Co-investing by Business Angels and Venture Capital Funds
Over our 10 years in the VC market in Poland, we have witnessed the rapid growth of the angel investment segment. When we started, business angels were a rarity: hard to find and often lacking formal investment experience. Today, the situation has completely changed: co-investing business angels are an essential engine of the startup ecosystem, capable of deploying significant capital individually or through syndicates.
How 24Ventures Views Co-Investing Business Angels
Out of the 5 investments we have completed so far at 24Ventures, in 4 cases we co-invested with business angels (both Polish and international). In some deals, there were just a few of them; in others, several dozen. So we have built a solid, practical overview.
Let’s start with the fact that some projects are suitable only for investment by business angels. A VC fund, as a manager of other people’s capital and operating within a limited lifespan, naturally has structural constraints. In theory, there may be projects suitable for a fund but not for business angels (as a seed-stage investor, we do not really see such cases).
What Benefits Do Co-Investing Business Angels Gain from a VC Fund?
What benefits does a business angel gain from co-investing with a fund? The question is somewhat tricky because the answer depends on the quality of the fund. A business angel should form their own opinion about the co-investing fund, just as they would about the company they want to invest in.
The fund conducts due diligence, structures the transaction, sometimes acts as an arbiter among angels, and will monitor the project once it becomes part of its portfolio. Some funds significantly facilitate raising subsequent rounds and executing an exit.
What Benefits Does a Fund Gain from Co-Investing with Angels?
What benefits does a fund gain from co-investing with a business angel? The primary value we see lies in the domain knowledge that angels may possess. Their investment lends credibility to the business assumptions presented by the startup.
Additionally, every additional committed investor brings their own smart money—for example, contacts with potential clients or knowledge related to scaling in international markets. Moreover, maintaining good relationships with business angels gives the fund access to valuable investment opportunities that are often unavailable through other channels.
In summary, in our view the relationship between business angels and funds is symbiotic.