Power of synergy – why have VC funds as members of the angel investor network?

21 August, 2023

Angel investing community has grown  significantly over the years. EstBAN has since the beginning been an umbrella network for the individuals wanting to participate in the startup ecosystem and has grown the network from 160 to 280 members in 2 years. Last year we started officially accepting venture capital funds as part of the network. 

One might wonder, why to have fund members as members of the angel investing network. As VC funding is the next step from angel investors, it only makes sense to include the angel friendly/early stage venture capital firms into the equation and have them in the loop.

Here’s a few reasons why:
  1. Expertise and experience

    VC funds bring a wealth of experience and expertise to the table. They have a proven track record of supporting successful startups and navigating the complexities of the business world. Startups gain access to invaluable mentorship and guidance, entrepreneurs can tap into the knowledge of seasoned professionals, who can offer strategic insights, help refine business models, and provide industry-specific expertise.

  2. Amplifying funding opportunities
    One of the most significant advantages of having VC funds within an angel network is the increased access to funding opportunities. VC funds often have larger capital reserves, enabling them to invest substantial amounts in promising startups. By joining forces, angel investors can pool their resources with VC funds, allowing them to collectively invest in startups that require significant capital infusion.
  3. Network and contacts 
    VC funds have extensive networks within the business and investment communities. By integrating VC investors into an angel network, startups gain access to a wider network of potential partners, customers, and mentors. This expanded network can open doors to valuable connections, strategic partnerships, and opportunities for growth that may not have been possible otherwise. The angels just have to use the network for their portfolio companies. 
  4. Validation and credibility 
    When VC funds take part in the startup screening in the very early on, alongside angels, they give a different view and validation. Their involvement signifies that the startup has undergone rigorous due diligence and meets the standards set by professional investors and therefore might be eligible to raise the next funding round from those network partners without going through 100 VC-s after they’ve raised from angels. In addition,  this validation can enhance the startup’s reputation, making it more attractive to other investors, customers, and stakeholders. It becomes a powerful signal to the market that the startup is worth considering.

Embracing the synergy between angel investors and VC funds is a winning strategy for startups seeking to thrive in today’s competitive business landscape. The collaboration between angel investors and VC funds combines financial strength, expertise, and expanded networks to provide a powerful support system for entrepreneurs. By welcoming VC funds into an angel network, the development of the startup ecosystem is systematic and cooperation based. The startups in angel portfolios can access increased funding opportunities, gain expert mentorship, expand their networks, enhance credibility, and accelerate their growth. It’s a winning formula that can set startups on the path to success.

EstBAN fund members to date

EstBAN is fortunate to have 17 funds (to date) as members of the network with expertise in a variety of sectors, (from fintech to biotech) network that reaches far and beyond and funds to support our angels’ portfolios in follow-up rounds. Startup ecosystem can only thrive when there is open communication, connectedness and collaboration, therefore our aim is to continue on that road to enhance support within the tech sector. 

Are you a VC fund seeking to expand your investor network in Estonia? See here who are our members and how to join us to make a larger impact!