Angel investors play a very essential role in the innovation ecosystem. Many are former successful entrepreneurs, which provided them with the liquidity to invest in other early stage companies. They take on very high levels of risk as they are typically the first equity investors in innovative start-up companies, and invest in advance of institutional venture capitalists. This is referred to as a "seed" round. In general, they invest their own capital and provide strategic counsel to the founding team based on their prior entrepreneurial experience
The term Super Angel refers to two very specific types of angel investors. The more common and traditional term refers to angel investors who are prolific in their investment activities and who have made seed stage investments in a large number of start-up ventures using their own capital. Well known Silicon Valley Super Angels include both the very low profile angel investor Keith Rabois, founder of Slide (acquired by Google), who has played many key roles in the Valley, including COO of Square and who recently joined the top tier firm Khosla Ventures in February 2013, and the high profile Reid Hoffman, founder of LinkedIn, until he joined VC firm Greylock, and Mark Andreesen, founder of Netscape and LoudCloud, until he formed the highly influential institutional venture capital firm Andreesen-Horowitz.
Well known Boston Super Angels include Bill Warner, founder of Avid and Wildfire. Well known New York City Super Angels include David Frankel, Founder of Internet Solutions, until he formed the Founders Collective.
More recently, Super Angel has taken on a second meaning. In this instance, it refers to highly sophisticated and well-connected angel investors who have been uniquely successful as individual angels and who have earned access to superior deal flow. In this case, they begin to either pool capital with trusted colleagues or raise capital from friends and close business associates and then invest from this pool of capital.
This new form of Super Angel is still largely a Silicon Valley phenomenon. While there are a number of these new groups, Ron Conway, along with Peter Theil, are leaders of the most well known and prolific Super Angel groups. Conway’s group, SV Angel, has been especially active. Their portfolio is a true Who’s Who of SV icons such as Google, Paypal and Twitter and emerging giants including Foursquare and Square.
Peter Theil, Founder of Paypal, and his group, the Founders Fund, are equally active and successful. Their investments include icons such as Facebook, SpaceX , Yammer (acquired by Microsoft) and Mint.com (acquired by Intuit) and emerging giants including Spotify.
Other well known Silicon Valley Super Angels include Dave McClure of 500 StartUps, investors in Udemy and SlideShare, and Mike Maples Jr, son of former Microsoft COO Mike Maples Sr. whose group is known as Floodgate and who was an early investor in Twitter and Digg.
One notable Boston/NYC-based Super Angel group, the Founder Collective, includes Caterina Fake, co-founder of both Flickr (acquired by Yahoo) and Hunch, and Chris Dixon, founder of Site Advisor (sold to McAfee) and Co-Founder of Hunch and David Frankel, founder of Internet Solutions.
As angel investors play an increasingly important role in the era of cloud–based services and the cash efficient Lean Start-Up, and as all but the most successful institutional VCs struggle to raise capital, we can expect to see continued growth in this important new form of investor. They will increasingly provide the jet fuel powering the growth of the Innovation Economy.