The 'malicious' bits are typically covered by good shareholder agreements, the ones with teeth in them. Angel investors that intend to 'do tricks' tend to bail out when they come across terms like that so a good shareholder agreement not only serves you well for the shareholders themselves but can also serve as a filter for prospective shareholders. Of course the more angel investors you have the bigger the chances that you draw someone who does not have your interests at heart. So you will still need to vet them, the easiest way is to contact founders of other companies they've invested in. With a lot of first time angels flooding the scene this is of course not always possible.<p>A good way to deal with having a lot of angel investors is to create a separate 'angels' vehicle where angels participate, this vehicle then participates in your company.<p>That way you have all of the benefits and none of the drawbacks of having a lot of smaller early stage investors. You can roll your 'friends and family' round if you have one in there too.<p>Edit: Ah, the author mentions the 'roll-up' vehicle at the end of the article. Good.
Well, if you have too many, you've done an unregistered securities offering and the SEC will come after you. At 35 investors, the rules change. Read up on Regulation D.
I strongly disagree.<p>1) Increasing the number of investors, increases a CEO’s effort required to maintain the same quality of investor relationships.<p>2) An investor doesn’t need to be malicious to be a major problem. Misunderstandings, misinformation, and disagreements are more likely with larger groups of investors. One disgruntled investor in a shareholder meeting can do great damage to perceptions, which can harm your chances of reinvestment from the other investors.<p>3) If you want to remain a private company, you must keep the number of investors below 2000.
The article skips over the obvious point that each investor = an additional chunk of your company you have given away. Cash from 40+ different individuals <i>might</i> be essential to get your company off the ground, but realistically it probably isn't.<p>In the current environment there is an unlimited number of investors with large pockets and a tiny population of capable founders. Use that to your advantage as much as you can.
IMO, the author has a valuable insight, but a sub-optimal solution.<p>The valuable insight is that, invariably, there are domain experts whose help can completely transform your business. As a result, it's worth investing time/resources to find and incentivize them to help you.<p>However, these experts may or may not be angel investors. If you narrow your search to only angel investors, you'll more often than not miss out.<p>Conflating the goal of locating expert counsel with the goal of raising money is more often than not going to waste of your time. Raising money is a long, distracting process, as-is. Just get it done as quickly as possible on fair terms with a trustworthy party.
Nice try angel investors. On a more serious note, investors need more companies to invest in. What does this post spread but propaganda? Why exactly should we take more money early when the real question is efficacy and speed of growth? Throwing more money at this issue likely won't fix it, so a headline like this is misleading. Less angel investors is better, and it's better to be picky about them and get better terms if possible. The opposite of this article.
> Don’t raise money from a ton of angel investors because it’ll clutter the cap table and be a big administrative pain in the butt<p>I was at a startup that had over 100 angels... their cap table was messy and it definitely had an impact on raising.
Any tips on finding angel investors in the Midwest? Unless you're manufacturing, agriculture, or research no one wants to invest. My contact info is mike<at>candid.dev.
Well you now have 44 people looking over your shoulder, giving you advice based on half-baked opinions formed on partial information, and freaking out whenever you do something that slightly surprizes them. congrats.