How Angel Investors Evolved From FFF To Unicorn Boosters

By Dmitry Samoylovskikh

Today’s market is far more competitive than it has been in the past. Now, it’s much more difficult for investors to win deals simply by offering money. Founders of really promising startups often have a considerable amount of choice when it comes to investments, so this means that if you want the deal, you have to offer additional value that makes you stand out from other investors. 

How the Angel Investor Evolution Began 

In the past, venture capital firms used to view angel investors as part of the “friends, family and fools” (FFF) side of funding. VCs treated them as a kind of “contamination” of the startup’s cap table, so it was much harder to get in on the serious deals. 

Now, VC funds have changed their tune when it comes to angel investors. Rather than dismissing them, VCs actually encourage founders to attract angels, even in the later investment rounds. This is because they now have a better understanding of the value and expertise angels can provide that their firms cannot. 

In addition to this, the geography of investment has shifted, and this has opened up the field for angels to show founders and VC firms what they can do. As little as five years ago, author and angel investor Jason Calacanis was convinced that angels could only successfully invest if they operated in Silicon Valley. Today, angels can find profitable deals from anywhere in the world. 

This shift in the investment landscape has underscored just how critical angels are to the startups that have unicorn potential. According to a report commissioned by the Angel Capital Association, the numbers show that U.S. angel investors are responsible for up to $24 billion in funding and the growth and success of over 64,000 startups annually. Europe is way behind now with just 1.5B EUR angel funding in 2021, but is catching up quickly.

What This Change Means For European Founders 

The increased value of angel investors as a support system and booster for promising startups means that there is now a much higher potential internal rate of return (IRR) thanks to the fact that the road to becoming a unicorn can now take as little as 5-6 years as opposed to the previous 8-12 years. 

Because of this, angel investors have become much more sensitive and attuned to the problems that founders around the world are facing, even if the challenges are not directly related to the business. 

For example, there was a time when one of my startups reached a point when its runway was no longer than two months, yet, even after dozens of calls with VCs, there was still no terms sheet drawn up for the near future. This was obviously a huge obstacle to launch and a highly stressful time. 

I reached out to our network of 62 angel investors and let them know that, despite massive and solid pitching, the startup was still too far away from being secured. I asked if any of them would be willing to help by any means possible, including funding of any amount, connections or offering advice. 

Within the week, I got a dozen tickets from my network of angels, and I even had one investor get back to me with a message saying, “I would be happy to close the whole ask between myself and another friend of mine.” I was so thankful at that moment. With just a quick, two-sentence message to this group of angel investors, I was able to get the safety and financial security my startup needed within ten days of my outreach. 

This is the kind of power I want to share with other founders and investors. Angels are now in a valued position to provide an unmatched level of assistance and experience to startups they believe in. 

Here’s What We Can Expect From Angel Investors in the Future 

I believe that there will be a tectonic shift in how startup investments are handled in the upcoming years. I have no doubt that angel investors will continue to grow professionally and develop an even greater level of influence and expertise in the near future. 

I also strongly believe that angels will have a better seat at the proverbial table when it comes to working together with venture capital firms. I think we will see angels and VCs working together in a synergistic relationship that is better for the investment community and for promising startups. 

New unicorns are popping up nearly every week in Europe, cultivating armies of founding teams and entrepreneurs who have fought and struggled and succeeded against the odds. Now, these same people have cashed out considerable capital and are eager to cycle it back into the startup ecosystem. 

We are at the beginning of a spectacular new movement, and I am excited that Uniborn will be on the front lines to facilitate its success.

About the Author

Dmitry Samoylovskikh is a founder and angel investor with 15+ years of experience, who launched 7 startups (3 of them were acquired) and got listed in Forbes 30 Under 30 Europe. Dmitry has been on both sides of the venture industry and founded Uniborn in 2022, the only venture platform that grants emerging investors access to the high-grade deals of seasoned investors and offers microfunds to syndicates (not SPVs).