I put zero effort in getting deal flow, if anything I have too much. It’s become this flywheel where if someone is investing they’ll reach out to me. That’s the network effect of sourcing deal flow. -Xavier Collins
Unlock the power of the network effect in angel investing with insights from seasoned angels Colin Boey, Xavier Collins, and David Gilgur. Read through to get practical tips for success and learn from their experiences in building top-tier angel syndicates.
Getting started as an angel is intimidating. Starting off you may not have the network, deal-flow, or exposure to even know where to begin. In our experience however, having set up SPVs for angel syndicates of all specialities and sectors, the one thing all angels have in common is that they begin with a unique story. There is no set path into angel investing. The beauty of it is that anyone, from any background, can take the first steps in building an angel syndicate.
Colin started his journey in investment banking. There, he found that private markets resonated with him. Gradually investing in startups, after 10 years he took the plunge and became a full time angel. Xavier on the other hand started off immersed in startups and tech. Being an early employee of Deliveroo during their UK launch, something he refers to as ‘breeding grounds for future founders’, he wanted to support his community and help the people he knew.
David, coming from a consultancy firm, saw something special in people working in tech with great ideas. He understood that mentoring is great, but what they really needed were investments, someone to step up and be the first check. He played that part, got hooked, and never looked back.
The journey into angel investing is a unique path for everyone, influenced by your background, interests, and the opportunities you encounter along the way. There’s no one-size fits all approach. All you need is passion and a desire to make a difference.
So where should you begin? Here are the top tips to building a thriving angel network:
When building syndicates, prioritise high-caliber and like-minded investors who can bring substantial value to the table. This is particularly important for the first few members: focus on forming a great core group who can then refer other investors of similar caliber. While it may be tempting to onboard as many members as possible, maintaining a curated and cohesive group is key to ensuring an active and efficient syndicate in the long-term.
There are two main approaches to building an angel network: spray-and-pray or relationship building. Both can work depending on the individual and the goals. But remember that part of the fun is the relationships you build along the way. People with shared passions will flock together organically, so just speak to people about what you’re passionate in investing in and those with the same interests will come! Over time these connections add up to a great network you can rely on.
If you’re struggling to find members, remember that investors look for leads who provide access and exclusivity first and foremost. Position yourself as an angel who can offer valuable connections and deals. Cultivate a strong reputation as a value-add investor who genuinely contributes to the success of the startups you support. By combining access and reputation, you’ll create a compelling value proposition for potential co-investors. Not to mention that founders will be equally swayed by an investor that offers not just capital, but helps the startup in the best way their skillset allows.
While a quick scroll through LinkedIn can lead you to believe VCs and angels have nothing but wins, everyone has their share of mistakes.
One thing they all agreed on however, is that investing in a company that eventually fails is never a mistake. You have to make those moves and take those bets, and that means you’re bound to make mistakes at some point. To save you a few hurdles down the road, Colin, David and Xavier shared some top tips to avoid some mistakes they made starting out.
Prioritize your time well. You’ll have to manage syndicate members, founders, applicants, and deals. Use an appropriate tech stack and utilize your time well: investors are time-scarce. Notion and Airtable can be very useful to track each member’s expertise and ticket size, as well as for sending updates, investment memos etc. There’s no silver bullet here, but every little bit helps.
To avoid getting bogged down in the admin side of your investments and to free more time for actual dealmaking, Xavier and David used Vauban. As your syndicate—and the amount of deals—grows you’ll need ways to lighten the investment process: an SPV provider is strongly recommended. Leading us to our next point:
Choose your platform very carefully. There are a lot of options these days on how to structure your SPV. As we learned with Assure shutting down, if an SPV provider looks too good to be true, it probably is. In fact, Colin says his biggest mistake was using Assure to launch his SPVs—something he still gets grief for from his LPs (remember, reputation is everything). While it may be tempting to go with the cheapest option and save on operational costs, it’s a mistake that can end up being very costly when it comes to migrating all your SPVs.
Manage FOMO. This is a big one. In fact, most mistakes made by angels starting out can be traced back to the fear of missing out (fomo) to some extent. At the start of the angel investing journey, every opportunity sounds like a good idea. As Colin puts it, with hindsight you realize that none of them were, you were just too ignorant about the space to notice at the time. Just because a startup is trending in your network, or other angels are lining up to write a check doesn’t mean it’s necessarily a good deal. FOMO is a very powerful factor in decision making and people will leverage it to get you subscribed to a deal. If you tend to fall victim to FOMO, it’s vital to build and follow an investment framework that doesn’t go off what other people are doing.
Play to your strengths. To get an edge in VC you have to lean into where you have a unique advantage. That could for example be a geography or sector where you have particularly keen insights. Overextending to areas where you may not be as knowledgeable can be risky. As always, it’s a risk/reward calculation you’ll have to make. Recognising your limits will be equally important: don’t get overambitious with deals that are too far out your comfort zone. For example, if you exclusively invest in early stage startups and a late stage deal falls in your lap, remember that the processes can vary significantly: late stage can be much heavier operationally, which can easily catch you off guard.
Just do it. This is unanimously the most important thing to take from the discussion. If you’re passionate about angel investing then angel invest. Start small, get with some friends and put money aside for deals. Before you know it you’ll find your tribe.
Ready to start your own angel syndicate? Click here to launch your first syndicate SPV.
Colin Boey: Former investment banker now a full-time angel with a syndicate of like-minded investors. They are mostly investing in B2B SaaS globally, with a ticket size between £100k-£150k.
Xavier Collins: Vice President of Turo, UK, and previously an early employee of Deliveroo. He is also the founder of the Shaman List - an email list/community for top investors looking to access great deal flow. This community has raised over £7m in 2 years.
David Gilgur: A founding Partner at Blue LakeVC investing in Seed and Pre-Seed, software, and b-2-b immigrant founders in the UK.