Raising Angel investments: 7 years later

I co-founded a new company and raised a seed round for our D2C startup in 2023 amidst the funding winter. Although ours was anchored by institutional capital, I couldn't help compare it to the experience of raising an angel round for my first startup in 2016. Some observations:

• Angel cheque sizes have not changed in 7 years. Inflation has made everything at least 2x costlier and presumably, angel investors are wealthier now than in 2016. Yet, cheque sizes are the same.
• Except they're not, because they've become smaller on average! The INR 5L folks are still doing the same. The INR 10L folks are now investing "10k" (USD of course), which is simultaneously smaller and cooler. And the big, anchor cheques?
• The 2016-18 angel ecosystem had some Big Swinging Dicks who wrote 50-80L cheques after 30 min meetings. These cheques anchored rounds and pulled up average cheque size. These are gone. They've returned to safety and liquidity and in many cases, to London and NY.
• But there's a lot to cheer. The pool is wider - 30% of my angels in 2016 were first-timers and everyone operated in their own micro-network. You had to pitch everyone individually. Zoom wasn't yet a thing, so you flew to Mumbai or BLR for informal angel group meetings.
• Over the past few years, I've invested in a few startups and a growing % are now via syndicates. Syndicates used to feel vaguely last-resort and founders took pride in having raised from their own networks. Glad that's no longer the case as it was a massive time waste for founders.
• Micro VCs have emerged. Large VCs have dedicated seed funding arms such as Surge by Peak XV and Atoms by Accel. Some VCs have specialized and can genuinely offer founders more than just capital. Just within D2C, can think of Sauce and RP-SG Ventures as great first cheque examples.
• Family Offices have transformed and are much better managed, bolder and more decisive than before. The mid and large size FOs are now experienced LPs and run by investing professionals. They also bring something important to the ecosystem - long term mindsets and "dhanda" thinking.
• A very important class of angels has emerged: exited founders. No other set of people understands the journey or believes as strongly in entrepreneurial investments as them. They're relatable, empathetic and typically play straight.
• Finally, many more companies are now investing in early stages. They are able to see value in learning from startups and have shed their image of being predatory/difficult. Many have experienced success with investments or acquisitions. Next-gen promoters have helped.
• Valuations are higher and founders are savvier. (Not sure if the former is a good thing.) A big change is the presence of second-time founders and experienced startup operators, who are able to combine experience and energy.
• An important change is cap table management has been largely solved due to AngelList and others. It was common to have 20, 30 or even 100 individuals on the cap table across multiple angel rounds. The mountain of paperwork and signature-chasing was crazy. Now, one entry does it.

But some things remain the same. FOMO still works, investors still need returns, it's still better to be default-alive, cash is still king, most markets are still not deep.

Most of all, it's absolutely critical that there is a founder-problem and market-investor fit. Which is unfortunately - and tragically - often forgotten, resulting in death by starvation or indigestion. I'll cover that next.