The recent visits to the Venture Development Center by Boston Seed Capital, Golden Seeds, Founder Collective, Race Point Capital, Boston Harbor Angels and Project 11 Ventures show that you can get in front of the right people more effectively by joining a program that draws the attention of investors to one place versus spending months knocking on doors.
But more importantly for Boston, the visits are further evidence of the changing face of the local venture capital scene, and the rising influence of professional angels. Many of these angel groups represent a grass-roots approach to investing early in tech entrepreneurs, a strategy that many traditional venture capitalists are adopting as well.
“We’re embedded in this ecosystem. We’re not just participants, we’re contributors,” NextView’s David Beisel told an interviewer from Xconomy. “The days of pitching in Waltham are over.”
Not to be left behind, five Boston-area VC firms recently banded together to organize what they are calling “CriticalMass” to get involved with tech entrepreneurs at the earliest stages. Three of them – Flybridge Capital Partners, Highland and North Bridge – have also met with the companies in the Venture Development Center.
But Beisel thinks this emerging segment of micro venture capital delivered by angels is enduring and will sit in a sweet spot between the various incubator and accelerator programs and big venture funds.
Large opportunities often have an angel round as a precursor, with a small group of individuals providing seed capital as runway to hit the proof points sufficient to raise a venture round or be acquired.
But there is by no means a seamless transition between angel and venture rounds, with much friction over angel rights to invest in a subsequent financing round. As Roger Ehrenberg says in Information Arbitrage: “Angels deserve respect. They serve a vital function in the capital formation process, and this needs to be taken seriously.”
The interesting thing about working with angels is that they’ve all run their own startups before so there is instant resonance with what you’re going through, the issues you’ll face and how to best help. They immediately think about product issues, technology trends, funding rounds, etc., at a level of specificity you don’t always find in VCs.
Angel investors from around the nation will visit the Venture Development Center during the Angel Capital Association’s April 4th Incubator Bus Tour when the “Angel Investing – From Seed to Harvest” conference takes place in Boston.