How Many Angels is Too Many? It Depends on the Founders

Yesterday, the New York Times published a smart landscape piece about the growing ubiquity of angel investing in Silicon Valley, where everyone with money wants to pour at least some of it into a startup – preferably one that has already received the blessing of a better-known investor or ten.

In fact, the crux of the piece was whether startups are now accepting checks from too many individual investors at once. Among the downsides: potential information leaks, the lack of an advocate when things go south, and the burden of having many more people to manage.

One interesting distinction the Times story doesn’t touch on – one that impacts the broader question of how many angels is too many — comes down to a startup’s founders.

Not everyone needs – or wants — the handholding that may come with a select few seasoned investors. Some are reluctant to empower a core group of investors who will invariably wield some control over them because they own a meaningful percentage of the company. More, while information leaks can work against a founder, having a host of connections can also produce useful competitive intelligence.

In the end, by working with dozens of individuals — few of whom have any information rights and almost none who have a real say in the direction of the company — a founder can get away with a lot, comparatively.

You could argue over whether so much autonomy is a good or bad thing. Presumably, it’s better for entrepreneurs who’ve already been around the block (and perhaps decided that professional investors tend to overstate their value anyway).

But not everyone who is collecting lots of checks is doomed to an endless series of headaches. For some, party rounds are seen as precisely the way to escape them.