Building a Home for Operator Angels

Venture capital, namely angel investing, has posed enormous barriers to entry.

Legal hurdles and insurmountable administrative fees reserved this asset class for:

• Professional investors, or
• Super high-net worth individuals (read: founder with a recent exit).

The latest wave of democratization has chipped away at these obstacles. This is a great thing for both founders and first-time investors – but it’s only a start.

A road in Palo Alto, California famous for its density of Venture Capital offices Venture capital has gone through a radical transformation in the past decade. Let alone the past fifty years. What was once considered a cottage industry has entered mainstream vernacular.

With the promise of a career launching pad, finance and consulting roles attract top-tier university talent . Venture capital appears to be edging into their territory. Instead of Morgan Stanley, ambitious graduates seek posts at a16z. As the industry scales, so does the investing landscape. The array of financing options, domain expertise and talent has exploded.

As with any lifecycle, there’s a consolidation followed by a decentralization. We are in the latter phase of the cycle. It happens to coincide with certain social and technological changes that are combining to create a new frontier.

You might be asking yourself a few questions:

• If the on-ramp exists, have we saturated the market with operator angels already?
• And why are operator angels so important compared to institutional VCs?
• What friction remains preventing new investors from entering?

Sand Hill Road has minted veritable institutions. Sequoia, Kleiner Perkins and other first movers paved the way for the upstarts of private investing. Today, you can find a near endless list of investors. Compared to their monolithic predecessors, newcomers vary across stage, geography and industry vertical. And that’s a good thing for founders: more competition equals better terms and smarter money.

This explosion of opportunity has given way to an entirely new class of investor. A class that has taken center stage in the past several years: the operator angel.

To clarify, it’s important to refine our definition of an operator angel in this context. An operator angel is someone with previous experience at a startup who actively invests in early stage companies. This could be as an individual business angel or as part of a larger syndicate. Additionally, it could be a full time role or an activity they engage in during their spare time. The critical trait is operating experience within a startup – the type of business in which they aim to invest their money. The emphasis on operational experience here is key.

“Starting a company is like throwing yourself off a cliff and assembling the airplane on the way down.” Reid Hoffman

The above quote from Reid Hoffman, Co-Founder of LinkedIn and Partner at Greylock paints a vivid picture. Startups are chaotic, unique, unpredictable and unusual. Without direct experience, it may be hard to relate.

Working in a startup environment gives you incredible competitive advantage as an investor. You would think, then, that startup experience would be a must on every VCs resume. In Europe, that’s hardly the case.

• In 2019, Diversity VC surveyed 171 active firms in the UK and found that just 8% had experience working in a startup
• A more recent report from Sifted, in partnership with Vauban, found that of platform users working in professional VC only 1.8% had startup operator experience
• The number of VCs in the United States with experience running or working at a startup hovers around 60%

So why the discrepancy? What’s lacking? What is preventing European startup operators from joining the angel investing community? Our theory: network effects.

Roundtable is purpose-built to close this gap. Great strides have been made to simplify SPV creation and administration. Still, there remains a glaring hole we aim to fill: community. The European ecosystem is not short on so-called talent mafias. There is also a clear appetite to re-invest knowledge, time and funds back into the ecosystem. But the on-ramp, as it were, is full of potholes. We plan to fix that with collaborative investment vehicles, super-charged with your social graph. What novice operator angels lack in cash, they make up for ten-fold in:

• Lived experience and startup wisdom
• Enthusiasm and active support where necessary
• A powerful network of potential customers, investors or advisors
• A core group of like-minded peers
• A collective pool of capital rivaling competitive stakeholders

At Roundtable, we’re building a home for operator angel investors. Infrastructure, crucial as it may be, will become a commodity. Our thesis: collaborative, integrated social tools will unlock access to sophisticated emerging investors. A healthy European ecosystem requires tight-knit communities of angel operators.

Join our waitlist and become the next operator angel to share your story!