Angel Investors: Wealth ≠ Value

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The startup world is full of bold ideas and ambitions that stretch far beyond the present. Founders are often considered very smart people. And for a group who are regularly defined using words like trailblazer, innovator and pioneer, they have a tendency to be led by the pack and listen to, frankly, nonsense, when it comes to fundraising. 

One belief that has persisted is the notion that the bigger the cheque, the greater the value. But we call bullshit!

This belief has shaped how founders think about funding, and it's time for a shift in perspective.

Founders need to stop being blinded by someone's net worth, and realise that smaller ticket investors can be just as, or often more valuable than a large ticket investor.

Individual investors, especially those contributing smaller amounts, are often dismissed or overlooked, yet they bring immense value that extends beyond the size of their investment. Founders need to stop following the herd mentality that equates wealth or cheque size with value, and recognise the untapped potential smaller-ticket investors bring to the table.

The term "retail investor" is very often misunderstood. Institutional investors tend to cringe and recoil a little when it's brought up, and most people in the startup ecosystem seem to think it means John around the pub who has €20 he wants to take a punt with. And this misinformation is damaging to the fundraising sphere. “Retail investor” actually means any individual who invests their own money, as opposed to institutional investors who manage pooled funds. These can range from everyday people contributing a few hundred euro to high-net-worth individuals investing hundreds of thousands or even millions. Retail investor means ALL individual investors. What unites them is not the size of their cheque but their direct personal interest in your startup’s success. 

This weird and pervasive myth, that bigger checks come with bigger benefits, has been around forever. While large angel investors can certainly inject significant capital and provide valuable guidance, smaller investors can often bring the same level of knowledge. Just because someone isn’t investing €100k doesn’t mean they don't have amazing experience and to share. A senior executive in the same industry as you, with decades of experience, and who believes in your vision, could be incredibly valuable, but they might only invest €1,000. Not because they don’t have more, but because it's what suits their investing strategy. 

Many smaller investors are deeply passionate about the startups they back. They aren’t just investing money; they are investing their belief in your vision. This kind of emotional commitment can lead to some of your most loyal advocates, customers, and brand ambassadors. In fact, smaller investors are often the first to spread the word about your product, rally behind your company in tough times, and even offer feedback that larger, more detached investors might overlook.

Individual investors, particularly those contributing smaller amounts, are often less concerned with short-term returns and more patient in waiting for growth. This patience can be invaluable, allowing founders the breathing room to make decisions that may take longer to pay off. While institutional investors might be focused on the next quarter’s financials, a retail investor may be more willing to give you the space to build a strong, sustainable company.

A common criticism of smaller-cheque investors is that they don’t contribute enough capital to make a real difference. But this misses the power of collective action. A hundred investors contributing €1,000 each can equal the same capital as a single large cheque, but with the added advantage of diversifying your investor base. This broad base of smaller investors can shield a startup from being overly reliant on a few large backers, providing stability and reducing the risk that a single investor's change in strategy or focus could significantly impact the company.

Importantly, each of those retail investors brings their own network, expertise, and perspective. Having a broad base of investors can create a community around your company that is engaged, diverse, and often quicker in offering feedback and support. The diversity of thought and experience they can provide is often a huge benefit, contributing new ideas and perspectives that may otherwise be missed.

At Shuttle, we plan to mobilise our community and give the founders we invest in access to the best people to help and support them at any particular moment. A founder wants to build out their sales function and needs support from the right people? No problem, we plug them into our members who’ve built and led sales functions. A founder needs technical advice on their new app? Sure, let us introduce them to the engineers in our community who’ve done it before.

Look, we get it. We really do. It's easy to get caught up in the allure of securing large cheques. After all, a big cheque feels like validation and it helps fill the round quicker. But founders need to stop following this herd mentality and start considering the real value of ALL types of investors. 

We’ve seen a few examples where an investor might invest a small cheque which in turn leads to numerous larger cheques through that investor’s network. So, the next time you’re looking to raise capital, don’t just chase the biggest cheque. Take the time to recognise the value of all potential investors. Some contributions may be smaller in size, but they often bring outsized benefits that can make all the difference to a startup’s journey. 

The startup ecosystem is evolving, and the outdated bias toward only focusing on bigger investors must give way to a more inclusive view of value. It's time for founders to broaden their perspective and recognise that value comes not just in the size of the check but in the dedication and belief behind it. Embrace all your investors, and you’ll build a stronger company for it.

What we’ve been working on at Shuttle

• We have locked in cohorts 1 and 2 for our private launch 🎉

• We are at 90% completion of our updated homepage 🛠️

• Work started on updated registration and onboarding flows ⚙️

• We held our very first board meeting this week 📝

• Lots of work on updating and improving our financial models 💰

The Unsophisticated Investor is brought to you by Scott & Rob, the founders of Shuttle. We’re both sick of private markets being a playground exclusive to the ultra-wealthy so we started a company to challenge the status-quo. Shuttle’s singular focus is to unlock private markets for Millennial and Gen Z retail investors and help them build wealth through the highest performing private market opportunities.

Scott & Rob
Shuttle Co-Founders