There’s lots of talk among Silicon Valley entrepreneurs about the importance of finding “smart money”—the venture and angel investors whose sheer acumen supposedly allows them to outperform the market and shepherd startups to success.
Trouble is, venture returns for the last 10 years actually lag behind those of the broader S&P 500. The average venture firm “can’t outperform a grandmother investing in an S&P Index fund,” as veteran journalist Tom Foremski comments wryly. The truth is that every high-tech startup faces a minefield of tough decisions, and no investor can really know the right way across it.
But while smart money may be mythical, nice money isn’t.
When early-stage startups are raising seed rounds, especially here in Silicon Valley, there’s an obvious temptation to take money from big-name angel investors who can jumpstart a company’s fortunes with a few dollars, or even just a few tweets. But there’s another class of angels who’ve built successful businesses themselves—often quite recently—and who invest because they love startups and entrepreneurs. You won’t find most of these investors in the media spotlight. But ultimately they may prove far more helpful, on a day-to-day basis, to the companies they back.
We call these the Unsung Angels, and this week, in the slide show above, we want to recognize a few of them. These are the folks who typically shy away from press coverage, because they’re too busy working behind the scenes to make sure that entrepreneurs get the support and advice they need to try their business ideas. In the captions, you can read about their focus areas, their investing philosophies, and their most recent or notable investments. (Click the “Hide Caption” button to see the full images without the captions in the way.)
Each of our Unsung Angels was nominated by one or more trusted sources from Xconomy’s Bay Area network. One of those advisors was Jessica Livingston, the co-founder of the famed startup accelerator Y Combinator. Every year, Livingston and her fellow YC partners broker hundreds of meetings between startup founders and investors, in an effort to help each team find the right backers. Here’s how she classifies whether an angel investor is really good at what they do:
“Do they make (relatively) quick decisions and write checks, are they responsive and helpful when needed, do they have valuable insights for the startup, are their connections useful and, finally, are they ethical, nice people who won’t turn the screws on you at high stakes inflection points? I’ve seen a lot of ugliness on the part of investors (more from VCs, but some from angels) so the last bit is an important one.”
Every one of our Unsung Angels qualifies as nice money. Of course, they’re pretty smart, too, or they wouldn’t be so successful as individuals. But as you’ll see from the statements they shared, these are intense and passionate people who invest in other entrepreneurs mainly out a shared desire to change the world.
Thanks to all of our angels for agreeing to participate and for sending in photos. And special thanks to the rest of the advisory group for the Unsung Angels project: Linda Avey, Reema Bahnasy, Phil Black, Ryan Caldbeck, Rafael Corrales, Rory Eakin, Josh Felser, Kevin Hartz, Jared Kopf, Ellen Leanse, Mitch Lowe, Dave Samuel, Aydin Senkut, Semil Shah, Halle Tecco, and Sharon Vosmek.
Wade Roush is a contributing editor at Xconomy.