Small investors make the startup world go round - and founders could be missing out by setting a high minimum check size.
Data from 23,000+ SAFEs signed before any priced round funding over the past couple years.
Small checks (under $25K) made up a full 55% of all checks signed in the earliest rounds (those under $250K total raised). Even rounds that raised over $1 million had major participation from small checks.
𝗠𝗲𝗱𝗶𝗮𝗻 𝗖𝗵𝗲𝗰𝗸 $ 𝗯𝘆 𝗥𝗼𝘂𝗻𝗱 𝗦𝗶𝘇𝗲
• Under $250K: median check size was $18,000.
• $250K-$499K: median was $25,000
• $500K-$1M: median was $40,000
• $1M-$2.4M: median was $50,000
So what do these small checks bring to a founder?
1. Expertise = They can help in a particular area (GTM, sales, hiring, etc).
2. Network = They can introduce you to other investors, potential customers, or future teammates.
3. Legibility = their involvement will help in the areas mentioned above and positively impact how other investors view your company.
Sure, the total capital from these small checks may only account for a sliver of the total round. But they can demonstrate progress, push forward momentum, and the angels themselves may open doors to larger investors down the road.
We are also seeing many initial advisors to nascent startups become strategic angels. Lots of ways to improve your cap table.
Here's to a year of small checks 🙏
------------------------------
Peter Walker
------------------------------