Hoey (thenextwomen.com)