Venture Capital & Consulting

Once upon a time the startup investment landscape was clear and simple. When you were creating your business, the first investment circle was your family and friends – the so-called “love money” - usually in the range of thousands to tens of thousands €. You would then turn to a Business Angel, wealthy individuals betting with deep pockets, willing to insert € 20,000 to let’s say 500,000 € into your venture. Both investment types represents “Seed Investment”, where people take a leap of faith, considering your company doesn’t generate any cash flows yet. Then, after your business is starting to take off and your product or service gains market traction and generates revenues, perhaps even bringing you towards break-even, you could go pitch to Venture Capital firms to get more substantial money. Most traditional VC funds rarely consider investing fewer than € 1 million.  

This tidy investment landscape has now changed, with a multitude of investment players stepping on stage: Super Angels, Angel funds, micro VCs, etc. This imperceptible shift is causing great complexity and, above all, great confusion. And as I’m frequently asked what Catagonia is and does, I needed to take a closer look at these different categories and the role they play in the VC industry.  

On the one hand, you have Business Angels, individuals investing their own capital in Startups. As previously written, Angel capital historically builds the bridge between “friends and family” financing and Venture Capital. At least until recently… Some Angels have begun raising funds from outside investors. Others started to regroup in “Angel funds” and invest as a formal team. The creation of such fund vehicles has begun to affect the traditional Venture-Capital firms, fearing to loose attractive high potential targets. You might also have come across the term “Super Angels” lately. Those are very active investors (let’s say with a portfolio of > 25 companies) that are now playing a major role in the Seed-Investment stage.  

On the other hand, you still have Venture Capital firms, managing institutional capital. Some firms are specialized either in early or later stage, but in theory a Venture Capital firm can be involved in any investment stage pre-IPO. Historically, as described above, Venture Capital will invest in a company after Business Angels and with larger amounts of capital.  But then micro-VCs  (also called Seed-Stage VCs) surfaced, basically Venture Capital firms who do Seed Investments of € 200.000 to € 500,000. 

Therefore the line between Super-Angels and micro-VCs is very thin. Both share a very similar investment strategy. Some say the difference is just branding and a question of marketing (it’s easy to understand why it’s better to be “super” than “micro”). But I would have to disagree. Indeed one should not forget that for a VC the majority of the capital being invested is always provided by institutional investors. For a Business Angel the majority of capital being invested is his own. Period. And that difference is substantial.

Anyway, the takeaway from all this theorizing is that Catagonia is a micro Super-Angel, own money but not enough investments to be super…