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What Kind of Startup Investor Are You?

Many aspiring startup investors around the world struggle to determine whether they should be startup investors and what role they should play in their startup investing community. While the term ‘angel’ investor is increasingly understood, it’s just one of a dozen roles an investor might have in their startup ecosystem.

  • Are you a passive or a lead angel investor?
  • Should you use crowdfunding platforms or look for ways to syndicate alongside professional investors?
  • What are the characteristics of an LP in a small venture fund?
  • How much money should you have in order to invest in startups?

To help answer these questions, Startup Angels has designed and launched the ‘What Kind of Startup Investor Are You’ quiz. This quiz leverages our years of work on the subject at Startup Angels. 13 questions will triangulate you to 1 of 11 possible investor personas. Each persona offers a variety of tips and details about that type of investor to help you assess whether that’s right for you.

The quiz is designed to be fun yet informative. As more people take the quiz, we will analyze answers and results to determine whether we need to update / modify any aspect of the quiz: our goal is to be as accurate as possible in the recommendations we make through this diagnostic.

Five icons of different startup investing personas

For the last year, we’ve been testing the logic that determines your persona result through our in-person events and workshops. We’ve combined those results with dozens of assessments of different individuals who we know are a particular type of startup investor, in order to rigorously test the logic.

Of particular note is that the quiz does not currently control for purchasing power parity, or ‘investment power parity‘ across economies. So if you’re an angel investor in Africa or Latin America, for example, you can write much smaller checks because the fundraising rounds of your region’s startups are smaller. We are working through the logic additions to accommodate this, and will likely publish multiple versions of this quiz that are customized for different regions of the world.

Regarding persona outputs and results, we decided to lean conservative with respect to ‘typical net worth’ and how startups fit into your portfolio, which is built into our quiz calculations. Right now, the average allocation towards alternative investments for a high-net-worth individual is about 16% and growing (it’s significantly higher for ultra-high-net-worth people, a category of investors who are generally considered to have $30M+ in investable assets). Our assumption is that startups, as an asset class, would be a subcomponent of your alternative investments. For our purposes, we assumed startups would be about 5% of an overall investment portfolio. You absolutely could have greater exposure to startups (or less) — a decision entirely dependent on your comfort with risk and any decisions you make with a financial advisor.

Similarly, we believe that any startup investor should build a portfolio of startup investments in order to mitigate risk and be a ‘sustainable’ startup investor. A portfolio-approach to startups is supported by a variety of research conducted around angel returns over the last two decades, finding that portfolios of 20 or greater startup investments have the best average returns. The persona results take this into consideration, assuming that you — as a startup investor — will make investments over a period of a few years to build up a portfolio. We’ll write a series of in-depth articles about each of these aspects in the future.

There are about a dozen factors that influence a persona result. That being said, three especially notable factors are:

  • Time: How much time are you willing to dedicate to finding and monitoring your startup investments?
  • Expertise: How much experience do you have with startups, entrepreneurship, or early-stage investing?
  • Money: How much of your personal capital are you willing to invest right now?
  • The chart below presents a simplified relationship between these three factors and a select set of personas.

Bar charts showing the variances in time, expertise, and money requirements for different types of startup investing

Because these factors can change for each person, it’s important to recognize that your ‘investor persona’ will change with time as well. We call this the ‘Investor’s Journey.’ You may be a great fit to be a startup ‘Indexer’ today, but 10 years from now you may have the additional time, expertise, and capital to be a great ‘Lead Angel’. Alternatively, while you may be an ideal ‘Passive Angel’ today, in 5 years your life circumstances may have changed significantly to where you no longer want to invest money in any capacity, and are much better suited to be a ‘Mentor’ instead.

So we’ll leave you with the question: what kind of startup investor are you?